Here is an interesting discussion about possible business models for social media. What does the search for profits mean for the future of social media?.
Social media are exploding as more and more people use social media platforms (up 82% from last year according to Nielsen). But the big providers--MySpace, Facebook, Twitter, etc.--still haven't figured out how to make any money. Meanwhile, their business expenses are increasing and their investors are clamoring for a return. They need to make a profit. But how?
Murder - Suicide
This has serious implications for marketers. Social media stole people's time and attention from traditional media outlets, reducing the size of their audiences and the prices they could charge for advertising. What's more, the infinite availability of ad inventory online drove traditional media ad prices down even further and often to unprofitable levels.
This double-whammy wreaked havoc with traditional media like newspapers, magazines and television; forcing them to operate on the slimmest of margins. Many couldn't and went out of business altogether. Read The Chaos Scenario by Bob Garfield for a great review of the entire process. (Full disclosure: I helped him publish the book)
Meanwhile, the social media companies that ran them off aren't making any money at all. Which, I don't need to tell you, is a difficult business model to sustain. If they can't achieve profitability soon, their demise could be next.
Could we be headed toward a world without traditional OR social media? Not everyone would mind. A 2003 Yankelovich survey found that a third of Americans would accept a slightly lower standard of living in exchange for a world free from advertising. If social media don't discover a profitable business model--and soon--those people might just get their wish.
Spread the fire. GS
Social media are exploding as more and more people use social media platforms (up 82% from last year according to Nielsen). But the big providers--MySpace, Facebook, Twitter, etc.--still haven't figured out how to make any money. Meanwhile, their business expenses are increasing and their investors are clamoring for a return. They need to make a profit. But how?
Murder - Suicide
This has serious implications for marketers. Social media stole people's time and attention from traditional media outlets, reducing the size of their audiences and the prices they could charge for advertising. What's more, the infinite availability of ad inventory online drove traditional media ad prices down even further and often to unprofitable levels.
This double-whammy wreaked havoc with traditional media like newspapers, magazines and television; forcing them to operate on the slimmest of margins. Many couldn't and went out of business altogether. Read The Chaos Scenario by Bob Garfield for a great review of the entire process. (Full disclosure: I helped him publish the book)
Meanwhile, the social media companies that ran them off aren't making any money at all. Which, I don't need to tell you, is a difficult business model to sustain. If they can't achieve profitability soon, their demise could be next.
Could we be headed toward a world without traditional OR social media? Not everyone would mind. A 2003 Yankelovich survey found that a third of Americans would accept a slightly lower standard of living in exchange for a world free from advertising. If social media don't discover a profitable business model--and soon--those people might just get their wish.
Spread the fire. GS
Totally! Advertising is soon to be dead.
Not to mention that with all of this social media, word-of-mouth advertising is easier than ever. People don't believe ads anymore, but they believe their friends.
Posted by: Charlie Fields | February 07, 2010 at 05:50 PM
Advertising is simply the communication of information designed to influence buying behaviour.
Whether delivered through traditional intrusive methods or delivered through search engines or face-to-face, it is still advertising. No matter what the future looks like, we will still have needs that will need to be met by shopping and purchasing and we will still need information to help make those decisions. Call it advertising or something else, but it isn't going anywhere.
Posted by: Steve Jones | February 13, 2010 at 07:21 PM