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The Myth of Social Networks

On September 14, 2009 Tourism Whistler hosted a guest speaker, tourism consultant Anna Pollock at an All Member meeting.
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On September 14, 2009 Tourism Whistler hosted a guest speaker, tourism consultant Anna Pollock at an All Member meeting. Pollock was bullish on the importance of social media for tourism, insisting it was vital to have a presence on social media sites like Facebook and Twitter but concluded her remarks by commenting that, "It's impossible to keep up with it all".

That's why companies have devoted entire teams of marketing staff to the task of managing social media, but it begs the question, "does it really work?" There is a stunning lack of evidence to support the business case for having a social media presence. Despite the incredible membership numbers boasted by the industry, there's no proof that it actually brings in the bucks.

 

Show me the Money

After four hours of internet searching, only two companies could provide examples of making money via social media - Dell and H&R Block. According to The Social Media Bible: Tactics, Tools and Strategies for Business Success by Lon Safko and David Brake, H&R Block saw a 171 per cent increase in online ad awareness and an overall increase in brand awareness of 52 per cent.

By using applications such as Facebook, MySpace, Twitter and YouTube to introduce customers to Truman Greene - a clean cut 20-something singing character who serenaded prospects with the brand's key messages - the aforementioned metrics would suggest that some money was made. Dell on the other hand has actual cash stats. Dell claims that it raked in over $3 million U.S. over two years from its Twitter followers (it boasts 600,000) who clicked through Dells posts to purchase products.

The volume of social media users is staggering; Facebook is the master of all with more than 400 million active users. The world's most popular networks, as measured by total monthly web visits include the previous number one MySpace (110 million), Twitter (60 million) and Linked In at 35 million. According to Facebook's own website, more than 60 million status updates are posted each day, more than three billion photos are uploaded to the site each month and more than five billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each week.

With so much hype about social media and the amazing numbers it generates it almost seems like a giant conspiracy that there are so few success stories of businesses actually profiting from it. It is true that Facebook's valuation is stratospheric and that since 2007 the company's revenue has doubled year over year to the point where it's currently on pace to reach the magical $1 billion figure by the end of 2010.

Meanwhile, Twitter still struggles to prove it can be profitable (they collected nothing while Dell used its services to make its aforementioned $3,000,000) and MySpace laid off hundreds of employees last summer.

MySpace also does not disclose revenues or profits separately from News Corporation, their parent Company - Quelle Surprise !

Apparently no one remembers the dot-com bubble, but just in case here's a quick synopsis: lots and lots of young entrepreneurs duped lots and lots of dumb old guys into giving them lots and lots of money for gee-whiz Technology that the old guys had no understanding of, while the young guys turned out to not actually have a business plan to make money! Over $5 trillion in wealth was wiped out when the bubble burst over a period of two years.

Amazingly, history is repeating itself. For example, Twitter does not collect on profits companies make through its service although it hasn't ruled out doing so in the future. So how are they making money right now?

Social marketing companies depend on advertising revenue just as internet companies 10 years ago counted on revenue from banner ads. In the last 10 years the industry hasn't changed its approach and the problem is that banner ads click-through rates are about one per cent (in relation to page views) and on social media sites they are about 0.02 per cent.

Rumour has it that Facebook is working on a payment system similar to Paypal, so they are trying to offer an actual service that, when combined with their volume of users, could be quite profitable. It's doubtful that even in his most proprietary dreams, Bill Gates would never have imagined the license that social networking users give to these companies regarding their personal information, let alone volunteer to provide these businesses with profit.

As Facebook founder Mark Zuckerberg put it in a recent Fast Company interview, "The value that people get is tied to how much information everyone is sharing."

Talk about "workin' for the man!"

There are companies trying to eek out a living from social media. A guy named Dan Zarrella has published a  22-page report called "The Science of Retweeting." Dan spent nine months analyzing roughly five million tweets and 40 million re-tweets. Why? So that you could know the Nine Scientifically Proven Ways to Get Retweeted on Twitter. Seriously... you can't make this stuff up!

An even bigger waste of time is corporate-created social media. That's right, social networks where a brand name product is the rallying point of the social network. There is even one for Purina's Breeze for Cats (www.breezeforcats.com).

