Today, Technorati reported the acquisition of 1 “social beer” platform by another amid speculation that the social media bubble is collapsing just like the dot.coms did in 2000. OK, so the acquisition of one platform dedicated to checking-in what beer you’re drinking where by another doesn’t imply the social media bubble is collapsing, but other recent acquisitions do reflect consolidation in the kingdom of social media marketing.
Evidence the Social Media Bubble is Collapsing
Other consolidations such as Salesforce.com’s acquisition of Radian 6 may foretell the social media bubble is collapsing. A slew of mergers, acquisitions, and closures of social media companies may indicate impending doom for social media companies. Technorati, for example, went through a major transformation after being acquired by AOL and has now morphed into a Huffington Post, with a somewhat techie bent (Arianna Huffington is now overseeing Technorati and several other AOL ventures after acquisition of her popular news site by AOL). The site now highlights independent bloggers who post directly to its pages and the StumbleUpon model of readers submitting erudite blog posts is gone. Instead, the site contains RSS feeds from blogs and lists post snippets below the fold on its site. I’m a Technorati writer and fear the site is loosing its place to StumbleUpon and, as a mini-Huffington Post it is redundant and might disappear.
I’m not the only one afraid the social media bubble is collapsing — Chris Brogan predicted many social media companies would close their doors starting this year.
Factors Contributing to the Collapse of Social Media
I predicted the collapse of the dot.com bubble in the late ’90s and this feels the same to me. It seems to share many of the same features such as:
- A number of competing platforms struggling to get enough traffic. Firms are dividing the pie rather than making the pie bigger. In a discussion preparing for Digital DC Week yesterday, one of the organizers point out that everyone is going after the same 10% that “get it” while the other 90% get left in the dust. Until firms learn to stop fighting over the 10% and find a way to bring the other 90% on board a sustained rally seems unlikely.
- Monetizing platforms continues to be problematic. It’s great to have stuff available for free — look at all the free themes, QR codes, plugins, sharing platforms like Tweetmeme, Foursquare, analytics like Google, keyword research … But many of these companies aren’t making much money. The ones who are making money use affiliate links as a major source of income and this source is drying up as more sites try using them.
- The ratio of work effort to return is low. It’s like in the dot.com days when everyone built custom websites from HTML — the amount of money you can make per hour looks like slave wages. Setting up, monitoring, and optimizing a social media marketing strategy for a client is time consuming. Creating a new social platform or app involves a staggering amount of work that gets shared free. And everyone is trying to reach a moving target as best practice changes constantly.
- Too many impostors. Forrester Research contends the days of everyone hanging out a shingle as a social media professional are over. Too many snake oil salesmen are out their ripping off unsuspecting clients by putting together programs without a clue as to what they’re doing. Being good at social media marketing takes skill and practice — it isn’t something you can do because you’re out of work anyway.
- Users and developers are speaking different languages. Developers not understanding what problems people have, then solving them results when developers and users speak different languages. Developers think in terms of cool codes and great design, users think about “what will this DO for me!”. Even when developers create something valuable to users, they sometimes don’t see the same value users do or they can’t explain how their platform solves a problem. Look at MySpace — once the leading social media platform it’s now struggling to survive mainly because using it wasn’t as intuitive as using Facebook. Foursquare had almost no users until retailers and service providers started giving coupons for checkins.
Let me hear your thoughts. Can the collapse of social media marketing be averted? How?
I would hate to see this bubble burst as if it does the last 6 months of my life will all have been wasted. You do make some good points. The first of which that I completely agree with is the amount of time one can spend trying to do Social media right. At my website Blogforbuyers.com I have spent countless hours trying to make everything work the way it is suppossed to, and spreading the word through social media outlets, but even with all of that, I am not seeing the type of results that I’m looking for. thanks for the info
I think your experience is typical of many social media users — they’re not getting the results they had hoped. Unfortunately, this is the same thing that happened before the Dot.Com crash in 1999. The good new is, as we all know now, the best businesses survived the Dot.Com debacle, other businesses entered the Internet marketing world with different business models that allowed them to be successful and the industry grew dramatically.
The take home message from my post should not be “Social media doesn’t work” it should be “too many firms are doing too much ‘me too’ businesses in social media and many firms are doing it wrong. There will be a shakeout where firms doing a good job will expand and firms doing a bad job will fail”.
The key is to make sure you’re one of the firms doing things right and creatively using social media, rather than one of the firms doing it wrong.