Social networking is booming, and big contenders like MySpace and Facebook are racking up millions upon millions of users. But social networking startups can still make an impact without becoming web behemoths. For young companies, niche social networking is a wide-open field of opportunities. Web research firm eMarketer estimates U.S. advertisers will spend $900 million on social network advertising in 2007 and more than $2 billion in 2010. That's a healthy growth curve for potential revenue.
In July, W. Harwood "Woody" Runner launched Med3q, a free social networking site focused on health and healing. The site offers forums for health-conscious consumers, a support network for individuals with long-term health issues and a community of credentialed doctors. The users decide how much interaction they want to have with other members. Focusing on a niche group was a key part of Med3q's plan for success. "The biggest challenge was deciding what to include in our initial release because there is so much you can do," says Runner, 50.
Like most social networking startups, Med3q is generating its revenue from online advertising. But its plans extend far beyond display ads. Sponsors can build networks for their organizations or products, and Med3q will even help companies create privately branded versions of the site. For now, a PR effort is underway to boost user numbers, but the company hopes its revenue plan will also help populate the community. "We intend to capitalize on the viral nature of the internet and social media sites in general," says Runner. "The sponsors will bring their traffic with them." So far, the plan is working--Med3q expects sales of more than $1 million in its first year.
Most social networking sites are free for users, so startups need to be creative when it comes to finding ways to make money. Med3q's plan of diversifying its revenue streams is a smart move for any new web business. "Make sure you can go deeper than you think from a financial standpoint," Runner advises. "Temper your expectations because there is a lot of competition."Med3q hopes the useful features on the site will set it apart from competitors as well as help garner attention from users and advertisers. "The idea is to give people a platform where they can really improve the quality of their lives," says Runner. "If we do that, people will find us, the message will get out there and we will be successful."