Ted Sapountzis is vice president of social media audience marketing at SAP and has been with the company since 2004 in various product-management and strategy roles. You can follow Sapountzis on Twitter or visit his personal blog.
It’s pretty simple, actually: The people we are trying to attract see no value, we are not able to show the return to our companies and our bosses are not willing to invest more, and so the vicious cycle continues. No, I am not predicting a doomsday scenario; I am merely looking forward to some sanity settling in as we get into 2012. Don’t get me wrong, I still fundamentally believe in the significant disruption that social media will cause to business. However, to paraphrase Mark Benioff, I believe we are about to enter a long and cold Enterprise Winter. Could the lackluster initial public offerings of Jive and Zynga this month be a sign of what to expect next year?
Every day for the past two years, I have been seeing one study after another, some declaring that social media is going to change the world — which, to some extent, it has — while some declaring the bubble is about to burst. What has changed in the last couple of months, however, is the number of studies that predict the latter, combined with the lack of any news that the next big thing in social media is just around the corner. Some of the facts:
- Growth is slowing down: The New York Times reported that growth in Facebook visits was a “mere” 10% in the 12 months ending in October, down from 56% a year earlier. Meanwhile, Facebook is preparing for an IPO early next year. As George Colony, CEO of Forrester Research, said at the LeWeb conference, “Social is running out of hours. Social is also running out of people.”
- Companies are not able to generate value (aka return on investment): I wrote about the holy grail of social media ROI more than a year ago, and eMarketer published a flurry of research this month. Some of the mind-numbing statistics are that only 8% of marketers could attribute ROI for all of their investments in social media, while 60% still count fans, followers and “likes.” This translates to 2 in 5 marketers having little confidence in their ability to measure social media campaigns, according to a Chief Marketer study.
- Corporate investments are decreasing: According to a University of Massachusetts Dartmouth study, “social media use among America’s largest companies is losing steam.” Their study, which focused on the Fortune 500, found no growth in corporate blogs, while use of Facebook and Twitter grew only 2%. This certainly is consistent with discussions with my peers in the industry.
So what does this mean for us?
- If you are an enterprise social media technology provider, my advice is to focus on the user experience and helping customers reduce the noise, engage with customers and prove the value of social media. I fully expect a major shake-out in this space next year, and I think the companies that will survive will somehow exhibit these two characteristics.
- If you are an enterprise leveraging social media to connect with customers, my advice is to focus and execute well, while moving beyond counting fans, followers and “likes.” There are ways to do that, but it’s not as easy as starting a Twitter or Facebook account and hoping they will come.
I suspect that many of you will not agree with my thoughts, and I hope to create some dialogue with this post. As always, I look forward to your thoughts and comments.
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[...] Social media: Have we finally hit the peak of the hype cycle? [...]
Interesting post, and just from my own observations and experience, I tend to agree. There may be exceptions to the rule, but in my experience, a website and a blog are still the two best ways to be found, build trust, and generate income from new and existing customers.
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The main problem we see: most "social media marketing agencies" that have popped up are terrible. They are typically ad/marketing agencies that added social media to their offerings to clients because they had to. However, they work it like traditional marketing and dont understand how social works. I would hazard to guess that this is about 80% of who is out there selling social media services. I see it on LinkedIn all day long. As well, they dont understand how to use analytics to find ROI, and have no idea how to measure success. They dont tie it into other marketing correctly, and then use facebook, as an example, like a newsletter. Websites are NOT an engagement tool, and I cringe when people make comparisons between a website and a social platform. They wonder WHY they cant find ROI. Our clients enjoy ROI on the platforms, because we know how to use it correctly. Want to see? Visit our facebook page http://www.facebook.com/talkingfinger
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What I have noticed is that it is harder and harder to keep up with all the posts, even for someone who has just a couple of hundred friends, when it can take too long to scroll through and read or scan them all.
What this means to businesses is that if they post, it may only be read or even seen by a small percentage of the users.
And if businesses start to post 3-4 times a day to get their message seen, befriending of these businesses will take place.
Where does this leave social media in the future, where it was meant, for personal usage only.
J Gary Farrington
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Gary,
You are absolutely correct in that one of the big challenges businesses have is getting the attention of the audience they are trying to attract. This is a big challenges that both corporate users and technology providers have, i.e., how to produce higher quality content and help their audience cut through the noise.
I still fundamentally believe there is a strong case for social in business, we just have to do it differently IMO.
