When the social media bubble burst


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Dick Lee asked today in LinkedIn: “We rarely see people as enthused as they are over social media. Among those recent rare times are: when the high-tech balloon popped; at the height of the housing bubble; just before the market crashed; and when Sarah Palin was nominated for VP. Hey, exuberance can be headiest just before the fall.”

I’d say YES – the social media bubble is about to burst. People are recognizing already that the endless hours of watching the incoming streams from Twitter and Facebook or all the status updates on LinkedIn are hours wasted. All the paid tweets and people or agencies, who have been hired to tweet are not going to contribute to the bottom line. And the fan pages people build to get “fans, followers, connections” are just hopes that it will do something for the business – but it won’t.

Yet, there are businesses who not only survived during the economic down turn but actually showed significant growth. What did they do differently as most are also associated with the rise of social media? The answer is SO SIMPLE that most people will reject the truth and continue to look for the hole grail. The answer is “The become more social with their customers”. Socializing is work, it takes time and focus, discipline and a clear understanding what to do and what not to do. And as 80% of humans continue to look for getting the job done automatically and get rich instantly, they will leave the social web because they just learned again and again – there is no free lunch.

Is that bad? Not at all – the Internet continued to thrive after the bubble burst. The housing bubble burst in the US – and today the US has the cheapest real estate in the developed world – it is only a matter of time when it goes back to normal (you get a mansion in California when you sell your 1 bedroom apartment in Nagasaki).

The biggest benefit of social media is to do more business with more people in a grander geography and in less time than ever before. But it comes at a price. And the price you pay is to be more open, more social, more connected, more interactive, more helpful and more conversational than ever before. And that means you cannot much longer be busy just slicing and dicing your data and aggregate information for even more knowledge about your demographics or aggregate more information to even better target your mail shots and advertising – NO you got to get out there and have a dialog with your customers. No time to do that? You will have a lot of time to think about it when you are fired or your business ceased operations. Being social is work – one customer at a time.

Can you automate?
Automation is sand in the social gearbox.


Axel Schultze
CEO of Society3. Our S3 Buzz technology is empowering business teams to create buzz campaigns and increase mentions and reach. S3 Buzz provides specific solutions for event buzz, products and brand buzz, partner buzz and talent acquisition buzz campaigns. We helped creating campaigns with up to 100 Million in reach. Silicon Valley entrepreneur, published author, frequent speaker, and winner of the 2008 SF Entrepreneur award. Former CEO of BlueRoads, Infinigate, Computer2000. XeeMe.com/AxelS


  1. Excellent post, Axel. Every boom has a bust, but the hype that fuels the boom serves a purpose in motivating people to try something new.

    What I’ve observed over the years is that by the time the hype reaches a crescendo — and social media (including Social CRM and Enterprise 2.0) is at that point now — the *real* leaders have already moved on to other things. They got the advantage then keep moving while the rest of the market tries to catch up.

    It’s like the joke about stock market bubbles. You know it’s time to get out when the taxi driver starts giving you stock tips. Except in this case, it’s “Pssst, have you bought your Social CRM yet?”

    There’s no competitive advantage to be gained solely by using new tools, be they CRM, digital marketing, social media or whatever the latest buzzwords — IF everyone else also has access to those same tools. And these days, tools are plentiful, easy-to-use and affordable.

    The key, as you pointed out, is not in using social tools (although yes, you’ll need them) but rather in actually *being* social/collaborative with customers.

    Zappos, for example, does this naturally because it’s part of their culture. Tools like Twitter and Facebook give them a boost, but only because they are social to begin with. Other organizations will adopt new social tools and then wonder why the miracle benefits didn’t come as promised by the vendors, bloggers and analysts all beating the drums to sell new technology.

  2. Thank you Axel for articulating what is surely on the minds of many but who may not be in the best position to say it. Using the often used and worn cliche by Einstein, repeating the same mistake and expecting a different result is a definition of insanity. Bob’s apt description of the hype reaching a crescendo reminds me of my days living in Silicon Valley during the dot.com boom and bust. It was Einstein’s version of insanity in real-time. Nearly every meeting, be it business or social at the time, gravitated quickly to “dot.com”, “IPO”, “start-up”, and how much your stock was up or down. As we saw, the dot.com bubble did in fact burst and the survivors lived on. I suspect we will see the same here – a second tier of social media players who take the lessons learned and create the social innovations that will live on. My guess is the landscape will look much different in a few years than it does today. Great post!

  3. Great article Axel. I’m always wondering myself when the social media bubble is gonna peak and bust. I don’t think we’re that close to it yet because there are still too many new and improved gadgets and gidgets coming out that improve social usage. Once the decline in productivity arises, I think that will be a sure sign.

