SOCIAL MEDIA PEAKS, THE HYPE IS GONE, MARKETERS SEE NO VALUE, A SHAKEOUT IS EMINENT, TRUST ME

It’s really pretty simple:

• Social media brand marketers see no value in social networks.  
• Social media is unable to show a measurable return-on-investment to companies. 
• Social media heads are not willing to invest more and so the vicious cycle continues. 

This is not a prediction of a social media doomsday, but a call for some sanity as we enter 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 this month be a sign of what to expect next year?  

Every day for the past two years, we've seen 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 early next year. 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.”  According to a Chief Marketer study, this translates to 2 in 5 marketers having little confidence in their ability to measure social media campaigns, 
• 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 social media?

• If you are an enterprise social media technology provider, we advise to focus on the user experience and helping customers reduce the noise, engage with customers and prove the value of social media. We fully expect a major shake-out in this space next 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.

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

Ted Sapountzis is vice president of social media audience marketing at SAP and has been with the company since 2004 in various product-management and strategy roles. You can follow Sapountzis on Twitter or visit his personal blog.

COMMENTARY:     I could not agree more with Ted Spountzis.   Ted left out a few really important problems associated with social networks:

• In a blog post dated November 27, 2011, I stated that social networks are "freemium" business which encourages wholesale "freeriding."  If brands had to pay for their Facebook or Twitter page,  there would be more of an incentive to invest in their brand.  By the same token, if individual users paid something, they would feel a need to engage with brands more in order to recoup their investment by participating in contests, games and sweepstakes. Brands could offer pay users a free month of Facebook just for filling out a questionnaire or recommending a friend to become a fan.
• Social networks have taken the "personal" out of connecting with other individuals. All the talk about "connecting and sharing," is mostly artificial.   How many "friends" in your social network do you really know and share with online?  Do you honestly believe that brands like Coke or Tostitos know you the individual on a deeper personal level?  Do you feel you've connected on a personal level with Coke? Remember: people connect with people, not brands.  
• Social networks DON'T make anything.  Think about that for a second.  The stark reality is that YOU are the product, or I should say, the data about YOU.  This is all Zuck, Mark, Sergey and Larry are after.  Without that data social networks would not have value, and their builders would have no incentive to operating them. 
• Social networks DON'T really care about user privacy.  Time after time, social networks have broken your loyal trust by using your most private information for self-serving and commercial purposes without your permission or notification.  They've been playng this trick for years now, and it will only get even worst.  Facebook's Timeline is just another to get you to forkup more information about yourself.  In a blog post dated November 30, 2011, I told you that Facebook had finally settled with the FTC over numerous privacy vilations, and agreed to a 20-year probation, with annual privacy audits, for violating your privacy.  They are presently under investigation for tracking you by your cellphone.  Stay tuned.
• In a blog post dated March 23, 2011, I explained to you that Facebook's ad-supported revenue model is flawed and that the social giant has already reached a critical inflection point.  Facebook's growth is no longer exponential and in just a few short years the number of users will reach saturation, growth will peak and so will advertising revenues.  It's just a matter of time.
• The concensus of opinion among chief marketing officers is that social media is not very effective in generating the one thing they value the most:  sales.   As a consequence, CMO's are concentrating on increasing fans and engagement and brand awareness something they can measure. 
• In a blog post dated November 30, 2011, I warned you about a new growing trend:  "social snoopers," such as Social Intelligence Corp, or companies that track your online behaviors, especially on social networks like Facebook and Twitter.  These social snoopers are now being hired by employment agencies, executive recruiters and employers to find out what new hires and existing employees are saying or posting online.  It is estimated that 40% of job applications are "blocked" from getting jobs because of things they have said or posted on social networks.  Some employees have even been fired for criticizing their employer.    

In a blog post dated June 6, 2011, I warned of a coming social network bubble that is being driven by secondary market brokers like SecondMarket and SharesPost who specialize in the stock of private companies like Facebook, Twitter, foursquare and Zynga. The scarcity of shares available for sale, hype, investor over-exhuberance, infactuation with bigness and the "Facebook Halo Effect," have driven share prices to unsupportable levels.  Many social networks which have had had their IPO's, including Groupon, LinkedIn and Zynga, have seen their share prices plummet by 30 to 35%.  

Courtesy of an article dated December 27, 2011 appearing in SnartBlog on Social Media