At least that's what Scott Tilton, president and chief executive of Loop'd Network, thinks when it comes to social networking sites. Loop'd, a San Diego start-up with 24 employees, is aiming to be the MySpace of the action-sports world.Sure, MySpace and Facebook have tens of millions of subscribers, Tilton acknowledged. But he said small, targeted social network sites such as Loop'd are the wave of the future as advertisers look for ways to reach niche markets.
"Everything is changing," Tilton said of the Web landscape.
No doubt advertisers are enamored with MySpace and Facebook. According to eMarketer, which tracks online media, companies will spend $1.6 billion this year - a 69 percent increase over 2007 - to advertise on social networking sites.
Although the bulk of those ad dollars will go to the social networking behemoths, smaller sites such as Loop'd (loopd.com) are seeing their share of the market increase. In 2007, 8.2 percent of social networking advertising was on niche sites, up from 7 percent in 2006. That number is expected to grow to 10 percent in 2008, said eMarketer.
Targeted social networking sites are popping up all over the Web, covering such topics as divorce, pets and shopping.
San Diego resident Yana Berlin has started a site called fabulously40.com, catering to women older than 40. "When I go to MySpace or Facebook, it's about everything," Berlin said. "I get lost."
Her site, which is in beta testing, will cater to a demographic she calls a "marketing heaven," because many older women have time and money to burn.
Tom Nelms, vice president of business development for Loop'd Network, said the appeal of Loop'd is also about the demographic it attracts, namely the often tough-to-reach youth market.
"These key brands are learning they have to go where the kids are, and that's social networking sites," Nelms said.
Loop'd has 240,000 subscribers, a pittance compared with Facebook's 59 million subscribers and MySpace's 110 million. Still, Tilton said the site has grown by more than 20 percent since it officially launched in November and has been able to lure advertising from some of the biggest brands in action sports, including Oakley, retailer PacSun and Monster Energy drink.
Patrick McIlvain, global sports marketing director for Oakley, said the promotion it's running on the Loop'd Network is one way for the company to tap into the grass roots of the action-sports market.
With the help of Loop'd, Oakley is inviting amateurs to submit videos of themselves doing their best tricks in six different action sports, including skateboarding, snowboarding and motocross. In the past month, about 1,500 users have submitted videos of themselves that have been judged by other users and Oakley employees as a way to reward emerging talent and foster good will among action-sports enthusiasts.
"We're not trying to attract everyone. We are trying to attract the most passionate about the sport," McIlvain said. "If you want to be an authentic brand in those core sports, you have to give back."
Tilton said these types of marketing efforts work better on niche sites and help avoid some of the problems that have plagued advertising efforts on larger sites.
In November, for instance, Facebook launched its Beacon program, which alerted users' online friends to their Web purchases as a way to virally promote those products. After privacy concerns caused a public outcry, Facebook apologized and made it easier to opt out of the service.
Tilton, 31, said the key is to make the promotions voluntary and part of the overall experience.
"We want it to be purpose-driven and not cheesy," he said.
Loop'd Network is the expansion of Tilton and co-founder RJ Kraus' original business called Sponsorhouse.com, which was designed to match athletes with sponsorships.
The two former motocross enthusiasts came up with the idea in 2001 when they realized how difficult it was for budding athletes to connect with potential sponsors. To promote the Web site, the two friends took all their savings and a logo-laden RV across the country to various sporting events. They ended up in San Diego because of the many action-sports companies in the region.
Building on the Sponsorhouse.com foundation has been the key to attracting new users and advertisers to Loop'd, said Kraus, 30, because the company had an established reputation.
"Sponsorhouse is where we started, and it really attracts the competitive athlete, and it really attracts the fans," he said.
Tilton and Kraus hope the combined companies' reputation will help them fend off competition from other small sites, action-sports companies and larger sites that may try to segment their users around different interests.
Loop'd has ambitious growth plans, but so far it has relied on angel investing to fund its expansion.
Although there is plenty of potential competition, building a niche social networking site is easier said than done, Nelms said.
Kraus pointed to Freestyle, an action-sports company that makes watches, which tried to run a sponsorship contest on its own site but couldn't get enough video submissions, only about 50 a month. Since Freestyle moved that promotion onto the Loop'd Network on Nov. 29, it has attracted more than 500 submissions.
"By trying to do that on their own site, they were an island," Kraus said.