  4. @Bob – you mentioned a key observation: “Zappos, for example, does this naturally because it’s part of their culture”. To me that is what makes the difference and what made the difference in the past. There are people who *leverage* social media while innovating behavior as oppose to just take it but do what they always did. The same was true for the Internet. Some really *leveraged* it with a new behavior around information distribution and consumption. Or back in the days where computers were introduced. My father told me once in the early days of computing his bookkeeper was manually checking if the numbers the computer generated were right 😉

    @Tony – You are right but there is one difference between Einsteins model and the bubble reality: All bursting bubbles were actually financial bubbles and “conversational bubbles – not market bubbles. The Internet6 bubble wasn’t a INTERNET BUBBLE but a financial bubble of investors in Internet technology. The Internet will have 2 Billion users this year. The “bubble” burst at not even have it’s size. The Internet and its growth, its application, its value… has continuously grown and the bubble bust had actually insignificant impact to the Internet technology itself.

    @Robert – Very good point. I guess the discussion around a “burst” is an early indication that there is enormous amount of talk. That will drive others to look into it and only then it will be just too much and we all go on to something else 😉

    Great discussion!

  5. I agree that the biggest benefit of social media is to give businesses greater access to more people in a shorter amount of time. But having that access is meaningless unless companies connect with their customers in a way that makes them take action. That’s a concept called Engagement Communications.

    Engagement Communications combines advances in communications technology such as Facebook, Twitter, e-mail and SMS texting in a way that creates a personal, human touch. These ongoing two-way dialogues with customers not only deepen customer loyalty, but also create a constant feedback loop that gives companies deeper insights into their customers’ motivations and needs, and offers the opportunity to react in real time.

    For example, a retailer can send text messages to a group of customers to inform them of upcoming holiday specials; another retailer can offer a coupon for a free gift for its followers on Twitter or invite their fans on Facebook to a Midnight Madness sale held exclusively for them.

    Social media provides a platform to engage customers in new and intimate ways that today’s consumers have come to expect. The value of the dialogue comes from knowing what kind of information your customer wants, as well as when and how they want to receive it. This level of engagement will help businesses sustain loyal customer relationships that lead to better sales and a positive impact on the bottom line when the social media bubble bursts.

    Thank you for the post.

    Scott Zimmerman, President of http://www.televox.com

  6. Axel,

    An interesting article which reflects how a lot of people feel. However I de the change not as a bursting bubble but as a gradual and inevitable deflation of a balloon.

    The hype over Social Media was about a new way to connect with your customers. Its novelty was its USP. That novelty is wearing off as users realise that social media is not the universal panacea but just another route to market and needs to be employed as part of the marketing mix not as the provider of a silver bullet. Users are already becoming more sceptical ( or discerning) despending on your viewpoint and are generally less likely to connect with people just for the hell of it. They are applying the “whats in it for me” test, you can see this in the slow down in growth of followers, friends or likes depending on the particular platform. This slow down will continue as ROI reverts to that 1% and when the new next best thing hoves into view.


    Laurence Ainsworth

  7. Axel,

    Great article, I’m delighted to see that some professionals are starting to realise that SMM is another tool in the marketing chest, not the solution to all world problems as soon seem to think.

    As a marketing consultant, I find myself on a regular basis having convince people that simply having a facebook page is not a marketing strategy. I always hear ‘500million people are on Facebook’ I counter that with ‘that means that 6.5Billion people arent’ on Facebook!’ this generally gets me a confused look.

    People are getting carried away by what is faddish in technology and marketing and not focusing on developing an actual marketing strategy. It happened 10 years ago when websites were pretty new. everyone was racing to get one, even if they didn’t know why. It was rarely part of a marketing plan or even controlled by the marketing dept, but by IT as its ‘on the computer!’ This has gradually changed, as will SMM.


  8. Thanks for the comment Ollie – yet I have to say I’m not quite in agreement. You refer to SMM (Social Media Marketing) as a just another tool. Yes, that’s how the majority is thinking of it and using it with almost no success. IMHO Social Media is not SMM and it’s not just another arrow in the marketing quiver. It’s a new bow. And of you just use it as one tool it’s like using a high performance arrow with an old bow.

    And exactly that is the reason why the excitement is vanishing away – it didn’t do the job. Meaning most of us didn’t do the job.

    Now to the numbers: In the developed world we are slightly below 2 Billion Internet users. 30% are on Facebook alone.

    But again if it is just seen as a marketing shout out and spam tool – SMM is domed to fail – and it does for those who use it that way.

  9. Axel: thanks for your post: great points, thoughtfully made.

    I especially like your subsequent point about the value of SM (like any other new technology) in innovating behavior for those who choose to leverage what these new tools enable. In this regard, while I like your notion of “automation as sand in the Social Media gearbox”. By contrast, IMO, learning is the grease (towards innovating behavior) in the Social Media gearbox. That is, the more sharply we can measure the impacts of our social media practices on business performance, the faster we’ll learn which innovating behaviors, leveraged by those technologies, are most worth adopting as new habits.

    @scott: IMO, your points on the need for constant feedback loops on the buyer impacts of user actions is a step in this needed direction of ‘more learning from the doing’.

    Trust this adds some value. – John

  10. I see the small business use of twitter crashing soon because of the limits and the fact most everyone on there is only out to shout or “tweet” their own horn but very few are reading on the other end. Twitter might be good for celebs and their stalker/following but for small business it is just too limited.

