Social Media: Don’t let the Bubble Burst

I am beginning to feel a little nervous about Social Media. I am beginning to get a little skeptical of all the Social Media initiatives around me.
But then I also read that a little anxiety and nervousness can be a good thing. A little increase in the heartbeat before you meet that someone special or before that important presentation is helpful. It just means that you care about what you are doing and want to be successful.

I read this on David Spinks‘ blog

There’s a problem, and deep down, we’re all aware of it…but to do something about it would make many feel hypocritical and so they push it aside whenever it’s brought up.

The Social Media Growth if allowed unchecked will be the next bubble to burst. There, I said it. The cat is out of the bag.

An important lesson from the dot-com bust (should be a lesson from common sense actually!!) was that companies that don’t make money cannot survive. Advertising, no matter how clever, cannot save you. Consider online pet-supply store Pets.com. Its talking sock puppet mascot became so popular that it appeared in a multimillion-dollar Super Bowl commercial and as a balloon in the Macy’s Thanksgiving Day Parade. But Pets.com was never able to give pet owners a compelling reason to buy supplies online. After they ordered kitty litter, a customer had to wait a few days to actually get it. And let’s face it, when you need kitty litter, you need kitty litter. The company lost money on most of the items it sold. Amazon.com-backed Pets.com raised $82.5 million in an IPO in February 2000 before collapsing nine months later.

Companies chased eyeballs, saying “don’t worry, revenues will follow”. People had business plans that had no mention of revenue. Web agencies popped up all over the place: building websites without a goal. You only needed “Web Programmer” or “Java” written on your resume to charge $200/hr for your services.

Fast forward to 2007. Similar story but same result. They said,

Buy the biggest house you can. Don’t worry about the downpayment. Don’t worry about the principal. Flip the house. Cash out. Live the “American Dream”.

We are still feeling the effects of the last one.

Fast forward again to the “Now” Network and we again see signs of the Social Bubble

• A search for “Social Media Consultant” on LinkedIn yields 46,069 results. “Social Media Expert” gives 12,426 results, “Social Media Evangelist” yields 1749 results and “Social Media Guru” gives 1477 results. For an industry that is 2-3 years old, that is a really large number. [Lesson: better to choose “guru” than “expert” ]
• At most of the digital conferences, the theme is “social”.
• VC money being poured into social networks, microblogs, real time search engines and other cool SM startups that have no clear revenue models. “We will eventually get there”. There is so much free in the industry that advertising alone couldn’t possibly sustain it.
• Each company and their mother is jumping into Social Media, rushing to build a Facebook fan page or Twitter following. According to Bertrand Russell, “Collective fear stimulates herd instinct, and tends to produce ferocity towards those that are not regarded as members of the herd.” It is the fear of being “left out” or not being part of the herd that is driving a lot of companies into Social Media. The prime ingredient for a bubble is the desire to do something because everyone else is doing it.

Adam Sarner, an analyst with market research firm Gartner, projected that close to 40% of social networking initiatives at Fortune 1000 companies with Web sites will will be classified as failures.

I Love Social Media: Don’t get me wrong. I do believe Social Media has gone mainstream. I do believe that the SM tools when used in the right manner can increase both personal and business productivity, improve customer engagement levels, make innovation faster & cheaper and build new relationships.

2010 is supposedly the year when Social Media will be tested. Investors will start demanding some visibility into returns and cash flows.

To keep the Social Media Wave going, it is our responsibility as Social Media Leaders/Experts/Consultants/Evangelists/Gurus/Advocates (whatever fancy term you want to use) to ask the right questions:

• QUESTION 1: HOW IS IT GOING TO BENEFIT THY COMPANY?
• Engagement, loyalty, brand building are all good things. But they are all warm and fuzzy words that others in the firm may not understand. Start thinking and talking in a language that your CFO/CEO understands. Will customer engagement and brand loyalty result in increased sales or lower costs? List down all the potential benefits and see if/how they can translate into $$$. Any marketing initiative can only be sustained if it has the support of the folks who control the dollars.

  And PLEASE, stop chasing followers. Don’t fall into the trap of “How to build 10,000 followers in 10 days”. Success in Social Media is not measured by the number of followers you have. This is not a competition on “My brand has more followers than your brand”. Social Media is for the long haul. It takes time to build the relationships and start seeing ROI. If it hurts to hear that, don’t do it.

• QUESTION 2: HOW IS IT GOING TO BENEFIT THY CUSTOMERS?
  Social Media is not a channel for self promotion. It is frustrating to see so many corporate Facebook pages, blogs, Twitter feeds ONLY talk about the firm. They are in a broadcast mode. They are not engaged with the customer. They are not listening to the customer. They are not solving customer problems. They are not building loyalty.
  You need to think how you can make the customer experience better or simplify their life or add more value.