We often hear the term "Peak Oil". This ubiquitous economic term refers to a point in time at which the world wide extraction of oil reaches a maximum - the implied cause would be an absolute peak in demand for oil products. At the same time, the expression "Peak Social Media" may sound a little comical and probably won't have entire economic studies dedicated to it - but there is a serious discussion to be had on the matter. Social Media has reached maturity and we are definitely facing some sort of a paradigm shift.
The Rapid Growth and The Rapid Halt
In the mid 2000s, social media was a brand new concept.
It was the period when the key players in the industry that we know today were established:
- LinkedIn launched in 2003
- Myspace launched in 2003
- Facebook launched in 2004
- Twitter launched in 2006
Social media was heralded as a brand new communication concept and media channel. It was a medium that would soon be firmly entrenched in history alongside the radio, the telephone and the TV. The concept was fresh. It quickly amassed a lot of interest and was taken on board - first by the kids in school, then by the adults, and then by the business sector who were seeking to capitalise on the opportunity.
Those were the golden years for (most) social media platform operators. There was nothing but rapid growth and fame in the years to come.
Until today. The growth of social media platforms is taking a dive... a clear sign of a change in trends.
History shows that the free market leads to the same outcome for all innovative products and services, and that consumer behaviour is largerly predictable when it comes to taking up new ideas and concepts. The "Gartner Hype Cycle" [Fig 1] is applicable to virtually every innovative concept. You can apply this principle to most modern innovations: The Internet, Tablet PC's and Blockchain & Cryptocurrencies. The rules apply to social media without expection.
The hype cycle suggests that there is always a point at which a new technology is thought to be the ultimate solution by the market... followed by a turning point where the market is suddenly disappointed and disillusioned. This results in a dip, which is followed by a period where the new technology is gradually adapted and used as a tool for legitimate purposes. After this point it is no longer considered new and innovative - this is a period called the "Plateau of Productivity".
There are signs that new trends are emerging in the social media sector that signal a turning point. Some major social media platforms are starting to report a real decline in users in different regions across the world - indeed users are abandoning the mainstream social media platforms and moving somewhere else, or quitting social media entirely. While any number of reasons has been put forth for this: digital fatigue and digital detox, privacy concerns, shifting demographics with Generation Z preferring different platforms and communication concepts... the key point is that the world is starting to move on from the social media obsession.
Social media has also been hit by a multitude of legal issues - this includes a data breach allegations against some major social media platforms, introduction of GDPR (General Data Protection Regulation) in European Union and miscellaneous country-specific legislation such as the new laws in Australia to limit the spread of violent content (Sharing of Abhorrent Violent Material bill). All this additional regulation will introduce more compliance costs for social media platform operators.
The unregulated free-for-all era of social media is now firmly in the past.
This poses some issues for social media platform operators - their business models were originally built on ever growing user bases and ever increasing share prices. The future may push social media platform operators into operating on fundamentals, which may create a loop of introducing even more advertising content to generate revenue, and driving even more users away in the process. It is now evident that advertising material is widely present on almost all social media platforms.
The Social Media Marketing Hype
The potential for social media to be used as a marketing tool is one of the sources of the much unwarranted hype.
It's no surprise that Social Media is hailed as the ultimate low-cost marketing solution that allows virtually any business to tap into billions (!) of new customers. The spread of social media marketing has spawned an entire army of social media consultants and gurus that promised big results.
Social media marketing specialists often talked businesses out of tried and tested methods: carrying out well-planned traditional marketing campaigns, investing into building proper functional websites and developing sound SEO strategies. This happened en masse. Many businesses were mislead into dedicating their entire marketing budgets to social media, which often turned out to be a foolish move, especially for those businesses that operate in the B2B environment.
This period of unbridled enthusiasm in regard to social media marketing has largely passed and the landscape has drastically changed - the concept is just not new and fresh any more. By now, almost every business has sat through consultation sessions and seminars with a social media guru, and consequently, tried their luck at attracting new clients via social media platforms one way or another.
Not many succeeded.
The truth is that unless you were already a large entity with an existing client base that needed to be kept up-to-date on a regular basis, or were an entertainer or a celebrity with a keen following, you probably wasted a lot of your time and your ROI was abysmal to say the least. Some companies in the B2C did benefit from well executed campaigns, but these were the exceptions.
Social media marketing seems like a bad bet if you look at statistics.
McKinsey Insights posted research that showed a very interesting finding: e-mail was discovered to be 40 times more effective for acquiring customers than two of the most popular social media platforms.1 A statistic such as this would give any digital marketer a hint that the tried-and-tested email blasts may be a better choice than social media in the majority of cases.
The caveat is, email marketing is a more complex to carry out as it requires additional steps of building a high quality website that is effective at obtaining e-newsletter subscriptions, the use of a professional tool to execute email blasts and compliance with relevant laws such as The Spam Act 2003. Email marketing is actually more difficult to carry out than social media marketing. The same is true for other marketing activities - social media seems to win on simplicity, but loses out when it comes to ROI.
What is the reason for such a poor response from carrying out marketing activities on social media?
1. Social media was designed for something else entirely
The primary reason is that social media was never designed for promotional material to be pushed through.
During the early days, communication on social media platforms was more comparable to an escape - it was just a place where people had group or one-on-one discussions. The channels were free from corporate intrusion and ad pollution. That was a critical feature.
Today, social media is still the same tool to communicate with fellow human beings - that hasn't changed. Simply observe how many "Likes" a happy group photo at a beach or a picture of a puppy would attain in comparison to a promotional or motivational post. People expect to see certain type of content in social media. Unwanted promotional content is simply seen as intrusion in their personal space.
2. Low barrier of entry = Low quality of entrants
If you are a micro business that just started and are expecting to kick-start your marketing through social media because you have no budget for other marketing pathways... get ready to fall into a trap. This is especially relevant to businesses that sell B2B products and services.
Your business will end up in a sea of other micro businesses that have no budget, and amongst a bunch of random people that have no capacity or need for your products and services. It's all too common to see micro business operators amass a social media following that consists of other micro businesses, friends and family, and other entities that can not be converted to clientele. It's an all-to-common social media marketing scenario: a big crowd and no sales.
The answer to this is simple. When it comes to the B2B environment, a general principle is that successful business operators that have the capacity to pay for products and services use dedicated channels for finding things they need. For example, they may subscribe to an e-newsletter from a company they are interested in, they may exploit face-to-face business networking opportunities, or they may simply search online for products and services they need. They definitely don't sift through social media groups to find new suppliers.
Opportunity for businesses
There are some opportunities for social media marketing if your business is in a B2C sector.
Campaigns have to be very well designed and targeted. You will most likely need to pay for exposure, just like with any other marketing tool. Your business needs to have a sophisticated system for converting interest - i.e. a well designed shopping cart that sells products. A key point is that in order to make sales through social media in this environment, your business already needs to have a sound business model and tools.
Another use for social media is to keep in touch with your existing clients. However, a well-crafted e-newsletter sent out on a regular basis will likely be superior to social media presence in this regard.
Let's keep social media for what it was meant to be. Communicating with friends and
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