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27 February 2016

Are Social Media a passing phase?

Tag(s): Marketing, Worshipful Company of Marketors
When planning the Marketors’ events programme for 2016 I wanted to run events that would engage and stimulate people as much as possible. While I enjoy and learn from lectures and seminars they can tend to be one way in communication. I recently attended one, not a livery company event I hasten to add, where the lecturer delivered his lecture, dominated the panel discussion which followed, and left only ten minutes of the allotted 45 for questions. He took just two, one of which was a speech. Delegates left the room somewhat deflated despite the excellence of the earlier lecture.

Therefore I came up with the idea of debates along traditional lines. Liveryman the Rt Hon Cheryl Gillan MP, who chairs the Marketing Debating Group in the House of Commons, agreed to be the Chair of the first two of a series of three debates. I asked the Thought Leadership Group to come up with suitable topics of genuine controversy in the marketing arena and added a few of my own. I then asked Cheryl to choose from the list. She also helped with the wording of the motion.

For the first venue I chose the Winston Churchill Room in the English Speaking Union (ESU) at Dartmouth House in Mayfair. It’s a lovely house that was built in the eighteenth century by George Washington’s brother at a time when that part of London was largely rural. The ESU was founded after the Great War to help promote international understanding through the medium of the English language and it runs a great many debating competitions for students of all ages. Churchill was one of the early Chairmen and I like to think that he got the idea of his History of the English Speaking Peoples from his association with the ESU. I have been a member there for many years and it’s one of my favourite places in London.

We assembled a fine group of speakers to debate the motion the “This House believes that Social Media are a passing phase”. Cheryl’s style is to take a vote before the speeches as well as after to see if the debate causes any movement of views. The first vote showed the audience overwhelmingly against the motion with just one person supporting the motion.

Thus encouraged Liveryman Professor John Egan rose to propose the motion. He said that technology is a means to an end, not an end in itself. Social media are flawed and transient. The well-known platforms of today were only started a short time ago, Linked In in 2002, Facebook in 2004. Facebook now claims 1.3 bn users while Twitter, Linked in and the like are around 250-300m. In China there are 650 million users, 90% of the online population compared with 67% in the USA.

Social media cause serious psychological problems, especially with the young who are losing the ability to learn and read social clues. 42% of them have suffered from cyber bullying, sometimes including death threats, and they are increasingly sleep-deprived causing health and behaviour problems. Social Media also reduce productivity, in the UK by an estimated £1.8bn.

John reminded us of previous Social Media platforms that had their day in the sun but have already crashed to earth. Second Life at one time had 20 million users and created an alternative economy in which a few people made real fortunes out of trading imaginary goods. But by 2007 it was already losing its appeal and has now dwindled to below a million users.

My Space gained 1 million users in its first month in 2002, was bought by News Corp for $580m in 2005 and in 2006 was the most visited site in the US. But by 2009 it was sold for $35m, a loss of 94% and by 2015 had fallen to the 982nd most visited site.

Friends United was founded in the UK and in 2004 had 11 million users. In 2005 it was bought by ITV for £120m but later sold to DC Thomson for £25m, a loss of 79%. Just last month it closed down.

Of those that have established themselves there are worrying signs. Facebook‘s core user demographic of 25-30 year olds is reportedly reducing their usage while usage is increasing only among the silver demographic. On 5th February, just three weeks ago,  Linked In’s share price crashed by 44%, costing investors $11bn. According to one analyst weak guidance on the Q4 earnings call was not the only cause. Multiple counting appears to have resulted in the overstating of featured posts by a factor of ten. LI’s own reported page views are unverified and widespread fraud in social media advertising is suspected.

John ended on a positive note that while social media are flawed and have considerable downsides something else will develop free of these flaws to take their place.

Liveryman Annmarie Hanlon rose to oppose the motion and stated that Social Media are not a passing phase but a game changing business system. Social Media had already been around for twenty years as the first platform, 6 Degrees was launched in 1996. She admitted that there is no single definition of Social Media but then you could make the same point about Marketing. She referred to Ansoff’s seminal 1957 article[i] on Strategies for Diversification and gave examples of businesses using social media for each of these.

