If You’re Thinking of Launching a Social Media Startup, Please Don’t
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Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#2While it's all been said before I did enjoy the article more than the title suggested I would. Plus the point about having a valid revenue stream is always worth hammering home again.
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#3[deleted]
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#4The reason why social media is valuable as an ad platform is because it actually is more measurable and more effective than straight-up Proctor & Gamble-style brand advertising that you see in magazines and on TV every single day. It's not for everyone, and yes, some people don't get an ROI on what they do. But that's not social media's fault -- that is the advertiser's.
My wife works in online marketing for women's retail. Every time they spend a dollar on Facebook or Twitter, they make two, or sometimes four, or more. An ad click or promoted post results in a measurable real sale.
Social media advertising is not that different from the kind of Google Adsense ads you see on blogs, at the end of the day. Sure, they convert less than Adwords and are less profitable since there's less intent, but these things are still a quantum leap beyond what was possible before the Internet.
New channels spring up and they turn out to be valuable and help businesses make a lot of money and build real brands. My wife worked at Modcloth and now at Bebe. Modcloth is probably going to go public in the next few years, and all with an online-only, email and social media-based marketing machine. They're a profitable real business built on a new channel.
Bebe was started in 1976 and also piggybacked on a new form of advertising medium that was unexploited. In 1976, it was bus terminals and bus shelter ads - they were cheaper than any other method (magazine, etc) and got their brand everywhere. Today it's a public company.
It is in 2013 as it is in 1976. I'm sure some people made bad ads and lost money on bus shelters back then too.
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#5As someone working on a social media app, I call bullshit. "The funding for these companies is plentiful because there is a serious bubble?" Now is the worst possible time to be building a new social network, because of the failures of Facebook, Zynga, Groupon, and pretty much everything else last year. Investors have a pack mentality, as he says, but the pack has totally shifted.
Also, he claims that Facebook and others' business models have failed because they don't convert well, or because their users are "forced" to use them. So what if only some Pages have used the product? Those are the companies that get value from it, and they'll continue to pay for it. And Facebook has other sources of revenue. I hardly think it's an example of a failed business model.
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#6I agree that the space is crowded. And there are other issues raising the barrier to entry: user fatigue and national/supra-national legislation (like the EU anti-cookie thing etc.) which may dampen your enthusiasm in case you thought about creating yet another social thinggy.
Even on the almighty social network I can not just feel (that I could since a long time) but also see people complaining.
No latter than today I opened FB just to see one post by a friend and lots of comments about the lack of privacy on FB and why FB "knew too much" about individuals.
It's also quite amazing: that friend (and several of those who answered) hardly post anything anymore there. And the consensus was pretty much: "I'm not posting anything nor commenting on anything on FB, except when it's to bitch about FB's policies and use of our data".
Non-techies friends btw.
I'd say the problem for mainstream users is that some apps are too targeted: it may be both effective (and the most cost effective way to advertize and reach your audience), it's also creepy to many users. There are some users who realize that any site they open, anything they 'like', any video they watch is used to target them more and more. As a result they're not liking stuff anymore, not opening their mouth, not opening friends' links, etc.
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#7I agree that the space is crowded. And there are other issues raising the barrier to entry: user fatigue and national/supra-national legislation (like the EU anti-cookie thing etc.) which may dampen your enthusiasm in case you thought about creating yet another social thinggy. Even on the almighty social network I can not just feel (that I could since a long time) but also see people complaining. No latter than today…
This is true for me to. Particularly the last bit, I never "like" embedded content (links, videos, etc), and never click the links themselves either (if I care, then I Google the description to find the link outside of Facebook).
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#8I read an article in the Economist not to long ago, that seemed particularly insightful. It's about investing, but I think it applies equally well here.
http://www.economist.com/news/finance-and-economics/21569397...
Here's the money quote:
Investors selecting a sector on the basis of its prior five-year performance would have earned much higher returns over the following five years by selecting the worst-performing sector than the best.
So if you're looking for an idea of what business to launch look at what did the worst over the last five years... Rather than what did the best (obviously this is just one thing to consider out of many, but I think there's a lot to be said for it.)
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#9The post would be better if he didn't plug his book in the first paragraph. In effect he's benefitting from the thing he complains about which is also not a sustainable business model.
I think the more interesting question is what will emerge after this transition phase where old media is dying. At this point all the webby stuff is still bottom feeding but eventually will replace the old thing with something new and sustainable.
Re: If You’re Thinking of Launching a Social Media Startup, Please Don’t
#10>>>>As I documented in the book, social media is a total loss leader for large corporations, too. They’re more or less there out of obligation
I can back this up with some information. I currently work for a large corporation who has invested a ton of money into social media (facebook, twitter, instagram). Even after several years, there is a huge war being fought between "new media" types in our company and the "old media" types. Our CTO routinely joins our meetings and basically says, "Great, we had 5,000 likes on our Facbeook page, how many more widgets does that sell?"
For them, there is almost no way to track how much of an impact a tweet or a facebook like has on their bottom line. Conversely, when they run a print ad for a certain model, and sales increase x%, they attribute it to the print ad.