Has the Social Media Bubble Already Come and Gone?
Do you remember Pets.com? Emerging in 1998, it sold pet supplies to customers in need and stood among the first of the dedicated retail websites. Perhaps you remember their mascot, a sock puppet dog with button eyes sewn to its face and a microphone affixed to its floppy paw.
Pets.com and its ubiquitous puppet were created in the primordial soup of the “dot-com” boom of the late 90s. They also both died a grisly death when the dot-com bubble burst a few years later, which hurled many fledgling web-centric businesses to their doom.
The Pets.com disaster stemmed from a company that sought to latch on to the hottest new technology and squeeze from it all of the profits possible within the least amount of time – not out of greed necessarily, so much as a desire to play part in the birth of the next step of commerce.
Businesses face a similar opportunity today in social media. Or they did. Apparently, the opportunity has already been lost. Fortune magazine’s Miguel Helft claims that the social media bubble has long since inflated and popped.
“There were no Pets.coms or Webvans this time around…But now, with Groupon (GRPN), Facebook (FB) and Zynga (ZNGA) alone accounting for tens of billion in losses to investors, it’s a different story,” Helft writes.
Helft brings up the interesting notion that Facebook’s poor financial showing and Pets.com’s demise share a similar weakness of poor economic fundamentals. Where Pets.com lacked market research and sold at a loss, Facebook opened itself to the public without, well, the ability to make money.
“He’s built a hugely popular service, but he is still searching for a business model to match,” says Helft, referring to Mark Zuckerberg. “Facebook has yet to find its AdWords, the search advertising engine that mints billions for Google every year.”
Social media won’t disappear of course — websites didn’t evaporate after the dot-com bust. But companies might want to re-evaluate social media as a quick road to wealth, and instead focus on how social media can contribute to a preexisting business structure.
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