Are we heading for a ‘speculative bubble’ effect in the portions of the media and IT economy that are tied up with Social Media and Social networking? Regular readers will know that I’m something of a cynic about the importance of Social Media and Social Networking; whilst it’s clearly an important aspect of marketing for the future, I am rather concerned about the importance that the ‘industry’, if we can call it that, applies to itself.
Take the following article, from a Canadian newspaper, for example. Real world businesses are still doubting the importance and relevance of Social networking and Media to their ongoing business activity. Unsurprisingly, the practitioners are effectively saying ‘Ignore us and you’re doomed, doomed I tell you! Doomed!’ Now, some of us who were out of school in the late 1990s can probably remember the comments made by a number of folks with possible vested interests that anyone without a web presence would be out of business within 5 years. What actually happened was that within 5 years a lot of web companies were out of business, and many businesses with no web presence or strategy whatsoever were going along quite happily.
Just because you find something sexy and interesting doesn’t mean it’s important; passion is a wonderful thing to have but one also needs to be pragmatic along with it. In a recession, surely any business is likely to be most interested in keeping existing customers and is likely to be playing a ‘safe hand’ with it’s resources. It’s unlikely to want to adopt techniques that it’s customers may not actually be aware of or care about. There is absolutely no point in extensively using social media and social networking technologies if your customers are not aware of them! It’s rather like advertising in French when you have no one in France reading the ads!
The arrogance of Social Media zealots in assuming that real businesses are lagging behind is astonishing; surely Social Media / Networking is a support function for most companies, part of marketing and advertising. It’s not as disruptive a technology as the web itself is, and shouldn’t be treated like it is. Take a look at this definition of a bubble – the phrases that immediately struck me were “emerging social norms”, “positive feedback mechanisms”,”they create excess demand and production”. I think it’s fair to say that we’re seeing all these effects.
In addition, it’s difficult to value the Social networking / Media market place and individual services and companies within it. And then we have the other issues often associated with bubbles:
Moral Hazard– how much of the market place is supported by ‘other people’s money’ – if supported mainly by VC capital then companies may take risks that they wouldn’t take with their own money.
Herding– the more folks who say it’s good, the more the markets are likely to follow.
All in all….I think a ‘correction’ to the emergent Social Networking and Media sector is likely. And then we can get back to realistic use of this technology as part of an integrated marketing strategy for businesses.