I started this post last night, so I guess it’s not “new” anymore — ShyCast was featured on TechCrunch yesterday (man, I’m resorting TechCrunch news), but I thought this was an interesting company with some potential. ShyCast is another social networking site that helps marketers to reach new audiences (hopefully). It aims to generate revenue via company sponsored contests where the community decides the winners in a transparent fashion. For instance, maybe a Coca-Cola contest for most creative way to drink a can of Coke where users can vote on the top videos. Perhaps some web 2.0 companies will sponsor a “best widget” contest for developers who are looking to build something cool & make a buck in the process (if they win). There are lots of possibilities as the site tries to capitize on the explosion of social networking, video, and user-generated content.

There are still some VERY large obstacles to success — the most notable being attracting an audience large enough to make the social network useful. Before ShyCast is really successful with reaching critical mass, I’m betting Myspace or Facebook (who already have massive audiences) will build a simple add-on to their site to tap this revenue stream. One of the commenters on the TC post, Kelli Mack, mentioned that there is probably money to be made in helping local business promote (raise awareness for) their product to individuals who live in the area. I certainly agree. It sounds like ShyCast have several nationwide companies onboard, such as Ikea — but I think the real opportunity lies in the local markets. Target cities 1 by 1 until the site is fairly well-known and successful in 10, then grow the product virally from there. Focusing on national advertisers and spending huge amounts of advertising dollars to draw a national audience is NOT the right way to go about spreading awareness (in my opinion). Another obstacle is whether this will even be useful to a large number of users? How many people will really create videos and participate in these contests? I don’t know if I’m convinced unless ShyCast creates an application that adds value to someone’s everyday life — not just people who want to spend their free time participating in contests sponsored by large brands (we’ll see how much the winners make – people will do anything if the potential payout is high enough).

I’m not saying they can’t make it happen, but it’s going to be a difficult road to the top…