RIP Social Media (As An Ad-Supported Business)

It was a tough week for "social media." Web 2.0 poster boy Kevin Rose resigned from Digg, while Tech Crunch's Sarah Lacy claimed that Digg was altogether dead. 

Digg remains a large site with prominent backers and the potential to regain relevance in an ever-shifting landscape.  But the fact remains: Digg was the most ironic of social media poster childs.  For one, as Mike Elgan outlines in his Why Digg Failed article on ComputerWorld, Digg not only outsourced social to Twitter and Facebook over time, but from the onset it was "anti-blog."  This last part isn't immaterial, considering what "social media" actually entails.

First, the mandatory definition from Wikipedia:

"Social media is the use of web-based and mobile technologies to turn communication into interactive dialogue. Andreas Kaplan and Michael Haenlein also define social media as a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, which allows the creation and exchange of user-generated content."



Thus, there are two main components to social media:

-      turning communication into dialogue and

-      user-generated content (UGC). 

When the dust settles, Digg's fate might play out in many ways, but I think that 2011 will mark a more profound shift in how social media is viewed by analysts and evaluated by media companies and would-be acquirers.

From Social Media to Social Marketing


-      is either professionally produced or user-generated;

-      is only effectively monetized through advertising if it is professionally produced;

-      so what is user-generated becomes a form of marketing for something else (merchandise, for example);

-      is marketed through traditional methods (TV, print, radio, online banners) or through social networks (hence social marketing).

If you combine those four trends, you realize that "social media" isn't actually a media in of itself anymore; sure, UGC and citizen journalism are manifestations and examples of social media, but if they are treated as stand-alone media, then they are the least ad-friendly of them all, and since we live in a world of free, ad-supported media, any media that is not ad-supportable is not really media to begin with, is it?

As a result, social media as per the Wikipedia definition above has evolved into social marketing.

Moreover, many of the forms of social media have been embraced by traditional media to the point where casting them in a separate light seems misplaced. 

Are blogs "social media"?  Not anymore. 

Is Facebook social media?  Perhaps because we've cast it as such, but then why is Facebook partnering with studios to stream movies?  Probably because it realizes that social media (or rather, social marketing) is akin to cash or credit: it's a means to an end.

Dawn of a New Era: The Day Social Media "Sold Out"

It's also hard to cast Twitter and Facebook as "social media" when CNN et al.use them in their marketing arsenal on a nightly basis.

In 1991, grunge music stood for Pearl Jam, Soundgarden and Nirvana.  But by 1993, everyone had a hint of grunge in their sound. 

Social media has undergone the same evolution, so to speak, with traditional media embracing what social media has morphed into: social marketing (a grassroots phenomenon which I dubbed Public Relations 2.0 in an earlier post).

Last week, Huffington Post's Arianna Huffington stressed that search engine optimization (SEO) is a tool.  Similarly, social media is a tool, too. 

Social Media Is Dead.  Long Live Social Media.

I know what you're thinking:

-      Facebook: Given Facebook's size, it's actually doing a very poor job of monetizing via advertising.  Unlike Google which is staggeringly effective at advertising, I would rank Facebook's offering as one of (if not the) the least effective online.

-      Twitter: Twitter's success as a "link dump" has rendered it pretty useless to promote anything.  Thirty seconds after someone adds a link to something, it's gone; drowned by 150 other links to other stuff you don't really click through anymore.

As one Cairo activist put it: "We use Facebook to schedule the protests, Twitter to coordinate, and YouTube to tell the world."  I also use a hammer, wrench and screwdriver to build a table.  The point being: without the will of the people, the tools are meaningless.  The value is in the end result, not the tools.

Similarly, without the appropriate content, social media/marketing is useless.

The more times change...

Mind you, I've been preaching this for five years now. By and large: distribution trumped content and aggregation trumped creation, and anything tagged social media raised mammoth capital at eye-popping valuations.  So sure, maybe that will all change this year, or perhaps a greater fool is born as we speak.

By the looks of it, 2011 might be too early.  Last week, Google bought Ireland's Green Parrot Pictures.  In a blog post explaining the move, YouTube stated:

"Some of YouTube's most popular or moving videos are shot using low-quality mobile phones and video cameras. Take, for example, videos of recent protests in Libya. Although emotionally captivating, they can be jerky, blurry or unsteady. What if there was a technology that could improve the quality of such videos -- sharpening the image, reducing visual noise and rendering a higher-quality, steadier video -- all while your video is simply being uploaded to the site? You can imagine how excited we were when we discovered an small, ambitious company based in Ireland that can do exactly this."

Somewhere, a pig is trying on lipstick as we speak.

The better you are at social media, the more you suck at generating advertising revenue

Both Digg and Huffington Post identified interesting stories to build an audience.  But whereas Digg solely indexed the title and headline and let its community comment on the story, Huffington Post added a commentary from an editor.  Digg's audience drove traffic to the site in question, whereas Huffington Post leveraged social marketing tools like Facebook and Twitter to grow its audience.

Meanwhile, Huffington Post was acquired for $315 million in February 2011 whereas Digg's founder just resigned.

The conclusion is simple to draw: Digg had the "scalable" model but in the end, advertisers and audiences were more comfortable with Huffington Post's model.  In the end, social media is a means to an end. 

