Most of my readers are interactive marketing professionals, they are experimenting, using, or living in the social media world –for some, it’s part of their very being and defines them professionally, and personally.
Social Media (which has gained popularity in the last few years) has never stared down an economic downturn, My CEO sees at least three to four quarters of reduced technology spending, and Chris Kenton sees even a more dire situation.
Four Social Media Questions You Must Answer During an Economic Downturn Whether you’re a CEO of a social media company, a professional blogger, or a community manager at a large corporation, you’d better be able to answer the following questions:
1) Is social media usage going to increase or decrease during a recession by consumers? In the last tech bust, I remember many tech professsionals going back to school, becoming real estate agents, or fleeing silicon valley, will migratory usage patterns evolve in social media? Yet even if usage of these tools increases, yet do these consumers have buying power?
2) Will brands and marketers increase spending on media that is generally unproven? Blog network Gawker recently laid off staff in anticipation of advertising dollars dried up, the key word here is anticipation, it hasn’t fully hit yet. Anecdotal case studies are available everywhere about social media, but hard ROI measures are hard to find –will marketers lean on the guaranteed 1-5% return on traditional advertising?
3) Will these be tools to improve communiation and collaboration within the enterprise? Time to think internally here, with travel prices going up, companies reduce travel plans, will these tools increase productivity, or will face to face meetings still prevail? Are these tools effective in communication beyond the ‘shiny’ factor?
4) Will the economic downturn force efficiencies to occur by shedding companies that lack innovation? The dot com bust was considered a market correction, is it now time to get rid of the new wave of dot coms that are missing vowels? or are the operating costs just too inexpensive that they will still thrive –and keeping markets crowded.
I’ve lightly weighed both sides above, I have my ideas, but would love to hear your thoughts below, I’ll state mine too.
Update: this post by James Duthie has thorough analysis, a must read.
My Tu’pence worth
1) Is social media usage going to increase or decrease during a recession by consumers?
As Dan said – those who lose their jobs will have more times on their hands and will see social media as fun, a way to keep up morale, a way to network with business colleagues and hear about job opportunities. Things like the need to publicise your skills and learn new skills should increase the use of social media.
If the economy really nose dives, those who keep their jobs tend to get paranoid and work extra hours and try to look super busy all the time in case some consultant comes along and identifies them as an overhead. Also loose work practices, like being connected to FB all day, will be tightened up on. That will be a culture shock to the generation Y/generation slacker types.
2) Will brands and marketers increase spending on media that is generally unproven?
Ulimately all media spend will need to show ROI. It is amazing that ad agencies have managed to sell TV and billboard ads for so long with no visible ROI.
A higher percentage of spending will go online as now more people are online and the ROI is easier to track. Expect increased pressure to deal in CPA and not CPM!
3) Will these be tools to improve communiation and collaboration within the enterprise?
Yes yes yes. With petrol that costly and travel budgets down online collaboration is the way ahead. Thats why Cisco bought Webex and IBM just launched Bluehouse. But also think Zoho, Google Apps, Salesforce.
4) Will the economic downturn force efficiencies to occur by shedding companies that lack innovation?
No – its not all about innovation. Its is about critical mass and providing value to customers. If it was about innovation then Microsoft would have ceased to exist years ago.
Social media has exit costs – your posting history and social graph. Those that have a critical mass of users and who are profitable will survive.
C.H. low wrote:
“We are already seeing successes in our users and clients on our Platform, many Gen-Yers growing beyond the Facebook and mySpace, finally learning to leverage the social tools to be more productive for collaboration and communication internally and externally in new ways they, or we for that matter, never thought of before.”
C.H. hits the nail on the head here. When users learn to use social tools for more than fun, ROI will naturally become apparent. Any examples that you can share C.H.?
Social Media will be affected by the economy a decrease for about 4-6 months.
Until B2B companies in a larger quantity start to look at reducing cost.
No increase in brands and marketers spending on media over the next 2-4 months.
Companies are looking to the internet to reduce cost but are still selective in where to place their wallet. The internet can be used to cutting the timeline “communication to Distributors to Reps to increase involvement.
Yes, all industries will be affected by the downturn, which will fuel the negative spin.
The only person who will profit from this will be companies that take chances like Buffett.
Thank you C.H. low – -that was very helpful