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Our Thinking

Social Media Crash Landing

Social Media Crash Landing

Remember Y2K? There were no major computer crashes, but there was, just a few months later, a technology crash of a different sort when many Dot Com’s lost most of their market value. The market learned painfully that eyeballs didn’t pay the rent – revenue did.

Today we seem to be in a similar “Social Media” heyday. The markets – public and private – are putting super-high valuations on the new social media darlings. These valuations aren’t driven by revenue (or “eyeballs”), but driven by friends, followers, and connections.

Investors should be wary, as history typically repeats itself. While some social media venues will be commercially successful, most will not. And of the 500+ social sites out there, expect a significant number of closures, consolidations, and abrupt strategy shifts. Only revenue can pay the rent.

As individuals, marketing leaders, and corporate managers, consider these four key insurance policies:

  1. Don’t put all of your social media eggs in one basket.   Remember MySpace?  A ghost town, or soon to be.
  2. Do some contingency planning: What would happen if your venue(s) of choice suddenly shut down? With “your” data?
  3. Look for ways to diversify your relationships with your connections across several channels: email, Twitter, Facebook, Blog, etc.
  4. Monitor the social media space for winners and losers. This allows you to catch the trends early …and provides an early warning mechanism just in case.

The Week’s Action Plan:

Will we really have a Social Media crash?  It’s hard to say exactly, but the parallels with the pre-Dot Com era are striking.  This week, ask the question “what if”.  A few minutes of contingency planning can make the world of difference.

This post has been written by 108’s Senior Advisor and former CEO Randall Craig.