While the consumer-to-consumer side of the web is buzzing with the advent and growth of social networks such as MySpace and Facebook among others, we at Kalivo are ear-deep in the process of figuring out how to enable businesses with the powerful marketing and loyalty building capabilities that social networking makes possible. I’d like to start by re-phrasing the term ’social network’ in the context of business use. For businesses, I prefer to refer to these as ‘professional networks’, as typically in business the networking is related to building professional capability and/or expertise and connections.

The question around which I would like to start this conversation is related to whether business social networks - i.e. professional networks - will be a mass scale phenomenon like on the consumer side with a couple of huge winners, or whether niches will rule. I will posit that, in the context of a professional network, relevance matters more than scale. A lot of folks are out searching or trying to create the business version of MySpace, yet I do not think that only one will emerge.

In the business world, professionals have areas of expertise that they and their companies rely upon to drive value for customers and for one’s career. In one’s professional career, being connected to more folks like oneself is a way to continue to (1) learn, (2) teach, (3) find job opportunities, (4) problem solve, and (5) identify relevant resources to aid in your job success. Whether you are a processing engineer, a risk management professional, a CIO, or a loan officer, you have a specific professional peer group with which collaboration can be mutually beneficial. Yet, in many to most cases (unless you are a sales executive), collaborating across these professions outside of the walls of your company is not nearly as beneficial.

For any one of these professional areas we would not expect to find 100 million or even 10 million people, a statistic which represents the aspirations of most consumer-oriented social networks. In fact, in some professional niches you may find 50,000 or 100,000 people in total. Does the fact that the number is small make is such that professional networks online should not exist? Can the expense of operating such a service for a relatively small community be economically viable? After all someone has to fund and operate the network for it to exist.

I believe that not only these professional networks should and must exist, but that it can be a profitable endeavor to provide the underlying professional network service to groups of this size. In fact, it is plausible to argue that professional networks must exist in these size chunks and that anything larger would falter due to irrelevance.

All arguments are made more valuable with examples. Here are a few professional networks that we have found in our discussions that appear to be successful and focused on an appropriate professional niche. I have no evidence that says any of these networks have millions of members.

• DBAZine sponspored by BMC Software for database administration professionals
• Enterprise Leadership sponsored by BMC Software for CIOs
• CRM Success sponsored by Salesforce.com for sales professionals

The value to the professional network provider is (1) a captive, highly relevant and active audience and (2) rich information about the professional behaviors and activities of the membership, and (3) the potential for word-of-mouth promotion through the conversations happening on the network hub. The operator of a successful niche professional network can reap revenue benefits from selling sponsorships, advertising, data & analytics, and the ability to converse with and poll the members to those businesses that are trying to target the professionals collaborating in the network. Such access to highly relevant decision-makers, users, and/or influencers for a given product is very valuable to the marketing department of any company.

Dare I say it … there may be a long tail effect here. All metaphors and models aside, I do believe that the future of professional networks will be built one niche at a time. Kalivo has built the Professional Hub product specifically to power these types of professional networks.

– brian