Monetizing social networks via increased ecommerce yield

I was in Palo Alto a few weeks ago and decided to check my Orkut account (for those who don't know, Orkut is Google's social network which, though not popular in the US, is the Facebook of Brazil).

Anyway, when I logged on, I was shocked to see some primitive user-generated ads in place of the normal professional advertising in the upper right corner of the home page.

Though the service has not been launched yet in Brazil, Orkut is going to enable users to create and promote things to their networks of friends.

This is an important development for several reasons.

First, it marks the first time in recent memory that Orkut has launched something innovative, rather than merely playing catch-up to Facebook.

Could it be that Google is finally putting some effort into Orkut, rather than treating it like an unwanted step-child?

Second, and more importantly, this is a monumental breakthrough in ecommerce.

One of the largest hurdles to overcome in ecommerce has traditionally been the trust factor, specifically, how do you get users to trust their counter-parties?

But, by enabling users to market to their existing social graphs, you render the trust factor almost obsolete due to Lessig's third law governing human behavior, social norms.

So, congratulations Orkut team, it seems like you have come up with a web native way of radically increasing ecommerce which should, in turn, answer that age old question, how do you monetize social networks?! 

Comments

[Americo]

Nice post, Simon!

I've heard from friends at Google that their Brazilian team is sweating to make money out of Orkut... so this is probably a nice initiative in this direction!