Niche social sites seek growth under Facebook's shadow

By S. John Tilak

BANGALORE (Reuters) - What do you do when you're a small online social network trying to compete against a behemoth like Facebook?

The answer may be to try to carve out a separate path by becoming a niche website for a specific audience base that advertisers, hopefully, want to target.

While this is no easy challenge -- given Facebook's intention to become everything to everyone -- some small social media sites appear to be finding their footing and growing at rapid rates, albeit from a very low base.

Ning.com, which allows users to build their own social networks, opinion aggregator Sodahead and fansite Fanpop have shown triple-digit growth and notched up a few million users very quickly.

"There will always be a place for niche sites that have a focus, whether the focus is gaming, or a regional focus, or a functional focus like Twitter, or a vertical or demographic focus," Gartner analyst Ray Valdes said, though he added that does not see them becoming as big as Facebook.

Facebook's popularity with professionals and older users might be putting off some younger users, according to Chuck Schilling, a director at Nielsen Online.

"The original people who were on Facebook -- those of college age -- are becoming a bit disenchanted and will soon find their own outlets, now that their parents are coming to Facebook in droves," Schilling said.

"People are branching out from the popular sites. They are exploring," he said. "There's a lot of room in the game."

Advertisers are spotting an opportunity with smaller sites.

"The promise of niche social networks and social networking applications is a more targeted audience around a specific interest that will be extremely attractive to advertisers seeking relevant content and conversations against which to place their ads," IDC analyst Caroline Dangson said.

BIG GAP

Clearly, the gap between the biggest social networks and the rest is huge.

Facebook had about 77 million U.S. users in June. With the exception of Facebook, News Corp's MySpace and privately held Twitter, only a couple of social media sites had more than 10 million U.S. users, comScore data shows.

But there are many rapidly growing sites with 2 million to 10 million users, including Ning, Sodahead, Fanpop and Funadvice. And steadily growing in double digits are older sites like Hi5, Digg and LinkedIn.

"The fact that this is such a growing space overall does enable other players in the space to ride the coattails of some of these bigger sites," comScore analyst Andrew Lipsman said.