The Netlog file

Fierce competition from ever-expanding Facebook means Belgium’s social networking pioneer Netlog is losing ground at home. But CEO Lorenz Bogaert is fighting back by heading east

 When Facebook founder Mark Zuckerberg was still in high school, Belgian entrepreneur Lorenz Bogaert’s social network was already out there. Except nobody called it a social network at that time. Redbox, as the site was called in Belgium (in other countries, it was branded Facebox or Bingbox), was a ‘community site’, where friendships and alliances were forged, unhindered by the restrictions of distance and anonymity. More than ten years after Facebox’s launch in 2000, it’s still not clear whether Netlog, the umbrella brand under which Bogaert and co-founder Toon Coppens relaunched their network of sites in 2006, is a ‘real’ social networking venture. It’s typically mentioned and studied in almost every market research report covering the social networking space, and industry analysts unanimously refer to it as a social network. Only the company itself does not. “Netlog is not a social networking site,” says Inès Van Lautem, HR manager of the Ghent-based company and confidante of Bogaert. “Not when you compare it to Facebook, anyway. Netlog’s purpose is to allow users to make new friends, have a good time with them online, and share media with them - playlists, online video, and the like. A typical Facebook user maintains their inner circle of friends through their profile. They have no interest in expanding it.”

For a website that’s not even a social network, Netlog has performed remarkably well in that market. The company holds firmly to its number of 85 million registered users, which - if it doesn’t use that term too lightly - puts it way behind social networking giants like Facebook, LinkedIn and Twitter, but still makes them a prominent force in the market. They’ve also successfully localised their site to every country where Netlog is available - a huge asset in the European market with its linguistically and culturally diverse population. Netlog touts a heavily localised presence in 28 countries(most notably in Europe, but also in Indonesia, Japan, Korea, Russia and Vietnam),offering 37 language options. Even after the big-name brands started booming, Netlog did well. Especially, of course, in its home market, where it still holds 1.6 million user accounts, but also in most other European countries where it holds millions of accounts too.

The trick to staying afloat after the Facebook tidal wave swept over the world was to focus on younger netizens. An average Netlog user is between 14 and 24 years of age. “They took that market at just the right time,” says Steven Van Belleghem, managing partner at internet consultancy firm InSites. “When Facebook was really booming, it was mostly attracting people in their thirties and older, who didn’t mind using an English-language site. Up until 2008, Facebook didn’t have Dutch- or French-language options. Netlog did, and this accounted in part for the relative success it had in the youth market at that time. Younger users were still looking out for a social network to call theirs. Then a few youthful opinion leaders took to Netlog, and the rest followed them there.”

But there’s still trouble ahead for Netlog’s Belgian internet presence. There are a growing number of indications that the youngsters, who used to be very active Netlog users, are now flocking to Facebook. According to recent figures from Belgium’s independent media tracking body CIM, Netlog attracts about 200,000 daily visitors. A year ago, it attracted approximately 260,000, and in 2008, the site welcomed 500,000 to 600,000 daily users. A steep fall, in just a few years. At the same time, Facebook’s Belgian market penetration, which today stands at 4.1 million users, is now more than double that of Netlog. “We’re aware of our changing market situation,” Van Lautem responds. “That’s why we’re expanding our brand into new territories. We’ve opened a new sales branch in Dubai, and are working to build our brand in the Middle East’s emerging internet markets. Internet usage is just starting to take off there. People haven’t really chosen a social networking brand yet.”

It’s a typical case of the so-called Blue Ocean Strategy, a line of market management teaching coined and studied by international business school INSEAD, which also worked well for brands like Nintendo and Cirque du Soleil. The aim of the strategy is to steer clear of the ‘red ocean’ - your existing market when it becomes saturated and rife with competition, making it difficult to survive (red = the colour of blood). Nintendo and Cirque successfully found blue oceans, where the blood of dead competitors doesn’t stain the waters yet. Nintendo did so by branching out from hardcore video gaming nerds to players who were looking for a more accessible form of electronic entertainment with the Wii video game console. And the acrobatic dance show brand expanded from their limited foothold inside the circus world to the general entertainment market, with shows in prominent Las Vegas casinos.

Those are the seas where Netlog is headed too with its recently opened Dubai office. “It’s a sound strategy for them,” says Van Belleghem. “What they’re trying to do there, it certainly can be done. Facebook doesn’t rule the world, yet. In Brazil, Orkut is the leading social network, not Facebook. In Eastern Europe, Vkontakte is the market leader, not Facebook. If they build their brand momentum there now, they really could succeed. But they should always be mindful of Facebook’s continuing growth, even in those markets. When people take their first steps on the internet, they go to social media brands that are well-known, because they know they will find their friends there too.”

But Bogaert has more aces up his sleeve. Simultaneously with its expansion to Dubai, the company retooled its organisation and changed its name again - this time to Massive Media. That umbrella name will now cover the Netlog business, as well as a number of new internet brands in the offing. One of them, online video gaming subsidiary brand Gatcha!, is already getting up to speed, and the company has two more web initiatives running in beta test: Ekko, a live videoconferencing tool, and Kezoo, a site where a daily raffle organised by advertising sponsors results in a daily winner. Their fourth new venture is Twoo, a new sort of dating site where singles meet their soul mate by playing online games and participating in other sorts of online activities. A bold move, especially in the heavily saturated online dating market. “But apparently, it’s not nearly as saturated as everybody thinks,” Van Lautem says, firmly. “We’ve crossed the threshold of one million active users, and moved into Europe’s top-ten of dating sites in just three months. You don’t get those kinds of results in a market that’s in trouble.”

Netlog in numbers

 85 million

Number of Netlog users worldwide

28, and 37

Number of countries Netlog has a localised presence in, and number of available languages, respectively

€11 million

Turnover in 2010

35

Age of founder and CEO Lorenz Bogaert

€310,000

Net profit in 2010