Consolidation Time for White-label Social Networks
Onesite, which builds blog, wiki and other social networking tools for businesses to incorporate on their Web sites, is buying rival Social Platform for an undisclosed sum.
The Feb. 20 deal is the first purchase of a white-label social network tool provider in 2008, a year analysts say is ripe for consolidation in the market for social networking tools for businesses.
Social networks such as Onesite, Pluck Media, Pringo Networks and Sparta Social Networks are nicknamed "white label" because they sell their technology to media, retail and other consumer-oriented businesses, which can then brand the technology as their own.
Technology from these vendors usually includes the ability for media outlets to let their customers create blogs, wikis, discussion forums and even mashups of multiple applications.
Media outlets leverage these social technologies to build stickiness, or to keep consumers coming back to their sites and staying longer. The more users stay on the sites, the more apt they are to click on digital ads, driving revenues for publishers and search engines.
Onesite President and CEO Bob Crull told eWEEK that Social Platform, based in Los Angeles, will extend the Oklahoma City, Okla., company's footprint on the West Coast, increasing its competitive advantage within the entertainment and technology sectors. For example, Onesite will now give Los Angeles-based Pringo more competition.
Social Platform CEO Eric Schlissel is joining Onesite as vice president of the company's Western Region in Los Angeles, along with one sales representative. Two developers will remain in Social Platform's Seattle office.
With more than 1 million users on more than 2,000 communities, Onesite primarily caters to media clients and Fortune 500 companies, including Univision and Clear Channel Communications.
In 2007, Onesite totaled $5 million in sales and expects to hit the $30 million mark within the next 22 months. Crull said Onesite's largest growth area this year will be in radio networks and print media.
Forrester Research analyst Jeremiah Owyang said the white-label social network space will likely see a repeat of the portal space from the late '90s, when companies creating commodity software to publish Web sites feasted on smaller vendors to get better technology and talent, and to grab more customers.
These vendors were then grabbed by super vendors such as Oracle, BEA Systems and Sun Microsystems. This portal space sorted itself out; white-label social networks need the same correction, Owyang said.
"The space is kind of a mess," he told eWEEK. "There's too many players and clients are confused. The industry should embrace the consolidation."
The analyst said Interwoven, EMC, Microsoft, IBM, Google and other larger vendors will likely move in to pick up social networks that gain some traction. "Rather than build their own, they might as well acquire a company," Owyang said.