I agreee – tthe post was very interesting and on-target… I fee that " Companies are not able to generate value (aka return on investment) " because they continue to make the assumption that if they get involved with the NEW MEDIA that the customers will come..a large majority of the customers we are working with have the issue that they have made that assumption – you need to integrate EVERY effort with your overall strategy and business outlook – social/new media is no different.
Greg, your comment is spot on. While social is a very different way to engage with an audience, it still IS 'just' one more channel, and we have to treat it as such if we want to be successful. Integration is key indeed.
I would agree that the bubble is probably soon to burst. Social Media has taken off at such a rapid rate that everyone wanted to get in on it and figure out how to milk it. The spammers and noisemakers are pretty rampant. Having worked for a small social media marketing firm for about 10months and now preparing to guide the advertising department at Cal State Northridge towards social media marketing consulting I really do believe that quality customer service and focus on the user experience is going to be a must to set any consultant apart from the crowd. It's going to be an uphill climb since everyone claims they understand social media and raves of what it can do, the real experts have to gain the trust of businesses that have experienced the poor results and services of the wannabes. The next thing we may begin to see also is a heavier focus on niche social network sites, where there is less noise brands can still have a great opportunity to have a voice. The key is understanding that niche and being creative with content.
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Ted – Great post. I've spent the last 16months consulting with CEO's on what an effective use of social media marketing strategy should be. However, you summed it up perfectly in that at the end of the day business owners want a return on their investment and the hard glaring truth is social's ROI is a constantly moving target and I've learned that the way to address it is to explain that right now it's a cost of doing business. B2C service providers cannot afford to wait 12 months for a community to grow large enough to justify the expense of running a comprehensive social media marketing plan. B2B seems to have a much greater propensity for success because social media is all about engagement and education. So a B2B client is much more inclined to invest in a long term commitment because they are not relying on Facebook to be a revenue generator. Social media forums are fantastic places for consumers to seek information and make better informed buying decisions. If you invest in a solid strategy that has a commitment to quality content, and you can get past the heartburn of spending a minimum of 12 months to get any real social traction then we will see this form of marketing settle into a rhythm of performance that we can attach an ROI to. But for now I agree 2012 is going to be the year of "prove it" and many firms will not survive.
Mark, thank you for your nice words. You are correct in that there are nuances between a B2C and B2B company (and many pundits would actually confirm your observation that B2B companies are more 'patient', and even innovative, in that respect). What we are also seeing however is a convergence and many B2B companies are also trying to understand how to connect with their end consumers/users/etc. instead of a faceless company. I believe we will start to see less and less differentiation going forward, but it is certainly there today.
Thoughts of a newbie in B2B social media: say something useful people! 22,000 tweets on the trivialities of your life? Not interested and I will not follow you even if you are my demographic. (I give any tweeter the benefit of 3 tweets. If nothing interesting or relevant to my agenda, then I will stop following or not follow to begin with.)
I think people have forgotten the first golden rule of any communication: Content is King.
Greg — I think you put it well, and if you don't mind I'll take it a step further: "you need to integrate every effort" the same way a conductor integrates the orchestra. The fixation on value or ROI is understandable and intuitive, given how digital media has always promised to track impressions in ways traditional media can't. One expects to track causality. But I think it's a red herring to expect the cash register to ring based on social media efforts alone. After all, no one counts how many concert hall seats the flute section fills. But you sure as hell need flutes, because your audience expects them.
Simultaneously, we ought to recalibrate the measuring stick. Social media looks like a lot like marketing tool, but I'm starting to think it's now just part of the cost of doing business — a communications tool that's mandatory in a competitive marketplace, like a conference room or office furniture.
Or as one of my colleagues likes to put it: evaluating the ROI of social media is like evaluating the ROI phone system. How do you justify the expense of that communications tool?
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Greg, thanks I like the analogy of the conductor with one exception. I still fundamentally believe that there is tremendous intrinsic value in social, it's just not as easy as counting your fans and followers. In my mind it all has to start with understanding the problem you are trying to solve. For example, if you are trying to create awareness about your product / widget, etc. there are ways to do that beyond counting followers. If you are running a social demand gen campaign, there many way to track those leads all the way through your funnel (this is the yet unfulfilled promise of SocialCRM). If you are trying to provide after sales support, there are numerous metrics and tons of case studies of companies that have been successful in increasing customer loyalty, reducing support costs, etc.