  11. This was a terrific post, and I’d like to support the message from a somewhat different perspective. McKinsey has found that 20% to 50% of the influence of b2b and b2c consumer decision-making comes from word-of-mouth, easily the single largest and most important factor. Independent research from several organizations (including national panel research I have conducted) shows that, irrespective of all the hype around online social media, the overwhelming amount of word-of-mouth, and impact on decision-making, comes from offline interaction.

    Social media’s sophistication and importance are growing, of course, as is marketers’ ability to analyze text and harvest key themes, so the bubble may well be with us for some time to come. Twitter, Plaxo, Facebook, and LinkedIn, etc. also more attention-getting than offline word-of-mouth. All of that said, marketers would be wise to be attentive to all the sources of peer-to-peer communication.

  12. Agree that the social media bubble has burst, or is about to do so, depending on your perspective. In the early days of social media, a popular columnist said “if you give enough people a laptop and a mouse, you’re bound to get garbage online.” This idea is true of most technologies that become commoditized, and subsequently widely adopted. At a certain point in its maturity, there’s excitement about the technology “because we can use it!”, not because it’s valuable or because people want what’s being communicated. As Axel and others have pointed out, the survivors will have recognized social, economic, and cultural forces, understand what they mean, and will adapt social media accordingly.

    By the way . . . the phrase, “Grow your Twitter following” just now yielded 224,000 results on a popular search engine. Yes, the bubble has burst.

  13. @John – I like the “learning is the grease” analogy. Well put.

    @Matthew – you are right. And keep in mind, you only see on Twitter what you follow. So if a small business is only following relevant small business customers it will make sense. However most SMBs are just too superficial and don’t take the time to get the pearl out of the shell 😉

    @Michael – I guess you pint to another big issue in traditional marketing: under educated stuff. Too many just follow the masses without seeing themselves as follower. Social media did a lot but it actually didn’t change the underlying behavior of leadership and followership.

    @ Andy – wow 224,000 results. Unbelievable. There is German idiom that goes like this: “Folks, eat more shit, a trillion flies can’t be wrong”.

  14. Great post! Too many people(some clients) are sucked into these schemes that purport to automate the process… they always sounded like get rich schemes to me and your article amplifies this point.

    If the focus is automation, then that means the focus is not on the customer.

    Social Media is but a tool that should be part of a business marketing strategy. I dare say most small businesses have any marketing strategy and that being the case, social media will be as ineffective as the traditional advertising and PR tools.

  15. Too many people look toward the “so-called” advanced skills before they have mastered the fundamentals.

    Why do your client/customers keep coming back? You offer something that provides a solution to a problem. Isn’t it similar with social media? If you don’t offer good content, they why should they return?

    The content has to be interesting, relevant and engaging. As you point out “…become more social with their customers.” You’ll only get as much out of it as you put in.

  16. The hours wasted are truly wasted–but they are a function of the agency business model of the people currently peddling ‘social media’ services–they have bums on seats that need feeding so a campaign makes sense.

    Forget the term, but look at the phenomenon of stakeholders, customers and vendors personally identifying themselves, engaging in discussion that they care about, contributing to the commons for personal and selfless reasons–most importantly helping firms see not undifferentiated marketing segments by individual humans. And then starting to understand how those humans might impact that companies operations be it from providing customer insight, to granular understanding of marketing messages, to identifying who could become an advocate or critic to your business.

    At that level the social footprints become deeply strategic. They start to eliminate an information blindspot for firms, allowing them to channel resources more effectively (to all our benefit). And for the individuals concerned, a benefit of engaging more appropriately with the professional or consumer businesses most relevant to them.

  17. I thought it would be interesting to re-visit this article after a year to see what has transpired. It’s now January 2012 and there have been a few developments in the evolution of social media marketing.

    Facebook now has over 800 million users and continues to tinker with its system, and is still fumbling the ball on security. Google now has Google+, which continues to grow, but there seems to be confusion about it because it’s not simply a clone of Facebook.

    What has really changed, though, has been an explosion in the use of mobile devices (smartphones and tablet computers) for social networking, the growth of local search, and the convergence of all of these, such as in Facebook Places and Fan Pages.

    But it’s still a case of “it’s not WHAT you do but WHY and HOW you do it” that makes all the difference.

  18. Great post, Axel. I was thinking about something similar today when I started to get irritated about FB friends “liking” big corporations that are contributing nothing to the real conversations. I think the bubble that is about to burst is the way some of those businesses are using social media – “bribing” their customers to like them on FB in exchange for a discount coupon or a chance to win some kind of prize. That’s not true social media engagement as your post describes it, and I’m sure those businesses don’t see the bump on the bottom line from it. It can’t work any more than old-fashioned manipulative direct mail works. But I actually think we are nearing a true renaissance via social media, where real discussions begin and real ideas are shared. The business that can participate meaningfully and learn from that renaissance will thrive.


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