The story as of today is that its Orkut vs Facebook for the control of the offline friends’ segment (A) in India; and it is the smaller Indian ones who are warring among themselves for the online friends segment (B). This segment does not have the lock-in effect of a ‘real’ friends’ network, hence traffic is extremely fluid among these Indian sites. Registrations into the site do not necessarily convert into long term traffic or activity. Hence they need to work that much harder to sustain traffic than a biggie like Orkut or Facebook.
Before we move on to these Indian sites, let us try to understand how the Orkut vs Facebook war is poised in India. 
Round June 2008, Orkut saw a sharp fall in its traffic. During the same period, Facebook had a slight, but sudden jump in its own reach. During the same period, Facebook had a slight, but sudden jump in its own reach.
Putting 2 and 2 together – we can wonder if this was the time facebook stormed the Indian cyberspace capturing the ‘urbane’ and ‘globalized’ sub-segment of the market rather quickly. Obviously Facebook’s urban appeal was its brand essence. However Facebook kept penetrating into the Indian market because of yet another magnificent marketing strategy - the quality and quantity of its activities, applications which were used to engage the user much more than any other site.
Facebook’s unique combination of brand essence and its applications is a social networking model of the Ratchet Effect. For those of you who are not from a marketing background, the Ratchet Effect says that the combined approach of running a series of Advertising and a series of Promotions yields greater results than running either, on their own. Any network which is stable and sufficiently large in number works as a continuous viral advertisement of the site and thus seamlessly contributes in building the brand. Both Facebook and Orkut had this form of advertisement going for them. What facebook did was to invest in the user engagement component of their activities/applications as promotions – just like a ‘sale’ in a retail store. This Orkut had never done. End of it, Facebook had a combination of advertisement and promotion, while Orkut had only the advertising of its strong stable networks. The Ratchet Effect graph below explains Facebook’s penetration into the Indian cyberspace in spite of Orkut having the first mover’s lock-in advantage.
Let us recap our Ratchet Effect scenario once again wrt the definitions of social networking in my previous scrap. We saw that,
1. Building strong Offline friends Networks (A) contribute as an advertisement.
2. Building Actives and Applications (C) is similar to promotions.
Note: Online Networks (B) and Activity based networking (D) do not have the stability or credibility for viral brand building and hence cannot be termed as advertisement nor do they involve quantum investment against a specific objective to be termed as a promotion.
Lets kept this thought on hold for some time, and see what the Indian sites are up to in the ‘online’ or virtual friends networking (B) segment. As of today, Bharatstudent.com is the leader in terms of traffic and they have been consistent for quite some time. However sites like Ibibo and Indyarocks are also doing well and hold a lot of promise. Ibibo has been investing a lot of energy in marketing, technology and applications; while Indyarocks achieved significant growth by introducing some smart ways of engaging their users. Backed by the Reliance muscle, another buoyant site is BigAdda as it owns a coveted Big B blog and a similar-to-Orkut interface. Fropper is the only dating specific site which is doing relative well. All these sites can be clubbed together as centrally placed in this segment. There are tons of other sites like Apnacircle, Blingbees, BhojpuriExpressNetwork, 26thJanuary, Buzzintown, CollegeMantra, CommonFloor, Desimartini, Doctorshangout, FunAdvice, Hooeey, Indiaheartbeat etc. which have positioned themselves in the niche and cater mainly towards active based networking for virtual people only.
Generally speaking all these sites have invested greatly on building activities (C) and networks round these activities (D) either to hold on to their traffic and/or to keep getting newer people to replenish the loss due to the fluidity of the market. Looking at this from the perspective of the Ratchet Effect model we created for Orkut and Facebook, we see that most Indian sites do not have any brand essence generation as they are weak in stable and strong networks. But they make regular investments in activities or promotions. This is how the graph in a scenario which has no advertisement but has promotions would look like. 
Though the advertising component of the above graph will not be zero in the real world as there will be some brand building exercise or the other taken by the company – the ‘free of costs’ brand value generation from its own networks is next to negligible. And it obvious from the Ratchet model, that investment only in the promotions (read activities and applications) will do little unless they innovate and start creating stable networks.
So what do we learn from this rather theoretical looking graphs? Three things clearly,
One: Indian companies should not be investing in activities and applications just because it can be one way of attracting new traffic. But instead they should strategically use it to engage its existing user base. Success is proven to be much higher this way.
Two: For any two Indian sites making similar investments in promotions, the growth would be higher for the site which markets its brand better- either through more stable networks or through real world brand building, ad/pr campaigns etc.
Three: Without entering the offline marketing segment, it would be almost impossible for Indian sites to match the growth or penetration of Orkut or Facebook. Unless of course it tries to matches the brand essence of Orkut and Facebook by investing in tons of dollars.
So we come to THE million dollar question? How would a small Indian site build a stable, strong offline friends’ network when two BIG sites are already locking in the entire market? Hmm.. that’s for the product managers of these companies to ponder upon. But for my two penny’s worth, my advice to Indian SNS would be to actively promote vernacular language networking! That can be one way to pull people out from Orkut and try to be the first mover when it comes to building vernacular ‘offline’ friends networks. With the investment continuing in activities/ promotions – the Indian sites can have their very own Ratchet.
More on this laters!!