What all of these have in common in my mind is that they start with a business problem and figure out how to integrate social next (not the other way around).
Ted, I couldn't agree more. And I can only add this: what's funny is that starting with a business problem — that is, focusing on a narrow objective — and using social media to help solve it has everything in common with other marketing/communications tools. It's tactical.
Does it help to think in narrow specific terms? Perhaps that's what you mean by "focus and execute." I agree. One dose of medicine: those to items require an investment, either time or money. Do large organizations understand this?
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Greg, yes that is what I meant by focus and execute, i.e., to start small, experiment, learn and expand from there. Unfortunately the hype has caused many companies to look for free instant gratification with social, which as we know could not be further from the truth
User growth is less of an important factor, where as, user engagement is the real value. Focusing less on how many users, compared to how many engaged users is what is going to reveal the rest of the iceberg.
[...] Social media: Have we finally hit the peak of the hype cycle?. [...]
[...] read some interesting commentary today in an article titled “Social Media – Have we finally hit the peak of the hype cycle?” The author would lead you to believe that the social media bubble is about to burst. He claims [...]
Your comments match what I have observed from the use of social media in the association community, arguably, the original "social networks".
I have seen a slow maturation of how social media is both viewed and is being used by organizations. It is slowly evolving from the "new shiny object" and a focus on tools (i.e. platforms) to a deeper understanding of how to use social media for specific business objectives.
The one area I would disagree with or at least offer a different observation is regarding investments in social media. Perhaps because associations tend to lag behind business trends, I see associations actually making more investment in social media instead of less in 2012. They have realized that in order to get results, they need to properly strategize, plan and staff for social media instead of simply adding social media to an already full plate for communications and marketing staff.
I agree that going forward, social media has to earn its way and the resources allocated to it in 2012.
Terrance thanks, I think you are alluding to a potential bifurcation that although I do not have any direct data points on, is certainly plausible. Companies that have been experimenting for a while and are starting to see tangible benefits may indeed increase their investments, while many 'newbies' that arguable shouldn't have started to begin with, may indeed stop or reduce their investments.
The thing to keep in mind about the Chief Marketer study is that it measured self-reporting about a marketer's own perceived confidence. That is, did they feel confident in it. Not "did they do it" or "can they do it."
I think this is indicative of the problem of marketing in general. Marketers have a problem with measuring ROI period, not just social media marketing.
I don't think this presents a problem for social media, rather it shows a serious lack of education and understanding of the need to measure ROI in general, not just with social media. If anything, measuring social media is easier than measuring TV advertising, newspaper advertising, or even billboards.
I see this as an opportunity for social media marketers to start showing their non-social media brethren about the joys of measurement and monitoring, as well as a new opportunity for measurement and analytics folks to find new clients to fill a growing need.
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I agree with your point and the lack of serious education. Reading through all these posts, I'm starting to see a pattern and an perhaps an opportunity…. Great content is #1. Build a strategy that incorporates measurement at the start to prove the value of Social Media Marketing – don't wait until AFTER the launch of a project or program. 2012 will be a year that will sort the "wheat from the chaff" in SMM consulting industry. BTW, your book "No Bullshit Social Media Marketing" is a must read ! Have a great 2012.
Wow, thank you very much, Kjell! I really appreciate that.
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Erik, I fully agree that this is indeed of the biggest challenges we have in Marketing today – I am sure we have both heard all the 80/20 marketing spend jokes. I really like the challenge you are putting up and look forward to social leading the way of the transformation of the marketing profession. Education (as Kjell highlighted below) and thoughtful experimentation with real targets will be key to success.
Social networks such as Facebook provide unmatched access to an enormous audience that can be hyper-targeted and matched to the advertiser's ideal customer demographic. Social is not some magic solution that automatically brings customers through the doors just because you have a "page" and are talking to people on a daily basis. To be successful in a social environment, businesses must overlay a true marketing process that transcends the social platform, one that not only gets that initial "like", but one that provides a path to product education, promotional awareness and one that aligns with the customer's buying cycle. There is a common misconception that social MEDIA is social MARKETING, but it is not. The company's who embrace social from a true marketing perspective will be the ones who use it as a successful tool in their communications arsenal. The "bubble" will burst on those who are are not employing a truly measurable marketing process in their social environments to prove the value of their marketing spend (i.e. ROI).
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[...] Ted Sapountzis is vice president of social media audience marketing at SAP and has been with the company since 2004 in various product-management and strategy roles. Social media: Have we finally hit the peak of the hype cycle? [...]
