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MONEY

The Trouble With Social Media

We all know that quantity, not quality, rules social media. But we don't think about what, exactly, that means.

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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.

IMAGE: flickr/ Thomas Hawk
Last updated: Mar 12, 2013

HOWARD A. TULLMAN is the CEO of 1871 – Where Digital Startups Get Their Start and the General Managing Partner of G2T3V, LLC and of Chicago High Tech Investment Partners. He is a member of the Chicago NEXT & Cultural Affairs Councils and the Illinois Innovation & Arts Councils; an adjunct professor at Kellogg; and an advisor to many start-ups. He is the former Chairman and CEO of Tribeca Flashpoint Media Arts Academy. Over the last 45 years, he has successfully founded more than a dozen high-tech companies. @tullman
@tullman




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