I’ve been interested in investing and macro-economy after I lost my shirt wasting money before the dot-com bubble burst. (eToys, anyone?) That came in handy in the last few years, helped me understand where we are going from here and how one can profit from these challenges. Bubbles are very common symptoms of a misaligned system and when you’re not prepared for their explosion or deflation, you will get hurt and suffer.
So, let’s talk about the imminent Social Crash.
More and more people are using social channels. This trend will continue, I don’t foresee people going back to their traditional ways. The tools will change, how people will use the tools will change and how brands will engage with people will change. (Let’s hope.) Social Marketing is a toddler, temper tantrums and amazement over little things (Oooh, Facebook integrated Skype: GAMECHANGER!) included.
It’s a pretty safe bet to say that the big players of the industry will be fine: Facebook, Twitter, Zynga and the other few billion dollar players. They might lose a huge chunk of their valuation over time but the Zuckerberg’s of the world will be doing well.
I’m not worried about them.
I’m worried about the smaller guys.
The social media consultants, the little shops that evangelize Social Marketing and execute smaller initiatives. The ones that struggle to get a $5,000 project and make a tiny profit from it. And all the startups that bank on social remaining to be the next big thing. The entrepreneurs building the new Twitter. (The next big thing won’t be social, trust me. It will have social features but the focus won’t be social.)
I suspect all of them will be gone in no time.
Why?
The more social the Web becomes, the less valuable weak connections and relationships will be.
Most social initiatives disappoint. They don’t perform as expected, don’t result in a measurable ROI or are plagued with extremely high expectations. The aftermath will make clients gun-shy. And make them move their money to more buttoned-up shops, firms that are part of a bigger network with access to analytics tool and other capabilities to make better informed decisions.
The majority of brands are starting to understand that social media experts are too limited in their capabilities. They desire a holistic, integrated approach that regards Social Marketing as one part of the marketing mix and not the holy grail of marketing.
The social space is moving on from media to social business. You need to understand the enterprise space, organizational structures and have deep insights into current CRM systems to be able to play in this new field.
The overall feeling in the market place is that anybody can do Social Media.
That’s the moment when the bubble goes “BOOM”. In the dot-com bubble, everybody thought they were Warren Buffett. During the housing bubble, everybody thought they could flip a house. And, now everybody believes to be a Social Marketing expert.
The crash is imminent. Maybe next month VC’s will stop investing in social sites. Maybe next year the majority of small shops focusing on Twitter pages will close down. It might happen any moment. But it will happen.
How to emerge victorious after the imminent Social Crash.
Don’t have all your fortunes tied up in high-risk social platforms like Facebook or Twitter. Diversify. Spread your investments to other platforms.
Diversify around user behavior. It changes constantly. Who knew people would check into places and expect discounts 5 years ago? Are you sure they will continue to do so in 12 months?
Think outside your current capabilities/expertise. Just ask the HTML programmers that received a BMW as a signing bonus in 2000 and flipped burgers in 2002. Educate yourself constantly.
Eliminate loss leaders. You might be comfortable building Facebook pages for smaller clients but is it profitable? Do you spend too much time with one client and don’t get enough in return? Time to cut ties.
If you’re struggling now; exit today. It won’t get easier. Time to move on.
Learn from Joseph P. Kennedy
The father of JFK, Bobby and Ted Kennedy saw his wealth increase from $4 million to $180 million. ($2.8 billion in today’s money.) These years were the dog days of the depression: 1929 to 1935.
When nobody wanted to invest in Real Estate, he doubled up by looking for value.
He diversified (liquor after the prohibition ended, reorganizing and refinancing several Hollywood studios) and developed powerful business networks.
Now, I know that many things done by Joseph P. Kennedy were unethical (insider trading, just to name one) but my point is that there are amazing opportunities once Social crashes. Capitalism is about creative destruction.
When the dot-com bubble burst, the Internet population continued to grow. People became more digital. And new ventures were born. History will repeat itself after the Social Crash. The Social Web will continue to prosper. It will become less media and more business, part of the collaborative enterprise.
You can prosper, too. If you prepare for a crash now and get your affairs in order.
Unfortunately, the majority of people don’t believe in crashes, just in minor corrections.
From where I sit, they look like lemmings heading towards a bluff, beneath them only the cold, stormy sea.
Don’t be one of them.
uwehook 
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