2014: The year social media comes crashing back to earth

UnknownPost Summary:  Twitter stock has come crashing back to reality, Facebook now admits that organic posts don’t reach 99% of people who follow brands and yet there are still “experts” who are trying to tell us that consumers really do have time to have, and want, relationships with brands.  Sure there are some brands we love, Apple, Starbucks, and Trek Bikes but for the most part consumers just don’t want to be bothered bt Tweets or posts from ketchup and soda brands.

Matt Drudge recently said “How does a company that has not made $1 profit now have stock value of $41 BILLION?  The coming crash will be horrific. America’s inability to be grounded and rational on value of things and stuff is on full display at TWTR (NYSE).

Ben Schachter at Macquarie has now downgraded the stock, writing:

The Bottom Line We expect this to be among the shortest downgrade note you’ve ever read, as nothing fundamentally has changed since our Neutral initiation on Dec. 11, except that shares have risen 40%. When we launched on TWTR 15 days ago, we laid out pros and cons and stated that TWTR was worth $46/share. Since that time, on the back of virtually no new news, the stock has risen in value 40% (vs. 2% for the S&P 500). Since the IPO open on 11/7, TWTR shares are up 62% (vs. a 4% gain for the S&P 500). We continue to believe that Twitter as a company has a bright future and many opportunities ahead. However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation. Therefore, we are reducing our rating to Underperform, from Neutral, and maintaining our estimates and $46 target price.

Macquarie expects that other analysts will also be downgrading the stock very shortly.

Then there with all this Facebook is now advising brands to purchase ads to increase reach ? What in the world is going on here ?

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1ne: Marketers have been taken to the cleaners by social media agencies & experts – As one “expert” recently said to me “there is plenty of money to be made by everyone”.  Ha ?  Bilking clients out of money is not what good consultants or agencies do.  They should be helping clients understand what is influencing the conversion from prospect to customer.  Sure there are some product categories where the purchase funnel can include social media but the next time you enter the market ask yourself “how many of these brands do consumers really have the time to have relationships with ?

takentocleanerssocialmedia

2wo: Convincing brands that they need to say thank you over and over – P L E A S E !  When I purchase something from Trader Joe’s I don’t need to have them kiss my ass for being a customer, just don’t disappoint me.n Oh and by the way if you really want to thank me for my business do something besides saying thank you in a Tweet or Post.  Subaru for example sent me a welcome kit and I get a magazine every month from them that is entertaining and has great information.

stop suckingup

3hree: You’re not really listening to what I’m saying – Listen to what I say on social media but unless you are determined to integrate customer recommendations into your brand/product I will drop you like a bag a dirt.

I have no doubt that more money will be invested in digital marketing in 2014 but I also believe that a lot of marketers are going to ask some hard questions about social media especially “do consumers want to be interrupted by brands in their pantry ?  The truth is that you can invest money in tactics that really drive conversion but first you really need to understand consumers today.

customer-research

 

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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3 Comments on “2014: The year social media comes crashing back to earth”

  1. Richard,

    You’re absolutely spot on, social media is a tech media driven bubble and the sooner it bursts, the better. Anyone who bought Facebook or Twitter shares needs their head looked at.

    I predict another dot com burst with law suits to follow and in the UK teenagers have stopped using Facebook as they don’t want their parents seeing what they’re talking about.

  2. I think that social media has a lot potential in the future, if brands start using it correctly. You are absolutely correct that most people do not have or take the time to interact with a brand, unless they have a problem with the brand that is.

    It is all about how brands use their social media, and the first step is to stop jamming self promotional bs down people’s throat with every single post. The number one complaint I see about social media (and this is true of users and brands alike) is that no one cares what you had for breakfast or that you’re going to the gym for an hour or that you think your store is the best around for whatever niche. The above mentioned post types are ignored by most people, which is why you never really see them with tons of Likes, Re-Tweets or Plusses, etc.

    The posts you see on social media that have the most engagement are the posts that have something interesting to show and/or say. It is all about user engagement and posting things that might interest your “followers” and get them to share. It is okay to put out a promotional post every once in a while, special sales and such, as that is why people are “following” your brand. But if you want to really build that fan base so more people see those promotions, then you have to engage users with interesting posts and give them a reason to “follow” you.

    This is just my opinion, but brands need to change the way they use social media if they want it to be a viable source for marketing. Be a person, be real, don’t be a faceless “corporation” just trying to make sales all the time.

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