Facebook has made the social graph a household term. Less known, but with perhaps greater monetization potential, is the interest graph, which maps connections between individuals with common interests, likes and habits. Companies currently creating and taking advantage of interest graphs are Pinterest and Twitter.
Q. So this is related to the famous “social graph”, but you say it might be a better way to look at monetization opportunities for social media companies…
A. Yep. Of course, a “social graph” shows who is related whom, and this is the world Facebook dominates, maybe with competition from LinkedIn. For a good while, people assumed that would be a great monetization vehicle: one friend would buy what another does. But it turns out to be less of an indicator of shared actions than expected: and shared actions are what the interest graph defines. And actions monetize: restaraunts, concerts, books, clothing, etc.
Q. And I suppose the best example of an “interest graph” company would be, what? Pinterest? Twitter?
A. Close call. Twitter was probably the first big interest graph company: obviously, those users are connected by who they follow, who they re-tweet, not by personal knowledge of each other or their demographic characteristics. And they’re having increasing success with their “promoted trend” advertising concept, which inserts tweets in the tweetstream of users who have displayed a given tendency in their r interest graphs.
Q. But Pinterest may the real champ, right? It’s growing faster than any social media company in history by bringing people together around their interests instead of their interpersonal networks.
A. Yes, and, from a monetization point of view, it may have a big advantage, since a lot of that interaction is around specific products that people are considering buying. Those kinds of intests, obviously, are a lot more monetizable than, say, the political instincts that bring a lot of people together on Twitter. By the way, also watch out for an uber-fast growing company called U Heart It, which is essentially Pinterest for teenagers.
Q. So where does this all go from here?
A. Location-based interest graphs are a coming thing. Imagine that an app identifies that you and I were both at the Knicks game last night and here at Bloomberg today and says: hey, you guys should get to know each other… several apps already pursuing that route.