Ultimately, it's a simple tool kit. Getting all excited about those tools might be typical, but a misplaced sentiment in the long run.

10 comments about "RIP Social Media (As An Ad-Supported Business) ".
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  1. Richard Monihan, March 21, 2011 at 11:36 a.m.

    Viewing anything as THE singularly useful tool in the absence of all others is a flawed concept. While a wrench is great for certain jobs, it's never going to take the place of the screwdriver for others. Learning how to use tools properly and effectively is the sign of a good craftsman.

    Social media, as a standalone concept, isn't just Facebook. It's all the other things the Cairo activist mentioned. Focusing only on one item will reduce the overall effectiveness of a campaign, but building a campaign that integrates different outlets will generate better results.

    Finally - focusing on one form of media to the detriment of others is similarly flawed. The web is a good place to advertise, and within general web advertising social media is very useful, too. But to assume one form of advertising media is predominant and more valuable than others is highly dependent on what you're trying to do as an advertiser. I don't need a wrench when I'm putting up sheetrock, but it sure is useful if I'm running plumbing fixtures through the sheetrock.

    As a result, a campaign that focuses only on internet advertising (whether its social media or not) is likely going to have inherent problems with results if it doesn't have a video/cable/broadcast/radio campaign that is coordinated with it. Social media succeeds because it feeds off the various available media existing outside the borders of social media itself, creating a virtuous cycle of interactive user behavior. While social media feeds that cycle, it generally cannot start without an external catalyst of some nature. For advertisers to best utilize this, it's useful to find the right catalyst, outside of social media itself, and then drive toward a social outcome.

  2. Anthony White from Media Twister Partners, March 21, 2011 at 1:05 p.m.

    The "social media" situation is an almost exact replica of that which was brought about when the cable networks were all launching (and then later closing down!) their "web-based' DIVISIONS in the late nineties . . . a failed endeavor that was the direct result of confusing the Internet's potential to market their properties (yes, that works in the context of a larger media campaign) with the notion that it could generate revenue in and of itself and on its own accord (not so much!).

    But you know, in spite of a empirically known cycle of gas shortages, people still drive SUVs too!

    Nicely written piece and so worth the read!

  3. Pamela Tournier from Focus: Productivity, Inc., March 21, 2011 at 1:21 p.m.

    Must-read piece for so many clients who are plunging headlong into social media without a clue.

    Unfortunately for them, "Facebook" is NOT a "strategy."

    @Richard Monihan ["social media succeeds because it feeds off the various available media existing outside the borders ..."] We couldn't agree more. We'd add events as well as other media to the list SM feeds off of.

  4. Douglas Ferguson from College of Charleston, March 21, 2011 at 7:55 p.m.

    More voice, more choice, is the advantage of social media. Disintermediation does not need to make money for marketers, who are themselves worthless intermediaries.

  5. Rich Nadworny from Digalicious, March 22, 2011 at 7:35 a.m.

    Ahskan, what is your point exactly? This:

    "Similarly, without the appropriate content, social media/marketing is useless."

    Let's paraphrase:
    "Similarly, without the appropriate content, television advertising is useless."
    "Similarly, without the appropriate content, direct marketing is useless."
    "Similarly, without the appropriate content, video (even WatchMojo's video!) is useless."

    Well duh. If you're going to write off social media because the content sucks, you might as well write off every other form of marketing because, well, it kind of sucks too.

  6. Ashkan Karbasfrooshan from, March 22, 2011 at 7:48 a.m.


    I think you missed the whole point here. Nothing is dead, I am not "writing off" anything; I am stating that looking at social media in a vacuum is foolish; it's a means to an end, but in an ad-supported context indeed it's the underlying content that matters. I am glad these things are obvious to you ;)

  7. David Scacco from david scacco, March 22, 2011 at 4:09 p.m.

    Thanks for this thought provoking piece. At MyLikes we're bringing the traditional publishing model to social media. We enable social publishers to select and post ads from marketers that they believe will resonate with their audience.

  8. Brian Hayashi from ConnectMe 360, March 22, 2011 at 5:13 p.m.

    Years from now, people will realize that "social media" was simply about making people, as individuals and as groups, addressable, in the same way that the web made documents on the Internet addressable.

    Just like the innovation of packaging over a hundred years ago enabled both brands and in the process unleashed a new era of commerce, so too does social media allow us to instantaneously "package" discrete groups (friends, co-workers, subject-matter experts etc.) for use in everyday applications.

  9. Meg Kumar from LocalBizNetwork, March 23, 2011 at 3:25 a.m.

    "Twitter's success as a "link dump" has rendered it pretty useless to promote anything. Thirty seconds after someone adds a link to something, it's gone; drowned by 150 other links to other stuff you don't really click through anymore"

    How true!

  10. Christopher Rogers from In the market, March 29, 2011 at 4:46 p.m.

    I'm late to the party, but wanted to add a huzzah. Your commentary is focused and clear. It's not often we see someone call out the latest emperor for being under dressed. Your analogy to the toolbox was on target. But I'm still left wondering if all of those tools are necessary, and if they will all survive. There's only so much advertising dollars to go around, Twitter...

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