People usually are talking about "Social Media Strategy" which is in fact nothing else but an extension of a marketing strategy.
Yet, you're reading little about Social Media beeing tied in a "Corporate Strategy". In my opinion:
- Using Social Media is useless if your company is not "social". I'm talking about corporate culture.
- Social Media budgets are coming under pressure if the deployment is not linked to corporate strategic goals.
- Deploying Social Media is changing the company. It will not be successful if you don't have a plan for managing this change.
There are many more aspects why a Social Media Strategy needs to tie in a corporate strategy. However, you find relatively few companies who really did that. Too many started to deploy Social Media just as a new distribution platform for their annoying and boring advertisements.
Why are our "social gurus" posting and tweeting thousands of articles on how to use Facebook and Twitter but little about re-writing the corporate strategy before you start to post or tweet?
I'm sure, once we understand this, discussion about ROI become obsolete.
Juerg, very nicely put. In my mind understanding your social strategy is step 3: Corporate strategy first, followed by Marketing (which unfortunately still does not happen at many companies), followed by social — if appropriate as you pointed out. I am a firm believer in your first point around corporate culture and blogged about this topic earlier this year. If your company does not have the DNA, starting anything is futile…
Juerg, you have a good point on why "social gurus" are not talking about corporate strategy. I have been puzzled about this as well and what I see is that many of them simply lack the necessary experience of having worked for major organizations with complex structures and you cannot advise on something you have little experience with.
Ted – interesting post. Based on our startup's discussions with a number of large and mid-sized companies here in the US, it seems that more business folks are realizing that Social Media will increasingly become a part of 'business as usual' and will lose its status as the 'shiny toy in the store' – similar to email many moons ago.
This transformation is in its early stages but is a critical one since it is a pre-requisite for decision makers to be asking the right questions before firming up or tweaking their 'Social Media Strategy'. They need to start focusing on what we call the "Interaction to Cash" cycle with seamless integration between social and traditional channels. It's important to get that right before making the technology decisions to support the strategy.
So, not sure that we are seeing the end of the bubble as much as we are seeing that bubble getting absorbed into the larger liquid mass of business…and by the way, we can't wait to see the end of the focus on Likes and Impressions (ugh)
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[...] to Social media: Have we finally hit the peak of the hype cycle? social is over. Or overrated. His explanation, “Growth is slowing down: The New York Times [...]
[...] post originally appeared on the Smartblog on Social Media. #dd_ajax_float{ background:none repeat scroll 0 0 #FFFFFF; border:1px solid #DDDDDD; float:left; [...]
[...] Social media: Have we finally hit the peak of the hype cycle? [...]
I agree with you on this point for sure – "Don’t get me wrong, I still fundamentally believe in the significant disruption that social media will cause to business." I do, too.
As I see it, the over heated hype about social media marketing led to expectations among some that social media could never deliver. We've successfully closed business from leads we've generated in social media. We may be one of the rare organizations that can actually TELL you what our ROI is for 2011 – and it's very good. But we are not measuring success by "likes" and "follows." We are looking for indications of actual engagement, lead generation and market awareness. On each of these important areas, we are seeing good results.
But I think the next phase of disruption will be in the development of social media inspired tools organizations use internally. 2012 will – I think anyway – be a fun year for this interesting and wide open market.
[...] Read Ted Sapountzis very interesting post on “Social Media: Have We Finally Hit the Peak of the Hype Cycle“ [...]
[...] of email, then the explosion of spam, and then the settling of email into what it is today. This blog post in smartblogs on Dec. 27th suggested that we have finally hit the peak of the hype cycle in social [...]
I absolutely agree Ted, some major changes have to take place for marketers to start getting real value out of social media. The hype is over and businesses need to start asking themselves WHY they want do this and what is in it for their customers.
Once they have done this, social media has to be fully integrated in the overall company strategy and marketing mix, including traditional media, online and mobile, taking advantage of the unique characteristics of each media. There is still a tendency for businesses to view social media as yet another silo to start pushing their ads and marketing through, and follows and likes are simply eyeballs. Many even go as far as outsourcing their facebook and twitter activities. How social is it if you hire someone to socialize with your guests when they visit you at home, because you are too busy in the kitchen preparing food for them?
The key to establishing a successful Social Media Strategy is very simple, be social. If a business is not social (credible, honest and emotionally engaging) facebook likes and twitter followers would not generate any real value.