The second Joe's rebuttal included the observation that, if word of mouth is the most influential source for buying decisions, the "giant word-of-mouth machine" that is social media has to be effective. He also points out that we don't turn to other media -- namely, TV, radio, or outdoor billboards -- for guidance either. As I said, I shared his reaction.
I'm a huge social media fan; I think it gives smart businesses an unprecedented opportunity to build customer relationships. That being said, there's no arguing the fact that social media has yet to monetize in any significant way.
Part of the problem, I suspect, is in how the question is being framed. Eli Goldratt's book "Critical Chain" describes two opposing business mentalities: the "throughput mentality" (in which the focus is on getting as much product out the door as possible) and the "cost mentality" (in which the focus is on keeping the costs as low as possible). Those two mentalities can't exist simultaneously, which is why companies end up swinging from one to the other.
Online, we've also got two mentalities, which can be defined using Dan Ariely's terms "social norms" and "market norms." Just like Goldratt's mentalities, Ariely's two norms are also incompatible.
Companies establishing their community chops have to focus on social norms, not market norms. They have to provide value before they're certain of a sale. And they have to be genuine and valid contributors to the conversation.
In traditional media, on the other hand, we expect -- and tolerate -- market norms. We'd be reasonably surprised if a company spent money on a TV commercial without trying to explicitly sell something. But the real gold is to be found on those occasions in which we actively seek out market norms, occasions on which we directly solicit the aforementioned guidance. On those occasions, smart businesses -- like good butlers -- appear as if from nowhere, ready to serve.
When it comes time to justify the return on a marketing dollar spent, those media that pop up exactly when someone is looking to buy have a giant leg-up on all others. The Yellow Pages had that leg-up for decades. Search has it now.
So, no, I don't think social media is a useless black hole of hype. Obviously, TV and radio and billboards have their place. But on the continuum of marketing performance, the bell curve is continuously thrown off by that king of purchase intent, search.
Congratulations, Search Insiders. You're in the right industry.