I was playing with some tools on WSJ the other day looking at the stock performance of some of the leading lights of the social media world. The woes of the space are famous but when I zoomed back the 5 year view the issue jumps into sharp relief. Facebook of course has the most spectacular curve…it’s resemblance to a cliff edge is dramatic, but Groupon and Zynga have similar curves…not as sharp, but then they have been around longer. As someone who is involved with the space pretty deeply I take no glee whatsoever in these precipitate curves. The reasons behind them are manifold but central to all of this is the fundamental problem with social media and daily deals…its people. Human nature is tough to go up against.
The huge winner from the first wave of the dot com revolution was search. It’s grown from nothing to a 50Bn industry and the smart money was on Facebook and their social media bedfellows would be the next big thing. The difference is simple…it’s intent. Search works as a medium because it clearly demonstrates intent. Intent trumps all. Social media provides a forum and a communication channel and by abridging the privacy of its users it’s possible to collect enormous amounts of data on the interests and activities of users. However just because I may post about sea fishing it’s not the same as targeting someone searching for ‘sea fishing rod.’ Interest does not equal intent…and that simple fact is responsible for the bonfire of value happening at Facebook. Similarly human nature loves a killer deal…but a shopper taking advantage of a fire sale offer does not necessarily turn into a regular customer. Those are both age old maxims which have driven retail and commerce for many years. To attempt to change those underlying drivers is an uphill task. Search, whether desktop or mobile will continue to thrive driven by intent and deals will continue to attract buyers if they are steep enough…and people will gossip. The vehicles may change but the drivers stay the same. Attempting to buck these trends is tough…as the burning smell from social media and deal of the day indicates. Smores anyone?