As an example of market penetration she quoted Marks & Spencer. As an example of market development she quoted  a surfing dude in Australia who experimented with filming his own surfing and now sells GoPro to produce video content of surfing Sky Diving and the like for YouTube and employs 1450 people. As an example of product development she told us that Walkers Crisps research ideas for new flavours among their Facebook fans. And as an example of diversification WH Smith presents itself as Funky Pigeon on Pinterest.

Annmarie said that traditional advertising media were in trouble. The unlamented FHM and Zoo closed down blaming loss of advertising revenue. The Independent has now closed its traditional paper version and will only be available online. She confidently predicts that The Guardian will follow it in less than four years. Advertising on Twitter is much more efficient as all respondents can be tracked. Annmarie also gave the example of RS components that now stimulates user generated content to get customer feedback on its widgets.

Cheryl then opened it up for speeches from the floor. To my delight there was considerable engagement with several good points made. Although the initial vote had been overwhelmingly against several concerns were expressed about issues such as privacy and being stalked by advertisers. People want to regain control of their lives. One guest told us that she was helping some NHS Trusts recruit nurses using sites like Mumsnet with excellent results. Liveryman Sue Griffin is a Trustee of The Donkey Sanctuary whose Facebook site has 250k followers. It has successfully raised money for new equipment through crowdfunding.

The intrepid single supporter of the motion told is why. He found social media actually anti-social in that it created barriers between the generations. He thought most of it to be trivial and its overall impact risked the destruction of our society.

I made my own contribution saying I could see both sides. The Social Media business model is fundamentally flawed. When the user does not pay for the service then you are the product. Your data is being exploited for the commercial gain of other corporations. As networks they break the principle of networking in that they are closed. Long term networks like the postal service or the telephone system were developed so that it became possible for a person to send a letter or make a phone call to another person virtually anywhere in the world. However those of us who choose not to be on Facebook cannot reach or be reached by those who are. As for China its systems are mostly closed to it.

On the other hand my friend Freeman Roy Schneider, who I proposed for membership in 2013, told me that in the resort hotel he owns in Honduras he now only uses Facebook for advertising. He asks them to identify people who have been on scuba diving holidays recently and live near cities that have direct flights to Honduras. He can then target them directly and gets an excellent, low cost response.

Freeman Nikos Kokkinos then rose to second against the motion. He told us that the internet is around people not things. The concept of social media is not new. Cicero would copy his correspondence with Julius Caesar to others as one might tweet today. Martin Luther published his 95 theses of protest against the Roman Catholic Church on the door of Wittenberg in the manner of WordPress. In the coffee houses in London in the 17th and 18th century there was a collision of ideas leading to the formation of the London Stock Exchange and Lloyds Insurance. As for the bad side there were warnings about the risks to health of young men visiting these coffee houses.

Dr Kate Armstrong, a Senior Lecturer at Greenwich University, rose to second the motion. She said that while noone could deny the popularity and high valuation of these social media platforms today the principle of adoption and then abandonment was well proven and we had seen the rise and fall of many similar sites.

She quoted from a study by researchers at Princeton University published in 2014.[ii] This compared the development of Facebook to that of a virus like bubonic plague. It had now peaked and was already in decline and would die out by 2017.

She confessed to being an active user of Social Media, enjoying the promotion of her own brand. But she was concerned that over time it was leading to the commoditisation of culture and consumerism.

Cheryl then summarised the arguments of both sides and the contributions from the floor. Her mastery of the arguments was most impressive and very fair although she is an inveterate user of Twitter herself relying on it now for most of her news and for her own communication to journalists.

She then took the vote. And it had moved. One more person voted for the motion but several abstained this time. In talking to some afterwards they told me that while they still opposed the motion they were wavering towards the end.


[i] Ansoff, I.: Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5, Sep-Oct 1957, pp. 113-124
[ii]  John Cannarella & Joshua A. Spechler Epidemiological modeling of online social network dynamic Department of Mechanical and Aerospace Engineering, Princeton University, Princeton 17 Jan 2014
 
 
 
 
 




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