Innovation, new markets to help social media websites move ahead

It is now official! The credit crisis plaguing the world has forced the US economy into a recessionary mode. Layoffs, credit squeeze, lower spending, credit default, slowdown of new initiatives by firms are some of the trends emerging today.

Under such a scenario when corporate spending is expected to hit rock bottom, sunrise industries in the Web 2.0 domain such as social media, networking and community websites are likely to face a slow down owing to lower interest from venture funds.

The scenario looks bleak in US and Europe as consumer spending is going to touch rock bottom very soon. It is also estimated that a substantial number of credit card default in the US are expected to surface in the current quarter. Hence it is very clear that thanksgiving and Christmas this year will be lackluster.

The “me too” factor aptly visible in the Web 2.0 domain is scaring venture funds away. With easy funds moving away from e-ventures on the back of credit crunch, social media bigwigs such as facebook, myspace and many others are forced to spread their wings in emerging economies such as India. Indian’s GDP is estimated to grow between 7-8% in the current scenario (an attractive growth rate when compared with that of US, Europe and a few Asian giants like Japan amidst the credit crisis).

Asia is turning out to be an attractive “consumer destination” with India leading the way, closely followed by China. Big global brands are closing in on growing economies in Asia to cash-in on the ever growing consumerism. Likewise social media and community networks are getting increasingly attracted to the large market in India owing to the large consumer base and strong economic fundamentals.

Facebook for instance has already launched an India dedicated website to tap the growing need of Indians to socialize on the web. The potential is huge, scope of business is mind-boggling, and the speed at which Indians are adapting the Web 2.0 technology is amazing.

Facebook is not the only community networking website to tap the growing potential in India. There are others in queue to tap the market potential in India amid the gloomy economic scenario.., the world over. Let me not disclose the names of other social media bigwigs venturing into India and china. We will wait for the announcements to come. Till then watch this space.