Social media became a buzzword when small companies began to hire young, “social media” interns and pundits began to declare that the trend had passed its heyday. Both the bulls and bullet-firers fail to consider what value, if any social media provides. Thinking about value can help avoid the feared Pets.com phenomenon (i.e. investing in companies that sound sexy but have flaccid futures). This framework becomes particularly pertinent given the speculation and sometimes trepidation surrounding tech companies’ IPOs.
First of all, I propose that a concept can have value and that a company can have a value add. For example, the concept of farming has a value: creating food. Farmer Brown has a value add: growing tasty strawberries. The Safeway Corporation has a value add: delivering strawberries efficiently. The concept provides the general working platform, the company provides the unique way to better the platform. An Onion article published many years ago, “Any idiot could have thought of the car,” where the author claims that Henry Ford is overrated, highlights this difference very nicely. The concept: the car has value: providing an individual with a means of transportation. The Ford company did not become successful by inventing the car but by providing a value add: a system of production that made cars much cheaper for producers and consumers alike. In the case of Pets.com, the concept: e-commerce had value: connecting buyers and sellers and the company’s value add was connecting pet food buyers with pet food sellers. Eventually, people decided that that particular value add did not sufficiently add enough to justify the high trading prices.
Social media is a concept deservedly vaunted because its value comes from the basic human need to communicate and socialize. Social media companies then cannot be worthwhile investments simply by virtue of being social media companies, but by providing a value add. We can see this in that non-social media companies provide ways to communicate and socialize as a part of their product. Well before Facebook and Twitter became standard, Amazon.com’s “reviews” feature allowed users to openly communicate with one another.
Consider Facebook, which can hopefully withstand another round of scrutiny. Admittedly, I don’t much remember Myspace, but if memory serves, Facebook’s value add initially over Myspace was a cleaner, easier to use workspace that seemed cooler because the college kids used it and an account came by invite (or evite) only. As Facebook matured its value add to the consumer seemed to be that it provided a way to craft and identity for friends and acquaintances through identifying interests, friending, and posting pictures. Given the numerous articles and studies about Facebook that focus on the site’s ability to advertise the best features of a life, identitiy seems to be a key value-add.
The site also provides a gaming platform through its uneasy partnership with Zynga. Finally, with the newly ubiquitious “like” button and ability to connect the Facebook account to most websites, the site allows people to create a synthesized presence.
For companies, the site seems to provide a means for advertising and a new way for businesses to connect with their consumers.
The question then, isn’t whether such services have value but how much value relative to other companies. Taking each value add point by point, Facebook seems less unique than perhaps it did originally. While Facebok may be the best, or at least most widely used, method to create an online identitiy, many other forums exist, such as blogs, Linkedin, Pintrest, OkCupid, all of which have the social media value-add of creating an identitiy linked to others outside of the immediate circle, with a shared interest.
Many other options for gaming exist: World of Warcraft, Second Life, Sims Online most immediately come to mind in addition to purchased games for consumer electronics.
For now, the “like” button seems unique, but Google+ seems to have added something similar. The easy connection toolbar on websites usually links to Facebook, Twitter, Google+, Linkedin.
With an entire worldwide web, where the same consumer visits multiple sites daily, even minutely, Facebook is hardly a any advertisers only choice. The great ease of app development and platforms like Twitter means that companies don’t necessarily need Facebook to connect with their customers.
As far as visual appeal, it seems to be an act of will to create an unappealing website. If there’s any question of lingering cool factor, remember that parents arrived on Facebook several years ago and its a known fact that employers actively search Facebook. The party got busted years ago and only the drunks are still dancing. Smart people keep it clean, which makes the site lukewarm at best.
All in all, while Facebook’s value adds certainly have value, this framework offers on explanation for the company’s fallen share price.
Just as a company can add value to a concept, a concept can add value to a company. Amazon’s value add is hardly social media, yet the social component previously mentioned adds value to their service. While some interpreted Google+ as Google’s attempt to be “the next Facebook,” an alternate reading is that Google recognizes that social media is less of a specific service that only one platform can truly deliver and more of a general model to enhance an existing product.
For example, when using Google Maps, searching for a nearby restaurant, reviews can come from Zagat, Trip Advisor, and now Google+ users. In their attempts to organize the world’s information for people, Goodle neglected to create a means for people to organize themselves. While it may not have as many users as Facebook, for now that is, it does complement their existing product.
Social media exists as a component of products not often considered “social media.” Massively multiplayer online games a la World of Warcraft would hardly be as “massive” if the multiplayers couldnt interact with one another. Several online education startups depend on interaction between student and teacher, and the growing funding suggests that others believe such a model has merit.
Practically every site provides the media toolbar, which makes sharing content very simple, which brings that site into the social media sphere. With the toolbar that links to various social media sites, enabling social media has become a basic, absent=-mindedly expected service, like wifi in a coffee shop.
In some ways, social media simply follows the Internet’s remit: it provides another way to share. In the case of social media, instead of papers amongst academics, it is images and witticisms between friends, family, and followers. And if social media is truly a basic, then a demonstration of its value comes not from a share price, but widespread use.