(Links to Part One – Two – Three )
If there’s one gauge a great many are convinced is “The” gauge as to whether or not a company, person, idea, or anything else is relevant, along with the equivalent powers of a sorcerers stone: It’s the phenom of social media. Along with the metrics used by the companies responsible for it.
This is where I believe many in the end will find not only was it never as it seemed or claimed. It will make the term, “smoke and mirrors” blush.
Not only are the giants like Facebook® and others showing underlying issues, the ancillary platforms such as Twitter®, LinkedIn® and more seem to be having difficulty in delivering (or describing) all that “value” promised to both investors or advertisers. However what seems glaringly obvious to my ear is the near exclusionary lack of focus for pleasing – the customer.
To give you some indication of just how removed from the end-user experience I believe these social darlings to be, I sat here for minutes debating with myself whether using the term “customer” above would be inferred as I meant it because: who really is “The customer” in the social space?
When I state “customer” do you know definitively whom I mean? Is it the user as in Dick or Jane posting? (Which is who I wanted to show) Or, is it the big data purchaser, advertising company, or Wall Street? Just having that pause as in needing to actually think or choose which, should be a tell-tale sign to anyone truly looking for understanding of the whole social space, along with its value as an indicator.
Currently all that matters across this spectrum is having the proper story to tell (eyeballs for ad dollars) as to please (or quell) Wall Street in justifying current outrageous market caps and stock prices.
When a firm needs, or feels the need, to place Wall Street concerns over their customers user experience or privacy concerns, you may have a business model, but that model is destined for failure. Time is all that’s needed to bring on the inevitable. Sooner or later – you’ll run out of it.
If this business model is the end all be all, shouldn’t we all be, “Liking” – “You’ve got mail?”
How about Twitter™. The now newest, greatest, revolutionary new platform to come along since sliced..I mean FB. In under 3 months since its IPO (initial public offering) its jumped from the hopes of making money, to a company worth some $40 BILLION dollars. (remember it currently doesn’t make a profit)
If one listens carefully, they now seem to be desperately jaw boning any and all types of advertising plans to justify why all this new-found wealth (share prices) needs to remain there in this increasingly nervous market.
This may be more difficult than first imagined with it being reported across the media space, the tweeters themselves are expressing down right contention to any so-called advertising pushed into their tweets. If that’s true where’s the model to support $10 Billion let alone $40 Billion?
Problem with all this is the very real fact that all the “free money” being pumped into the markets fueling speculation by investment funds from the Federal Reserve is suddenly being reduced. All these speculative bets fueled by “hot money” will be the first to suffer à la 1990′s style. And anyone with any financial acumen knows it.
I have stated for years: “The only ones making money from social media, are the ones selling people the idea they need social media.”
Just look to, or remember all those stories that are consistently thrown across the financial media and others. All those buzz terms like: “user generation, followers, likes, connections,” and more? All touted as “The” metrics of relevancy for anyone using or purchasing. Now? Seems what’s needed for tangible, reliable, clear metrics is moving from the asking stage – to the demanding stage.
Advertisers and users want to know exactly what they are getting. As well as – what they’re not. Just a few years ago that was looked upon as only something the “uniformed” would ask. One had to just have “faith” in all these concepts for it was such a new industry. Well – not anymore.
One of the fastest growing sectors within social media oddly enough are companies whose sole purpose is to prove all those ads the social media giants say is being seen by real people actually are. Along with verifying (or trying to) legitimate users as opposed to fake.
What a nerve, where’s the trust I say! Oh the humanity!
Don’t get me wrong, social has its place. However, that place must be put into its proper context. Along with real, understandable, verifiable metrics to warrant the allocation of real money.
Just remember this if nothing else: As of this writing, I know of no bank that accepts, “likes, followers,” et al as payment, deposit, or legal tender to pay the mortgage. Period. And what shouldn’t be lost on this is neither do these companies.
Yet, if you would like to purchase a “Like,” well, you can buy them for pennies by the thousand. Need Twitter followers? Again, no problem – about $10 per thousand. Or, if you need that big time, look like your someone important – you can get a million, for around $600.00.
You can read a ZeroHedge™ condensed view on the latest from an AP® article here.
