I’ve been planning an article on Social Media and its failings for sometime. In this post I will point out out some super obvious signals as to why Social Media isn’t all it’s cracked up to be and we’re heading to an almighty “pop”, which will be even bigger than the 1990’s dot-com crash.
Two blog posts have been published recently fighting both corners, I recommend reading both of them and using them to make your own mind up as to the usefulness of “Social Media”.
The first is by Peter Shankman and you can read his argument against here.
The second argument which is for Social Media and can be found here. It’s been written by SEOmoz owner Rand Fishkin.
For the record, I don’t believe in Social Media as channel to generate business. I have tested extensively as well as some close friends and colleges as to the ROI generated by Social Media and the results have always been huge. Hugely negative. I work with some of the smartest affiliate marketers who are able to extract every last 1/10th of a cent out of each dollar and they cannot get it to work, not even break-even, not even lose a little – it just doesn’t work. Spend a dollar and lose 90 cents kind of not work.
Businesses need money. No money, no business. Why do Social Media platforms have millions of visitors work now, well they have money. It’s just not money they have generated, it is venture capitalists money and other poor investors that will lose their shirts if they don’t sell to the next fools quickly enough.
Social Media isn’t designed to produce revenue and the money aspect always seems to be an after thought, that doesn’t work. If you want a sustainable, long-term business then you need sustainable revenue.
Facebook and Twitter have hundreds of millions of visitors, yes they do. But they are not revenue generating visitors, they are “lurkers” than don’t like interruptions or are blind to them. It’s very difficult to create seamless adverts in social media, so difficult that even Social Networks like Twitter and Facebook that have not been able to pull it off. Twitter is losing millions a month and Facebook isn’t exactly doing “well”. Facebook is still raising money! To validate my point, I used to work on Digg extensively and was paid thousands of dollars to ensure an article reached the front page of it’s website, we did it for back-links, that worked well. However, if the article even had a “whiff” of commercialism, it was buried – at lightening speed and would never reach the front page of Digg. Social Media users not only don’t like being interrupted, they hate it! You can’t make a business work under those conditions.
To put this in perspective:
Facebook’s P/E ratio is 125 on revenue’s of $1.6 billion, nett earnings of just $400m
Google’s P/E ratio is “just 35” on revenues of $20 billion and nett revenues of $7 billion (If my math is correct, which I’m sure it is)
You don’t need to be Einstein to figure out that something is so horribly off-kilt that it’s going to fall – and break. Actually, fall and then explode. The day Facebook does their IPO, I will short their stock with everything I own. Seriously.
Social Media can exist as a “hybrid” of what it is now, but it needs to be able to stand on it’s own two feet and actually add some value instead of the faux value it doesn’t contribute now. The most laughable part of Social Media are the “joke” amazing results you get. You can go to your boss or clients and say “Look I got a billion tweets and Facebook likes here” and that looks impressive, sort of. If your boss is dumb he’ll look all pleased and keep paying your salary, if he’s smart he’ll say “so what, what has that done for the bottom line”. When enough people are brave enough to stand up and shout that “Social Media Marketing is bullshit”, the bubble will burst and the Internet community will have thousands of bullshitters out of work. Oh well, bullshit baffles brains so I’m sure they won’t be out of work for long.
People are worried they are missing out on “something” or are too shy to say they can’t get Social Media to work for them and are just blindly throwing money down the toilet.
There are examples of “Social Media successes”, but by enlarge they are highly unusual and that’s not a case to call Social Media the best thing since colour television. If it doesn’t work for 99% of people it’s not going to work.
You maybe asking yourself why I’m so aggressively calling Social Media out as the biggest bubble ever to be seen, here’s why:
Social Media isn’t driven by business, it’s driven by “fun”. “Fun” gets boring, people get fatigued and leave. Hello MySpace, Hello Digg. Hello Bebo. Hello Buzz.
People will get bored of Facebook and Twitter and will leave. Then there will be no more…
Whereas, money doesn’t get boring, Money stays “fun”. Where there is money, there is life. At the moment, there isn’t a breath of life in Social Media, bar artificial life being breathed by ignorant VC’s.