How will the social media bubble burst?
Jinfo Blog

By Tim Buckley Owen

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At the end of 2011, social media continue to dominate the information industry – becoming the agenda as well as setting it. But graphs don’t go in the same direction for ever, and one analyst suggests that they’re riding for a fall.

According to the latest Experian Hitwise data, the term “Facebook” accounts for more than one search click in 40 – followed some distance behind by “YouTube”, “eBay” and “Amazon”. Small wonder, therefore, that the information industry and its customers continue to embrace everything social – almost, it seems, whatever the application.

A month or so back, Adobe announced that it was purchasing social marketing specialist Efficient Frontier, leveraging its new acquisition’s ad buying optimisation capability to predict results and (it hopes) drive return on investment. At about the same time, Hewlett-Packard Enterprise Services launched the HP Social Intelligence Solution, enabling its clients to exploit social media and other unstructured data to (again hopefully) optimise their customers’ experience and manage their brand’s reputation.

Then in mid December Salesforce.com said that it had agreed to buy the cloud-based social performance management company Rypple, which is also the core of Facebook’s own employee performance management platform and “designed from the ground up to be social”. And finally a recent study from LexisNexis shows that law firms are also anxious to exploit social media – although it warns that they need to maintain their social presence wholeheartedly or risk losing their followers to other firms that do.

The message from these and similar developments seems to be that if you do it socially you’re bound to be onto a winner – and the latest International Communications Market report from the United Kingdom telecoms regulator Ofcom does little to dispel that notion. It too notes that, in most of its comparator countries, a social network was the most searched-for term on Google – and it also reports that over three quarters of the consumers it surveyed globally visit social networking sites.

What could go wrong? Well, elsewhere in the report Ofcom quotes figures from the research firm Nielsen showing that, although some countries continue to experience significant growth in their internet audiences, in others including the United Kingdom and United States, levels have remained relatively flat over the last year.

Technology analyst Gartner adds a further warning note. It is predicting that, by 2013 for consumer networks and by 2014 for enterprise social software companies, the investment bubble will have burst.

A large crop of vendors with overlapping features is competing for a finite audience, it warns, and smaller independent operators will find opportunities for market differentiation and fast growth eroding. A sobering thought – both for those who hawk social media solutions and those who buy them.

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