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The Social Networking Bubble

October 25, 2010

Social media is overhyped, overcooked, and overvalued

We are now in a social networking bubble. Social networking is useful, but it’s overvalued. We’ve overstated and overemphasized the utility of social networking and are now in a marketer’s “greater fool” territory.

The social aspects of life and work are only a piece of the puzzle, and I don’t think they are the biggest piece by any means. If you want to talk about culture or personal happiness, the social aspects dominate. But there are many things that don’t benefit from community that much. For example: dating. When I spent two years working on building a dating site, it became clear that dating isn’t social. In fact, if you look at the anthropology of dating, you find that people of completely unrelated tribes tend to fall in love and have children more often than people within a tribe (it benefits you to get your parents’ genes from two completely separate gene pools). You DON’T want a dating site where women rate their experiences with men and tell other women about the various men on the site, because a man who’s good for one woman isn’t right for another. On the other hand, many couples meet through friends in various ways, so using the power of your network can help, but it shouldn’t be the only way to look for a mate. This is also true of job hunting – you should use both the power of your network and the power of search to uncover all possibilities. At the other end of the spectrum, if I’m looking for a babysitter, I would much rather find one who has some connection to my network of friends, because a babysitter who is recommended has a lot of advantages over one who just answers my ad on Craigslist (though I’ve also found good ones there as well).

Here are a few things for consumers to consider:

  • What works for you doesn’t necessarily work for me. One child’s idea of a great birthday party and gifts are entirely different from another’s. You might be a runner and I’m a runner, so do I want shoe recommendations from you? No, I don’t. My feet are completely flat. Most shoes don’t work for me, so please don’t go on and on about your fantastic running shoes. Restaurants are kind of in the middle – if I recommend a restaurant, that doesn’t mean you’ll enjoy it, because I’m vegan and you aren’t. But if I tell you one Italian restaurant is much better or has a better wine list than another, you may find that valuable. If you like a friend’s taste in clothes, you’ll probably want to learn where she shops. But on a social network, are the shopping recommendations really that valuable? Probably not.
  • Consumers aren’t good reviewers. The average person isn’t very good at giving reviews. Go to a travel site like TripAdvisor, and you’ll see a lot of negative comments. That’s because people who enjoy a vacation spot often don’t write up their experience, whereas someone who has a bad experience often has a desire to vent. Most of this is rubbish. Don’t make travel plans based on what you read at TripAdvisor – the comments are often more about the people writing them than the conditions on the ground.
  • Experts are more findable than ever. As I’ve said before, if I’m looking for a pocket camera, I’m not going to ask my friends. My friends don’t know anything about pocket cameras. What’s great about the Internet is that we can fairly easily find experts whose opinions we like, because the experts work hard at being visible. For example, I stopped reading Michael Reichmann’s camera gear reviews a long time ago, because after taking his advice I bought a camera I thought wasn’t very good. Instead, I gravitate toward guys like Bob Atkins and Lloyd Chambers, whose research and writing I like more. I also check Phil Askey’s DP Review for the latest in press releases, gear specs, and even reviews. I don’t know any of these guys, and they’re not friends of friends. They are experts. I’d never ask my friends for a recommendation for a plumber, because not one of my friends knows the first thing about plumbing. Instead, I would read reviews at places like Angie’s List and The Franklin Report.
  • ProSumers can be great sources of information. A ProSumer is someone who does something for the fun of it but wants to do it at a professional level. Look at the reviews of products on Amazon.com or Yelp. I know a good review when I see one that says “pros” and “cons.” I can tell right away from that whether the reviewer is someone I want to pay attention to. If the reviewer says that price is a “con,” and I’m not price sensitive, then that person’s reviews may not be right for me. This is particularly true for durable goods, where a high-priced product may outperform and outlast a cheaper one and, in the end, will be cheaper to own, but the reviewer simply can’t afford a high-end product. So I look for people whose reviews I think are good. Amazon.com lets me rate reviews, but because different people have different values, this one-size-fits-all rating system makes it difficult for me, because I still need to read a lot of reviews to find those I am interested in. The appropriate reviews for me don’t necessarily surface. But look at how rich and valuable the reviews are on Amazon.com – there are people who have set up grids for testing flashlights in their basements! I’d rather read serious pro-sumer reviews than marketing fluff any day. And often the pro-sumers are more valuable than the experts.
  • Marketers are masters of disguise. In many product areas, the “testimonial” sites are set up by companies to look like real people giving real advice, but they are just extra domain names trying to drive traffic to the sites that offer the same product. Many marketers have set up profiles on Facebook and other social networking sites to help drive traffic to their clients. If you want to see examples of this on Twitter, type “Collectable coins prices fluctuate” into their search window.
  • Mobile is not the holy grail. I hear so much talk about finding “a great restaurant near where you’re standing now,” that I have to wonder how I ever managed to eat in a strange neighborhood before. It may sound cool to “find women you’re interested in meeting nearby,” but I can tell you that the women don’t think this is such a hot idea. There’s a lot of checking in going on, and it all seems to me like something our kids won’t do because they don’t have the problem FourSquare solves – being in a certain place and not knowing their friends happen to be nearby so they can hook up and hang out.
  • Buyers must learn to be critical of sources. In general, look for balance in a review. Look for “pros” and “cons.” Look for people who have taken the time to write a thoughtful review and make suggestions for improvements. If you learn that a surgeon has had six malpractice judgments against him in 7 years, would you choose him? How about if you learned that the average surgeon is sued at least three times a year and loses fairly often because jury trials are expensive, so insurance companies just settle? In fact, surgeons that have the most practice get the most difficult cases and often get sued by families of patients who had no other hope. I’m making up the numbers here, but it could be that a surgeon with only six judgments against him could be a hall-of-famer. The details matter, and most people giving reviews leave the details and the overall perspective out.
  • Bigger isn’t necessarily better. As we say in social networking, “The first 500 friends are the hardest.” I have almost 600 friends on Facebook. I know about half, have met about a quarter, and the rest just asked and I said okay. Huge social networks aren’t really an effective way to connect with people. Targeted professional networks, like MediaBistro, can be much more effective.

Social networks are certainly good ways to discover and learn new things and meet new people, but there are non-social ways to discover and learn new things and meet new people that are probably even better. Like the $3-billion SEO industry, social marketing is just a game, played for the benefit of search engines and consultants. No matter how global, social, and mobile you are, your business doesn’t depend on these things. All the venture capitalists investing in social media are contributing to the bubble. It’s time to stop the insanity. Twitter is great for bringing down repressive governments. It’s fine for offering discounts. A Facebook page can be an extension of your web site. Social has a place, but it’s a small place. Don’t get sucked in by all the hype. I’ll talk about something I think is much bigger on Thursday.

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