The Trouble With Social Media
Quantity, not quality, rules social media. We all know that, but we don’t think hard about what it means.
But if you’re advertising on a web site, and its primary traffic drivers are hacks, tricks and clever pet pix, what are its visitors really worth? Even assuming that those visitors are people and not tracking robots?
I’d argue that they’re not worth your time and certainly not worth your money. Instead of attracting people who might be interested in your products or services and also highly influential, you can end up spending money to attract mobs of easily-influenced people who probably couldn’t explain how they got to a given website if they were asked.
Groupon is the classic example of what happens when a company buys into tonnage rather than quality. It’s not good for Groupon, and it’s not good for the businesses that provide Groupon with its deals. As a business, you have to be very careful about doing a deal with Groupon:
- The deal needs to drive new users and incremental revenue. It can’t replace or cannibalize existing full-margin revenues.
- Your business can’t be subject to capacity or size constraints that would cause the new Groupon folks to crowd out your existing customers.
- The deal can’t require you to spend or invest a great deal of money upfront.
- The deal can’t give you cash flow or other float problems.
The same thing that happens on Groupon--a drive for lots of “customers,” even if they’re not good for your business--happens on social media. Too many companies measure their results by the wrong competitive metrics, such as likes and followers.
As a result, the market continues to encourage young entrepreneurs to create businesses which provide plenty of buzz, but don’t deliver real services and demonstrable results to clients. There must be a zillion social media management businesses and consultants out there by now, and I’ll bet a bunch of them used to be financial advisors.
I’m not sure there’s a clear or easy answer. The temptations are large, and in many cases, the buyers are both uninformed and desperate to show their bosses that they’re in the game.
I do know that we need to start having these conversations so that we don’t create an industry-wide backlash against social media initiatives and the impression that most of the practitioners are all hat and no cattle.
HOWARD TULLMAN | Columnist
Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman