I wasn't going to write this article.
I mean, the premise seemed self-evidently absurd; that social media is a busted flush. I've heard it now from several sources, however, most recently the chief executive of a print media company, and it's worrying.
Facebook's numbers are down. LinkedIn's IPO is evidence of a bubble. Groupon's valuation bears no relation to reality. Warren Buffett says that some internet start-ups may be overpriced. The meme is spreading, and as it grows it is gaining credibility; largely from the 'no smoke without fire' crowd.
In 2001, as the dotcom crash bit, the City fell out of love with the internet. Until 2000, companies would experience a leap in their share price simply by adding the suffix '.com' to their brand name; after the crash, the web was a dirty word. The marketing community moved from spending irrationally big amounts to cutting internet investment altogether.
Across the country, media agencies showed their vision and commitment to the digital future by closing their digital divisions or 'merging them with their direct operation' (ie closing them). The schadenfreude was palpable as those who'd never had the guts to get into digital pointed to the burst bubble with a 'told-you-so' look on their faces.
As the founders of an internet agency, my business partner and I could have found this disheartening. Actually, we thought it was great.
Every day throughout that recession, more consumers got online. Every day they did more online and spent more time online. All we had to do was to ignore the dodgy fashion advice, and build a business that delivered against this consumer opportunity; while the retrenchment of those fashion victims gave us the opportunity we needed to drive greater market share and pull up the drawbridge behind us.
This time, it isn't quite that simple. There may well be a bubble in social media-related stock valuations; and as before, for our purposes, this isn't important. As marketers we should be looking at what consumers do, not what the City values. The problem is that there is a marketing bubble.
Friend. Fan. Like. Connection. Follower. All words with significance in their description of the exchanges between humans. All words now thrown around in a social media context to describe processes created to mimic 'real' interactions.
This isn't one of those Luddite complaints about Facebook friends not being as good as real friends. They're not, but that's not the point. This is different, and, just as early adopters of Facebook got carried away with collecting as many friends as they could (it could just as easily have been stamps, or beer mats), plenty of brands are now obsessed with collecting as many fans as possible.
'Become a fan of brand X and get free stuff' is common; but what sort of friends can you buy? The obsession with what a fan is 'worth' says it all; more important is what 'fan' means.
However, the irrational exuberance of some doesn't mean there isn't something real and valuable there.
At one end we have the Eeyores, relieved they don't have to do anything about this complicated issue. At the other, we have the cheerleaders; some selling social snake oil, some true acolytes of the church of social.
In the middle lies a valuable and effective way of getting closer to your consumer. Let the cheerleaders waste their money and the Eeyores bury their heads in the sand. While they do, you just might get ahead.
Andrew Walmsley is a digital pluralist.
30 SECONDS ON ... THE DOTCOM CRASH
- From 1995 to 2000, dotcom venture capitalists enjoyed meteoric rises in their stock prices, leading them to act faster and with less caution than usual. A common model was to operate at a considerable loss in an effort to build market share.
- Speculators bought up internet stock en masse as even respected news outlets such as the Wall Street Journal encouraged the public to invest in risky dotcom shares.
- On 10 March 2000, the Nasdaq index closed at a peak of 5048.62, more than double its value at the start of 1999. That month, the US' 371 publicly traded Internet companies were collectively valued at $1.3tn.
- One victim of the crash was British company Boo.com, which launched in late 1999 selling branded fashion apparel over the internet. The company spent more than £80m of venture capital in just 18 months, and was placed into receivership in May 2000 and liquidated.
- By 2001, many dotcoms, such as Clickmango.com, had gone to the wall, having gone through their venture capital without ever making a profit.
- The crash caused the loss of $5tn in the market value of companies from March 2000 to October 2002. Several companies and executives were accused or convicted of fraud for misusing shareholders' money.