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24 September 2011

Is Social Media a Fad?

Tag(s): Marketing

I think I “get” social media, but then again I don’t “get” it. I “get” it in the sense that I know man is a social animal and that social media give him a way to keep in touch with countless “friends”. Where I don’t “get” it is in the sense that there is an overwhelming business case for all of this. And if there is n’t then it has a limited future because time and again we can see that people don’t like to pay for all the stuff on the internet. What makes Google impressive is that it generates huge advertising revenue by providing unmatched access to data.

In the last week or so I have attended a number of seminars and lectures on the subject in an attempt to make sense of it. In the process I have learnt three things:

1.       A lot of people are sceptical like me

2.       A lot of people completely disagree  with me

3.       Therefore  the jury is out

I’ll make another confession.  Not only do I not have a Facebook account, but I’ve never even seen a page of Facebook except when copied as an exhibit into another location. I have seen the film The Social Network and even more importantly have read the book on which it is based, The Facebook Effect by David Kirkpatrick. The film is well written by Aaron Sorkin, the writer of the acclaimed TV series The West Wing, but it focuses more on the drama of the nerdish Mark Zuckerberg and his attempts to keep control of his fast burgeoning creation at the expense of friendship and perhaps of previous agreements with others who were involved in developing similar ideas.

The book is much kinder to Zuckerberg and gives him credit for some remarkably far sighted and intelligent moves, particularly in his early recognition that he was extremely inexperienced in business and so brought in much more experienced players either to act as advisers or NEDs or even as senior executives . But the book also makes clear that Facebook has very often got into difficulties over its attitude to privacy and on these grounds alone I reject it for myself.

But as a Marketing man I want to know why so many of my colleagues believe that they must have a presence on Facebook and more and more of marketing expenditure goes on social media. And it seems that many of these colleagues don’t know themselves. I read that over 50% of marketing executives who invest in such practices don’t know what return they get from it.

The argument is that the world has changed. Companies that seek to control communications will fail. The power is with the consumer (as it always was) but s/he now wants to control the communication too. S/he wants to be able to comment on a brand, criticise a brand etc all on the internet in chatrooms or now on the pages of Facebook. Some brands “get” it and actively manage the pages. Others take a presence but don’t keep it up to date or react quickly when they are under fire. One expert I met last week believes that you can show cause and effect with those companies who manage their online presence well and are also those who are increasing profits while others who take a more traditional approach are losing money. I’m not sure if the causative effect is proven here or whether it is just a correlation that one often sees with progressive companies. Those who are progressive and take the lead in a range of policies are more likely to be ahead of the agenda and win in the profits battle too.

What this gentleman more convincingly said is that the more active companies produce considerable content to illuminate their followers and they have armies of bloggers who write in multiple languages around the clock to bring news and stories to their readership. Here not only is a page on Facebook de rigueur, but also an active Twitter strategy.

So here is another confession. I do have a Twitter account but I’ve never used it. I opened it to reserve the name in case it became something of interest to me. But it never has. I have no interest in the banal tweets that seem to occupy the airwaves. The absurd celebrity culture means that teenagers follow the most asinine comments of their idols just because it gives them a thrill to know that some talentless teenage pop star is about to go shopping. However, half of tweets worldwide, some 25 million per day, contain a URL. i.e. are referencing some content on a website or a social media site somewhere and bring it to the attention of a wider audience. That is more interesting.

As well as the big two, Facebook and Twitter, there are many other social media networks that are more focused. Some of these are also quite interesting. Yet another confession. I do have a Linked in account, though I don’t pay for it. I have about 800 contacts and if Linked in had been going 40 years ago when I set out in business I guess I’d have at least 10,000. I have collected nearly 5000 business cards and did not carry one myself for the first ten years of my career. I have had many colleagues with whom I have not bothered to exchange business cards.

I have found Linked in useful as a way to keep in touch but more usefully to rediscover old friends. I have just set up a Skype call to America with an old advertising friend with whom I have not had contact for over 30 years. When I wanted to found a Sony UK Alumni Group I used Linked in to find the potential members and then organised a successful dinner for nearly 100 people.

But this brings us back to the social motivations. I enjoy the fact that Linked in in keeps me in touch with former colleagues. Others will use it to try to get work. Both are legitimate interests. But Linked in can only make money if it can persuade its users to subscribe for these benefits, a dubious proposition or persuade advertisers that it is worth advertising to such a community on such a medium. Linked in was floated in May 2011 and on the first day’s trading was valued at 300 to 600 times earnings.

This indicates we are back in a bubble like 1999. Facebook is expected to go public next year which will break all records. It will only make sense if the strategy of using Facebook as a commercial vehicle plays out. If it is just a sophisticated mail box it has no future. In the UK the number of users has started to fall for the first time, about 100,000 fewer in May/June. In the USA a more alarming number of 6 million have quit. The more commercial it becomes the more people will object to such things and leave. I hear that many people now can’t be bothered to update their status. Others are concerned like me about privacy or the vanity of others or the trolls who lurk in the shadows and write their bile. As investors seek to justify the zillions in the IPO forecast  valuations so pressure will come to exploit all the bytes of personal information that have been stored. Google knows a lot about us too but is very profitable doing what it does. Twitter has yet to crack its commercial model and will be tempted to carry ads that may just alienate all those who just think it’s a great way to follow what’s going on and don’t see why that should be interrupted with commercial messages.

So conclusion? Is social media a fad? Well, you can try out these links on YouTube to be blown away by those who think it’s a revolution. But beware. These clever videos are made by people who are trying to sell you stuff.

Copyright David C Pearson 2011 All rights reserved

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