Cyworld: User Segmentation and Targeting
TMBA BBUS 506 A
Michael Cavelero, Joel Engstrom, Nesreen Zadah, David Tobey

4/19/2010

Introduction Smoke signals, telegraphs and telephones: communication in the modern world evolves quickly. The 21st century has been no exception. The rise of the internet heralded the growth of so called “online social networks” or simply “social networks” – websites where individual users carved out their own niche. Many of these networks have become household names to Americans: MySpace, Facebook, Linkedin and more. For many Koreans between the ages of ten and thirty, social networking has meant one thing: Cyworld. Cyworld, a small social networking company, was founded in 1999 by a group of MBA students in South Korea. The network was revolutionary, pioneering user experiences, such as community gifting and public threads, that other networks would adapt years later. Cyworld underwent rapid growth, and in 2003, was acquired by SK Telecom, a billion dollar Korean mobile communications enterprise. Cyworld employed a relatively unique revenue model of selling virtual items (“microtransactions”) to over twenty million users. However, by 2006, the social networking market was changing rapidly. Surveys and forecasts reflected declining activity and loyalty among current users. Additionally, an increasing percentage of users simply took advantage of the free services that were offered. Hyung-Chul Joo, as newly appointed CEO of SK Comms (the online services division of SK Telecom), is faced with creating the vision for what Cyworld will become. Development of this vision requires not only a clear understanding of what Cyworld is today and how it got there, but also of how users extract value from Cyworld. Defining value creation, identifying market segmentation, observing their values and understanding Cyworld’s role in delivering those