I’ve joined another one. Gooruze. In order to have my blog syndicated there, I need to have “tanyaferrell.gooruze.com” in the first few lines of a blog post. Now isn’t that a great promotional tactic?
There have been a lot of posts floating around about the end of social networking. How many social networking sites does a person need? One blogger at Marketing Profs Daily Fix proposed that a person could only be an active participant one or two networking sites. Three tops. Steve Rubel predicts that eventually it will all come back to the search engines. People will always visit Google, Yahoo, and MSN. These three own our email accounts - Gmail, Yahoo Mail, and Hotmail. When sites like the Facebook burn to the ground, Google, Yahoo, and MSN will still be around because everyone needs their email and their search. These sites have also started adding social networking features to their site - the latest being the mash up of GoogleEarth and YouTube.
My favorite article so far has been one by Mark Simon at MediaPost comparing today to the dotcom boom of the late 1990’s. One only has to subscribe to Mashable! to see where he’s coming from. Mashable has all the latest news about social networking sites. According to my Google Reader, I have 104 pieces of news I’ve missed over the last two days. 104! Mashable reports on social networking site startups, acquisitions, and venture capitalist funding. Can I say it? Things have gotten a little out of hand with the social networking sites.
Mark predicts that the bubble will burst as it did in 2001. I wouldn’t go that far. A large part of the burst was the small stock market crash. Sites like Yahoo! were overvalued on the stock market. There was VeriSign, InfoSpace, theGlobe.com. InfoSpace alone reached a high of $1385 per share.
That’s the biggest difference I see between now and then. Back then companies went public as soon as possible, hoping to gain some extra dough. Now it seems that the creators of social networking sites are keeping their sites private, getting as much venture capitalist funding as possible, and praying that someone big like Google or Yahoo will buy them out. Examples include YouTube, Flickr, Del.icio.us.
Eventually all of these social networking sites will fall out of fashion. Of course the best ones will survive, just like Amazon.com survived the burst in 2001. But when these sites do fall out of fashion, all of the ones that are living on venture capitalist funding, aren’t generating revenue, and aren’t owned by one of the big portals will fail.
As for Google, I agree with Mark, their stock is overvalued. It opened at $635+ today. Over 99% of Google’s revenue comes from Google AdSense, and as SEO becomes more popular, I can’t see PPC being the goto for internet advertisers when only 34% of internet users trust sponsored links.
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4 Comments
Being relatively new to social networking, I can’t really comment on it being a bubble experience.
However, I just did a case on Google in school, and we talked about the future of their business model. Their mantra, charters, vision, etc are all about search and doing good. But really, they are evolving from a search company to an advertising company. I think they are a “relevance” company. I think the way advertising now exists on their site will change - maybe their AdSense sites will have tailored advertising that those site owners are familiar with and recommend.
It’s all about trust with advertising. You’ve got to trust the source. It feels like social media is all about trust in the form of referrals and recommendations. The question is how do we harness that new type of behavior to advertise. Its not sexy when it comes down to the bottom line.
Google is definitely evolving. I think the acquisition of DoubleClick is good for them if their goal is to become an advertising company, which I think it is. I love Google. I’m really hoping they come out with a way to bring social media and advertising together. Harness a new behavior, as you said.
You make some valid points, and I like where your head is at. I think you should start writing for our blog as well!
Couple quick comments:
There are too many social networking websites. The proof of that is once they make a website (www.onlywire.com) to ease to submission process to 25+ social sites, that’s a red flag. SEOs began using these sites to create backlinks very quickly (social bookmarking spam). Some like Del.icio.us employ no-follow, but there is speculation that engines may be picking and choosing what to ‘follow’ or ‘not follow’. For example the elements of branding was saved by 355 people and all those links show up in our Google Webmaster Tools, that doesn’t mean they count… but if you were Google, would you count those?
The bubble crashed because business models were based on obtaining eyeballs on your website, and then generating the revenue. When it should have been vice-a-versa. I experienced it.
I don’t necessarily foresee social media websites falling out of fashion, but I do foresee them becoming more niche. Best example is Sphinn.com, it’s like Digg for internet marketing only. I believe the community aspect of the internet will always exist. Because when you break it down, social media websites are just communities with funky names.
Communities with funky names? I like that. As you said, the community aspect will always remain, and I can definitely see sites becoming more niche, but I think the term “social networking site” will become outdated. More and more sites are adding social networking/community features to their sites. Eventually every site will have some kind of community aspect to it. As more sites adapt the features, “social networking” won’t be considered a huge category anymore. Sites like Sphinn and Digg will just be news sites. They won’t be so special in their delivery of content. The only “social networking sites” will be ones like MySpace and Facebook, which have the sole purpose of connecting friends.
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