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More Consolidation in the White Label Social Networking Space: Mzinga Acquires Prospero

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White label social networking provider Mzinga, which officially launched at TechCrunch Boston this past November, has announced its acquisition of Prospero Technologies, another social networking company that we covered in a roundup awhile back.

Mzinga has also raised an impressive $32.5M in funding, part of which has gone towards acquiring Prospero, and part of which will be used to expand the business, which post-acquisition brings in over $30M annually from 125 enterprise customers.

This acquisition news comes on the heels of another acquisition in the space – that of ONEsite acquiring Social Platform two weeks ago. The combined activity suggests that the very fragmented and crowded white label social networking space has begun to consolidate.

I had a chance to get Forrester analyst Jeremiah Owyang’s thoughts on where this market is heading. He keeps a close eye on all of the white label social networking players and currently counts over 60 of them, with more joining the fray each week.

Given that the software technology provided by these companies is mostly a commodity – and that ordinary customers can’t distinguish between the many variants – Owyang predicts that many companies will combine and/or partner to form larger entities that deliver not just software but a slew of other value-add services.

These are services that can include hosting, metrics, and widgets, which make for more complete software solutions. But they can also include ongoing consultation that helps clients plan and execute more effective online community-building strategies. As Owyang puts it, successful companies “will be strategic marketing or enterprise partners who can share the goals of their clients’ business objectives.” They will also provide communities that not only integrate seamlessly into existing corporate websites but also pervade consumer social networks like Facebook and MySpace through the deployment of widgets.

In addition to intra-market acquisitions like those of Prospero and Social Platform, Owyang sees major ERP, media, and web companies getting involved through acquisitions and partnerships. The movement should be reminiscent of the consolidation that took place in the CMS industry during the late nineties.

He also predicts that the character of these services will change in time, with a movement away from generic white label solutions and towards packages that address well-defined verticals such as sports or video. The companies will also fall into camps that serve either enterprises who want to develop communities internally or clients who want to leverage communities for marketing purposes.

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