A 2008 article in the Wall Street Journal claimed that 35 per cent of corporate online communities have less than 100 members while less than 25 percent have more than 1,000 members - despite the fact that close to 60 per cent of these businesses have spent over $1 million on their community projects.

There is scant evidence that social networks drive business, but increasingly a value is being placed on your "friends," according to recent articles in The Economist and Fast Company that illustrate the commoditization of friendship.

For example, an Australian company called uSocial, actually sells Facebook friends. Usocial trawls Facebook for users by criteria; age, location and interests, etc. then recommends potential friends to companies who approach them directly. Companies pay $727 for each 5,000 users who agree to be its friend. Facebook founder Mark Zuckerberg sees the benefits as well and is looking at ways to cash in on connecting likeminded friends with business.

He is quoted in Fast Company as saying: "The message you get, in a lot of ways, is actually less important than whom you get it from. If you get it from someone you trust, you'll listen to it. Whereas if you get it from someone you don't trust, you might actually believe the opposite of what they said. I think that's the basis of the value that people get on the site."

A different perspective is offered by Seth Godin, marketing Guru and author of several bestselling books. When asked  about social networking and business, Godin replied: "If you're on Facebook you're probably my friend, 'cause god knows I've got enough of them. but that is worthless to you, it's worthless to have lots and lots of friends on Facebook cause they're not really your friends, they're just people who didn't want to offend you by pressing the ignore button, and if you have 5,000 people following you on twitter because you tell a dirty joke every couple of hours that's not particularly helpful to your business either. My answer is... it's always important when it's real and it's always a useless distraction when it's fake. What the internet has allowed is an enormous amount of fake networking to take place, and it's so easy to be seduced by it because there's a dashboard, a scoreboard (that says) 'look how popular I am,' and it's nonsense."

Go ahead and ask yourself: How many of my Facebook friends have I shared a meal with in the last month, how many Twitter tweets have retweeted with a business opportunity or a sale, and is updating your Facebook status really on your to do list?

Slacktivism

The truth is you don't have time for social networking, a few years ago all you had to look after at work was well... your work, email and maybe a cell phone.

In September 2009, the Globe & Mail began its first of a regular column on social media. The first article, "Tweet timesuck" was penned by Lisan Jutras as she accurately describes where the time goes on Twitter: "The sheer volume is imposing. The forum champions brevity, but I suspected that, in actual fact, it was a massive timesuck. How massive? I decided to put aside a day last week to find out. Every time I refreshed Twitter, there were more links posted. I began to read faster in the shadow of the mountains of unread content. I felt like I was in one of those nightmares where you suddenly realize you have an exam in an hour. Who posts an entire hour-long podcast? Unreasonable. By 4 o'clock, the stuff was just roaring in. And it wasn't even a big news day."

An entire day spent tweeting, but at least she can chalk it up as research for an article she got paid for.

The February 25 Economist print edition cover story was titled "The Data Deluge." The special report was filled with examples of "unimaginably vast amounts of digital information which is getting ever vaster, ever more rapidly." The key to managing this deluge is having the discipline to focus on the important information and forget the fodder. And fodder is what most social media is. For all its claims of cultivating activism, here's a Facebook fan page barometer of what people care about. The winner with the most fans is Texas Hold'em Poker with 13,442,474 followed by Michael Jackson with 11,213,130 (he's dead people, let it go). Next is Mafia Wars at 9,860,399 fans and, sadly, Barack Obama sits in fourth place with 7,792,595 fans. He's 6,336,485 ahead of the next most popular politician Sarah Palin but only slightly ahead of Vin Diesel with 7,664,993 fans.

There is no denying that Twitter was a great tool for the failed Green Revolution in Iran to tell the world about their plight, but the dark truth is that the dictatorship used those same images to identify and arrest protesters. The sad reality is that social media promotes "slacktivism" - a pejorative term that describes acts of altruism that require little personal effort (e.g. joining a "cause" signing on line petitions buying wristbands etc.).

Research from the Pew Center shows that young people aged 18-24 will readily share political news or join political causes on social networks, but it does not manifest itself to taking actual action... They are also least likely of all age groups to email a public official or make an online political donation.

In future we should be a bit more sceptical about the benefits of social networks and remember that all revolutions begin with a few brave souls taking to the streets, that business is best when concluded with a handshake, and a friendship is only meaningful when backed up by a genuine human connection.

Logging out...

 

 



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