How Will The Slowdown Impact Social Media?
Will the economic slowdown impact the Social Media space? Certainly. One respected writer, Rafe Needleman has already put his picks in on who might fail in the coming months. There are bound to be failures as investors look for gain, not pain. But is that such a bad thing?
Our initial take at MediaBadger is that as the economy was overheated, many stocks overvalued and the housing market way overvalued, so are many Social Media applications overhyped and underserving. Media channels have become extremely fragmented in the past decade and even more so in the past two years, with the plethora of Web 2.0 applications. There’s just too many services in certain segments; over 350 blogging services, over 200 social bookmarking applications, over 700 community services, 500+ ecommerce apps and hundreds of fil sharing, video sharing and photo sharing services. Somethings gotta give as they say.
While Web users may have breached 1 Billion, that doesn’t mean all are using or need Social Media tools and services. What we’ll likely see is a culling of services. Some will be bought out at fire sale prices by the larger players, others will just shut down and some will limp along.
We expect that microblogging like Twitter and Plurk (who’s Karma will that hurt?) may suffer sooner, along with video and photo sharing sites that aren’t under the wings of a Yahoo! or Google. Many a Social Media service have been struggling to find their ideal revenue model and falling up short.
An upside for Social Media though is that people tend to “cocoon” in harder economic times; spending more time at home and consuming entertainment media, including the Web. We expect to see a rise in Social Media use (sales of home electronics outpace other consumer products still) as this cocooning occurs. This may help some start-ups on the verge and others that survive to do better than might be expected.
We still don’t know where we’ll end up in terms of recession and for how long, but a culling of Social Media services isn’t so bad. The best will survive and may survive well, marketers will have an easier time reaching their target audiences and consumers will dictate what they want while learning to say “no” to more frivolous services. Either way, the next 12 months will pass quickly and it will be an interesting time.
What do you think will happen?