It seems all these business models based on anything and everything advertiser related will be coming under even more scrutiny. It seems “big media” may all of a sudden be realizing their getting smoked by these new kids mirroring or taking a page from their old tactics.
With such revelations now being reported, exactly what takes place when “big advertising” no longer accepts social medias metrics?
Ad placements and revenue allocations are based on these very (now highly questionable) metrics they’ve been touting or using as to bludgeon their competition in enticing ad dollars away from them, and into their coffers.
They’re not alone in questioning current models, IPO’s, acquisitions, and more. It seems since we are in this new blood chilling climate, aka “QE tapering.” The very crowd that cheered the cheers the past 5 years, is now pondering the “brilliance” of their earlier calls. Along with a more pointed glare towards the “brilliance” of some others. Just look at what was shown and hailed as evidence to support the brilliance or prowess of these titans of social.
Another gotta have company of social media? Well Instagram® was bought by Facebook for $1 Billion because? Well, I guess you gotta have it so no one else can. Right? So scared it seemed that users were leaving FB for Instagram the need became self-evident. Or, so was reported.
What else has been reported? Well, its been stated by reputable sources after the purchase of Instagram they began losing nearly half their daily users per month over a privacy backlash, a fury over ad placements, and more. Hmmmm.
So, what is the touch stone of all social media giants to do with not only a diminishing base on its newly acquired platform but, is once again losing the narrative? (the narrative, they are the model because, they are FB)
Well don’t spend another billion dollars. Go full-bore in offering $3 BILLION for a company that seems even more implausible to turn a profit based on logical (verifiable) metrics: Snapchat™.
All I’m going to say on the matter is this: Tell me, in this day and age of the NSA and all that suggests. Does anyone believe there’s going to be “no record” of your snap or chat? If you do, I have a bridge in Brooklyn and I’m prepared to make a deal if you act today, and you’ve got cash. (Sorry no “Likes” regardless how many)
Yet, the media were all abuzz regarding the prowess of the Facebook hierarchy in offering such a buy out and the implications for growth. All this backed by the astonishingly obscene disregard for cash money shown in the face of – well – cash money by the CEO of Snapchat.
Again in Groupon like fashion – he turned down the offer.
(I’m still shaking my head in disbelief as I’m typing this)
The so-called “smart crowd” across the financial media landscape hailed both sides for prowess and brilliance. But – something happened.
It seems before the ink was even dry on the rejection letter Snapchat and its reason for existence, i.e., privacy without a trace. Was hacked and made public via a data breach exposing if not all nearly all its users private information. What could possibly top such an awkward embarrassing (along with devastating) issue to also be revealed?
Seems they knew about the possible threat and took it as, no great threat. I’ll bet they wish that story had gone “poof” like their products were supposed to.
Did I also mention FB is currently denying or countering reports teenagers don’t like using them any longer? Funny to have to defend something which only yesterday was a given this demographic would grow ad infinitum. But hey, it’s not like the business model was based on that demo right? Wait…
Now sure, I’ve thrown a lot at this space and some of the largest players involved here. And yes, maybe I could have cut this article in half. However, I thought it was far more important to bring back into light a couple of scenarios within a sector for which there are too many people running around seemingly trying to shut anyone down or brush them off as nay-sayers who questions their story, metrics, or anything else in this space.
I also believe social media is in danger of ruining itself by its own hand by the outrageous over-promising, and under delivering taking place by the very companies stressing why, “it’s different this time.” Again, it sure sounds a whole lot like, and looks a whole lot like the 90′s to my eye.
The entire social media space I believe can become something greater and better for everyone going forward. But only if everyone dumps the unicorns and rainbow treatment – and gets serious about where it goes from here.
It’s both fair, as well as prudent, to understand and question everything – and anything – in this space. Even though you may be looked at as some “doubting Thomas” or worse, some “social illiterate.” For if you’re going to put both your hard-earned money, as well as your time, and more importantly, reputation into this space. Understanding these gauges along with the ability to read them correctly, then use them accordingly isn’t heresy. It’s called business.
And being an entrepreneur should demand you treat them as such.
© 2014 Mark St.Cyr MarkStCyr.com
