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I originally wrote this post on my personal blog last December, but thought it would be appropriate to re-include here, especially as we approach Social Media Week (SAP is the host on one of days of this global event).  I am particularly hoping to spur some conversation given the rich social media expertise present in our community.

It’s pretty simple, actually: The people we are trying to attract see no value, we are not able to show the return to our companies and our bosses are not willing to invest more, and so the vicious cycle continues.  No, I am not predicting a doomsday scenario; I am merely looking forward to some sanity settling in as we get into 2012. Don’t get me wrong, I still fundamentally believe in the significant disruption that social media will cause to business. However, to paraphrase Mark Benioff, I believe we are about to enter a long and cold Enterprise Winter. Could the lackluster initial public offerings of Jive and Zynga last December be a sign of what to expect this year?

Every day for the past two years, I have been seeing one study after another, some declaring that social media is going to change the world — which, to some extent, it has — while some declaring the bubble is about to burst. What has changed in the last couple of months however, is the number of studies that predict the latter, combined with the lack of any news that the next big thing in social media is just around the corner. Some of the facts:

  • Growth is slowing down: The New York Times reported that growth in Facebook visits was a “mere” 10% in the 12 months ending in October, down from 56% a year earlier. Meanwhile, Facebook is preparing for an IPO this spring.  As George Colony, CEO of Forrester Research, said at the LeWeb conference, “Social is running out of hours.  Social is also running out of people.”
  • Companies are not able to generate value (aka return on investment): I wrote about the holy grail of social media ROI more than a year ago, and eMarketer published a flurry of research this month. Some of the mind-numbing statistics are that only 8% of marketers could attribute ROI for all of their      investments in social media, while 60% still count fans, followers and “likes.” This translates to 2 in 5 marketers having little confidence in their ability to measure social media campaigns, according to a Chief Marketer study.
  • Corporate investments are decreasing: According to a University of Massachusetts Dartmouth study, “social media use among America’s largest companies is losing steam.” Their study, which focused on the Fortune 500, found no growth in corporate blogs, while use of Facebook and Twitter grew only 2%. This certainly is consistent with discussions with my peers in the industry.

So what does this mean for us?

  • If you are an enterprise social media technology provider, my advice is to focus on the user experience by helping customers reduce the noise,      and prove the value of social media. I fully expect a major shake-out in this space this year, and I think the companies that will survive will      somehow exhibit these two characteristics.
  • If you are an enterprise leveraging social media to connect with customers, my advice is to focus and execute well, while moving beyond counting      fans, followers and “likes.” There are ways to do that, but it’s not as easy as starting a Twitter or Facebook account and hoping they will come.

I suspect that many of you will not agree with my thoughts, and I hope to create some dialogue with this post. I look forward to your thoughts and comments.

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  1. Kevin Grove
    Ted

    You make some good points. I think that a slowdown and contraction will be a good thing. In some ways the social media cycle is analogous to the PC boom in the 90s. How many companies were making Windows PCs in 1995 in comparison to today? Social media will see the same type of cycle although at a much faster pace.
    At the same time, SAP  is among those companies taking social media lessons back into the core products to improve user experience and collaboration. The next few years will not be boring in the area of social media, of that I am fairly certain.
    Regards,

    Kevin Grove

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    1. Ted Sapountzis Post author
      Kevin,

      Thank you, yes there are indeed many parallels with bubbles past, and I would even compare the stage we are at with the internet bubble of 2000.  My favorite quote is what is now known as Amara’s law “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. 

      I still believe in the fundamental value (and disruption) social will bring across industries, I just don’t know if we have collectively figured it out yet.  This year will be an interesting one to watch for sure.

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