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February 07, 2008

Recession comments, day 2: good for social applications, but not for social media

by Josh Bernoff

I got a fair amount of pickup on my recession post, including articles in AdWeek and MediaPost, and mentions a bunch of blogs including Logic+Emotion, Web Strategist (my colleague Jeremiah), Micropersuasion, ZDNet, and even Techmeme. There was also this interesting post from Bernard Lunn at ReadWriteWeb, "This is not our bubble," which looks at how the recession will affect entrepreneurs and venture investments.

There was plenty of cheering from the social sphere, along with some jeering, too. But I think some people missed the point (or more likely, I wasn't clear enough about what the point was).

I say social applications and not social media for a reason. People will want to boost word of mouth in a recession. This is great news if you're selling community apps to companies. It's also good news for Facebook community applications and groups. You're a company and you want to charge up your citizen marketers about your product -- you can build your own application or climb on board an existing network and work within it.

This is not good news for plain old banner ads, or any other form of CPM-based, brand-based advertising. That includes banner ads in Facebook. Raw monetization of traffic won't be worth any more in a recession -- it will be worth less, since awareness-building will be less important.

What does this mean?

First of all, it means that Facebook, Myspace, et. al need to continue to work harder on innovative ways to create social advertising opportunities that are more creative and less intrusive than Beacon v1. Is the recession good or bad for the big social networking sites? Depends on how soon they can get those ad formats working.

Second, it means all those me-too, social-network with a twist startups who don't have a monetization plan, or whose plan is dependent on traffic=advertising, are in trouble. This is social media -- media being defined as ways to turn traffic into advertising. Not a good place to be sitting in a recession, when marketers are looking for scale and interaction and persuasion, not just impressions.

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Listed below are links to weblogs that reference Recession comments, day 2: good for social applications, but not for social media:

» Can Social Media weather a recession? Yes - Forrester from WebMetricsGuru
Read a story in AdWeek on Social Media to Weather Recession and it occurred to me that few studies have been done to gauge which types of media and advertising will be the most recession proof.According to Forrester - ...... [Read More]

» Social Network Advertising and the VRM effect from broadstuff
Interesting karma / zeitgeist / whatever...last week I was accused of "jeering" at the Forrester view (I prefer to say disagreeing with wit ) that Social Nets would survive the recession better than most due to their superior Ad vector (ie my "buds" - t [Read More]

Comments

Tech News

Great article. Thanks.

Stijn

I like how you link the need for brand engagement (as opposed to awareness) to recession and social applications and I hope you are right. Plus lets face it, most companies will not repair the roof (innovate) unless it rains.

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Payday Loan Advocate

Is there an American who isn't thinking about the economy these days? So many pundits are screaming from the pulpit "BACK OUT NOW," and that the Dow Jones is falling toward 8000. People hear this kind of fear mongering and tend to believe it; they pull their money out of the market, curtail their spending and everything begins to freeze. Yet there are those who believe that we are in the recovery phase of a cyclical recession, not a "massive contraction." A recent video segment of a discussion on the Fox Business Network that included economist Jeff Sachs of the Earth Institute at Columbia University and Dan Shaffer of Shaffer Asset Management points toward the light at the end of the tunnel. Sachs praises the Feds for taking on the serious problem of maintaining a good thaw on short-term money markets. If those were to freeze, businesses wouldn't be able to make payroll and it would become exceedingly difficult to obtain working capital. Shaffer digs into the numbers to offer the worried a positive word. He places America's current recession in historical context, identifying that there have been 14 distinct periods in American History since 1929 where indexes have fallen an average of 40 percent or more. As recently as 1973 (when this writer was born), the drop was more than 49 percent, but the country survived. Shaffer's studies of S&P and the Dow indicate that a bear market, which is a market condition in which the prices of securities are falling or are expected to fall, is here. Moreover, big-time entrepreneurs who have the money to invest - people like Warren Buffet - may just jump in and invest in various industries while the price is right. What has been damaged is well on the way toward repair, so don't pull your money and hide under a rock! It's the only way we know to keep the system going for everyone. For the average consumer, that also means don't be afraid to spend. If you run into some short-term problems, understand that products like short term installment loans are an option for help. Stimulate the economy, America!

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Payday Loan Advocate

Is there an American who isn't thinking about the economy these days? So many pundits are screaming from the pulpit "BACK OUT NOW," and that the Dow Jones is falling toward 8000. People hear this kind of fear mongering and tend to believe it; they pull their money out of the market, curtail their spending and everything begins to freeze. Yet there are those who believe that we are in the recovery phase of a cyclical recession, not a "massive contraction." A recent video segment of a discussion on the Fox Business Network that included economist Jeff Sachs of the Earth Institute at Columbia University and Dan Shaffer of Shaffer Asset Management points toward the light at the end of the tunnel. Sachs praises the Feds for taking on the serious problem of maintaining a good thaw on short-term money markets. If those were to freeze, businesses wouldn't be able to make payroll and it would become exceedingly difficult to obtain working capital. Shaffer digs into the numbers to offer the worried a positive word. He places America's current recession in historical context, identifying that there have been 14 distinct periods in American History since 1929 where indexes have fallen an average of 40 percent or more. As recently as 1973 (when this writer was born), the drop was more than 49 percent, but the country survived. Shaffer's studies of S&P and the Dow indicate that a bear market, which is a market condition in which the prices of securities are falling or are expected to fall, is here. Moreover, big-time entrepreneurs who have the money to invest - people like Warren Buffet - may just jump in and invest in various industries while the price is right. What has been damaged is well on the way toward repair, so don't pull your money and hide under a rock! It's the only way we know to keep the system going for everyone. For the average consumer, that also means don't be afraid to spend. If you run into some short-term problems, understand that products like short term installment loans are an option for help. Stimulate the economy, America!

Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
Blog: http://personalmoneystore.com/moneyblog/

FX

I agree less intrusive advertisements that still catch a person eye and are useful are the most agreeable with the end users and cost effective for the advertiser.

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