Like every industry, the social media industry is plagued with problems that for now, are slowly being solved. It’s important to note the challenges in our industry in order to first identify them and eventually overcome them. There is no indicator from our data that Social Media will go away, in fact the adoption rates of Generation Y, indicate this is a trend, but with that said, let’s first examine the issues in the industry:
The Many Challenges of the Social Media Industry
A current lack of profits
The social media space, a movement where anyone can participate has resulted in low or no revenues for most participants. For example, there are millions of bloggers, and only a few of them can claim serious revenues, and even a smaller subset have built media empires. Aside from the users themselves, many businesses focus on generating hits, visits, or registered users and will figure out how to monetize. Take a look at social networks, some valued at billions, yet we’ve yet to hear success stories of hand over fist revenues. Like the universe, stars and revenues are far and few in between, a majority of creators will not generate revenues.
Some innovation spurred by funding –not revenues
Both a problem and an opportunity, investors (VCs) continue to inject money into this space –often funding unproven business models or one-off technology. In more mature industries, it’s unlikely we’d see such an influx of spending, but often because innovation was spurred off the success of actual revenues. With so many companies being funded without actual revenue, the market is exposed to a several variants of the same feature.
Low barriers to entry make competition cut throat
Commodity software is always a concern, and when this occurs, there are so many entrants the market is confused –unable to determine who to purchase from, and competiors may eat into each others margins. Take for example the crowded community platform space (aka white label social networking) industry that has over 100 vendors –all offering very similar software.
Excessive noise drowns out signal
With everyone able to create content and share the details of their personal lives in detailed minutia, the problem of excessive content becomes an issue. Every 60 seconds, 13 hours of content are uploaded to YouTube (says YouTube employee), and millions of tweets are generated every day. With so much content being created, how will one filter out what’s important?
Amateurism threatens professionalism
Nodding to Andrew Keen’s criticism of the dangers of amateurs creating less-than-professional (and sometimes incorrect) content then spreading it prolifically this has caused some concern for those who consume this content. The problem of course, isn’t really the quality of content, but the ability to quickly decipher what’s important –and what’s not.
Marketers move in without community consideration
Wherever people move, marketers follow, while some do it smart and savvy, many will approach it from a different style. For example, the concept of pay for post, social media optimization, bacn, spam-like content on blogs and social networks, and other marketing noise is and will continue to be a challenge whenever communities congregate. (updated per Jennifer’s suggestion)
Corporate and personal brandjacking
Becoming more and more common, brands –and individuals– can easily be brandjacked as others take their user name, domains, and assert themselves as someone else. Given there are hundreds if not thousands of websites to monitor one’s brand, squatting these names will increasingly become difficult over time.
Lack of standards causes disparate experiences
Although better than many industries, the open web still slowly moves towards common standards of logins, social graphs, and content types. Even protocols like Google’s OpenSocial were designed to unite activities and applications across any social network, each container (social network) requires tweaking to customize to each platform, while some –like Facebook– don’t participate at all.
Cultural changes cause resistance
Without a doubt, this movement of self-publishing and connecting is a disruption to the marketplace, media, the buying cycle, and the marketing funnel. Generation old barriers are crumbling from a command and control viewpoint to an open and collaborative style of business and personal communications. With these radical changes comes resistance from those who were previously in power (media, management, marketers, governments) who are slow to adopt –and thus resist.
Identifying true expertise challenging
In experienced industries, track records are defined by years and sometimes decades, in this burgeoning new industry, it’s often difficult to decipher who is a true expert –and those that have actually performed a social media change to make a difference. Mostly, track records only go back a few years, and few can demonstrate a return on investment.
Difficulty measuring ROI
Despite many attempts to measure “engagement” or “ROI” there still is no industry standard to measure the efforts of social media at the personal –and corporate level. While many have developed their own ability to measure on a one-off way, there’s no industry way to quickly –and easily agree pan-industry.
Conversational Marketing may not scale
Peter Kim points out that social media marketing may not scale. Primarily due to the 1:1 relationships that are needed to engage in conversations, it’s difficult for one person (despite how large their platform is) to cover all the conversations in a given market. Be sure to read the thoughtful comments. (added August 23)
Rumors can impact stock prices
This example of a rumor spreading mis-truths about Steve Jobs health actually cost a dip in Apple stocks. With rumors flying around more easily than the time it write an email, the internet often doesn’t have time to self-correct before bloggers hungry for link bait jump on, adding to the flames. We often see this pile on behavior during blog fights too.
Hyperconnected can’t scale
For some hyperconnected folks on blogs, twitter, friendfeed and facebook, they don’t scale as everyone reaches out to them, as a result, they miss deadlines, opportunities during this long battle to stay up to speed. Technology has created this problem when the world flattens out and there are no more gate keepers, I thought it would be fun to be like this, but in reality, it’s a curse too.
I realize this post could infuriate some social media purists, but I wanted to provide an objective view of what I’m seeing in order to map out danger spots on the map, so we can collectively overcome them. I hope you read my other posts where I list out challenges of social networks, widgets, blogging and others, if you plan to run in this space, first know the hurdles.
If you can think of other challenges in our industry –feel free to leave a comment, I’m curious to hear your reactions. (Update: On a related note, Jeremy Pepper is holding the experts to task)
This post has now been translated to Italian, thanks Marco