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.