The Business of Social Graphs (and Why Everyone Wants to Own One)

By Bob Troia

When Facebook unveiled “Open Graph” at their f8 event in 2010, it was the first time many of us had been exposed to Graph Theory. Basically, Facebook realized that they were onto something – they had grown so big, so quickly and had amassed so many users that they could essentially provide a global mapping of everyone and how they are connected/related… what’s known as the Social Graph. What this means is that by Facebook “owning” the Social Graph and then opening it up for others to integrate with, it would cement their standing as the ones who are “powering” the social web. “One Graph to Rule Them All“, as Fred Wilson put it.

Types of Graphs

Over the past year, we’ve seen the emergence of a number of other “graphs”, each of which having players that are vying to “own”… thereby, controlling particular slices of the social fabric by becoming the de facto source for that data which in turn everyone else relies on:

Interest Graph- Identifies connections between people and things they are interested in via social and search activity (typically by “following” something). Along with the Social Graph, the Interest Graph is “foundational” to the social web.Who owns it? No one at this time, but keep an eye on Twitter, Google+ Sparks, Topics in Quora, and of course, Facebook.

 

Taste Graph- Identifies shared preference of behaviors.Who owns it? Hunch were the ones who introduced the Taste Graph earlier this year, which is built on a massive data set that powers their predictions platform.

 

Location Graph – Identifies the personal location pattern (checkins) of individuals and how they are connected to these places (venues).Who owns it? Foursquare‘s Venues Project seeks to cement them as owners of the Location Graph by creating associations with 3rd party location data to their venues (they’ve already partnered with The New York Times, New York Magazine, Thrillist, and MenuPages ). Yelp and Gowalla seem to have missed the boat (even though they were in the space first), but Facebook and Google aim to own this space as well.

 

Health Graph - A digital representation of a person’s personal health, body measurement stats, and health/fitness related actions, and their evolution over time.Who owns it? The Health Graph was created/announced by Runkeeper earlier this year, who saw an opportunity to go beyond just being a GPS fitness mapping mobile app and by opening up the Health Graph to allow others to not just tap into it, but build on top of it as well. This probably has the most “real word” (physical) implications, since 3rd party fitness device manufacturers like FitBit, Zeo, and Withings have begun integrating their data with the Health Graph.

 

Developing New Graphs

What’s common about these graphs is that in most cases, the companies had no original intention of creating them. Essentially, what they did was:

  • Look inward at the data they have already amassed and identify a set of data no one else has but is of extreme value
  • Provide structure and open up the data(via APIs), thereby providing both read/write access (letting others in turn grow/add value to your graph)
  • Give it a cool name :)

 

The Intersection of Graphs

Where this whole graphs business gets interesting is when new businesses are built by layering or combining several graphs to form a new business model, i.e.:

  • Yelp - Social Graph + Locations Graph
  • Pandora - Social Graph + Interest Graph + Tastes Graph + Music Graph
  • SCVNGR – Social Graph + Locations Graph + Gaming Layer (I’ll talk about “layers” some other time :)
  • GetGlue – Social Graph + Interest Graph  + Entertainment Graph (music, movies, tv)

As Mark Zuckerberg put it,”If we can take these separate maps of the graph and pull them all together, then we can create a Web that’s smarter, more social, more personalized, and more semantically aware.”

The Business of Graphs

How do companies intend on making money off of these graphs? Primarily, two ways:

  • Advertising. By understanding the relationships between people (Social Graph) and what they like (Interest Graph) that creates a powerful opportunity for highly targeted content. Once Facebook starts to better automate their targeting (right now it’s self-serve unless you use a 3rd party tool) and combine this with retargeting (since they’ll know if you visited a 3rd party site), the opportunities are tremendous. Twitter will be playing in this space as well. The Taste Graph offers the next biggest opportunity to make money (for the same reasons as Social and Interest Graphs).
  • Licensing. Another way companies will make money is from commercializing their graphs by licensing access to them. This is no different than, say, companies like All Music Guide license their database of music-related info to third party sites to supplement (i.e., if I’m browsing music on Spotify and click on “artist bio” or “related artists” to see more info).

 

The Future of Graphs

It will be interesting to see what other graphs and layers emerge in the coming year. Some ideas that come to mind:

  • Knowledge Graph?- One would argue that Wikipedia owns the knowledge space. Quora is building a pretty large body of knowledge through a well-maintained repository o fuser-contributed questions and answers, grouped by topic and tied to both social and interest graphs.
    Who *could* own it? Wikipedia, Quora, Yahoo Answers
  • Deals Graph?- These could be tied to locations (via the Locations graph) or within the social graph (tied to brands, etc.).
    Who *could* own it? Groupon, Living Social, Facebook, Amazon, Yelp
  • Stats Graph?- Sports Statistics comprise a pretty large, constantly updating data set.
    Who *could* own it? Elias Sports Bureau, ESPN, STATS
  • Genome Graph?- Provide access to the most up-to-date set up data related to DNA sequencing.
    Who *could* own it? Human Genome Project, 23andMe

 

In Summary
  • Social and Interest graphs are the foundation of the social web. Facebook outright owns the Social Graph (“one graph to rule them all”).
  • After Social and Interest Graphs, the Taste Graph has the most potential to make money through ad targeting and predicting user preferences. Other graphs will be monetized through licensing/access fees to third parties.
  • Niche-based and long-tail graphs are being developed which in themselves will have business models, but will not succeed financially on the scale of the Social or Interest Graphs.

What graphs might you be able to own (and transform your business with)?

  • Anonymous

    Thanks for this great article.

    I would like to give a different spin on the interest/influence graph ( which is the one my company is focusing on). I don’t think that social and search activity are enough to capture interest.

    The way we see it is that tribes and influencers within these tribes play a specific role in structuring the social web – this is very much in line with the Forrester study on mass maven and mass connectors.

     With this in mind you just can’t understand interest and influence looking at social graphs only, even supplemented by search. You get that Mrs x is connected to Mr y but… you can’t tell why.

    When you map the core tribes of the universe ;-) – 100′s of them, from Fashion to Investing to Moms to Tech- , then you may discover that besides these two people being connected one to each other,  they also both have connections to many “maven” in the Biking community. This give you relevant  context about why they may be connected one to each other and what type of shared interest they may have.

    In other words, connections only are not enough to spot interest; content is not enough to infer interest and – in our opinion- you have to do a little bit of both (and more, but that’s another story) and strike the right balance between these two to do this with accuracy.

    I would be very happy to have a follow up discussion with you on this and share perspectives.