Social Media: Bull Market on Users, Bear Market on Revenue

February 12, 2009 by 4 Comments

I need to get off the social media stump soon, but it’s the one topic of conversation I keep having with people and it’s on my mind.

The statistics for the social media market are staggering. Social media sites are attracting visitors like mad with minimal amounts of effort.

Here are some numbers to consider (thanks to Nateonk):

1. Facebook is growing by 600,000 to 700,000 users per DAY.  The site has 150 million registered users today and is obviously growing.

2. Twitter has 6 million users. I love this statistic: 11 percent of Internet users are on Twitter.

3. LinkedIn, the professional social-networking site, has over 35 million users.

I have said this a number of times, but there is a whole generation of people who are turning on their computers, opening their social-media application first, leaving it on and living their Internet day in the application.  Just last night I was out with a bunch of social-media loving twenty-somethings, PSOGLE and Meadball. Somehow, I ended up arguing against the power of Facebook and Twitter with these young guys. But they were confirming the points I make every day: social media is incredibly relevant as more and more people manage their Internet experience out of these applications. I don’t have the statistics, but I honestly believe no one under the age of 27 has a @yahoo email address or goes to Yahoo! or MSN. They use Facebook and have GMail.  They are “doing the Internet” differently than my generation, and it’s all about social media. It seems like my peers are more likely to live on LinkedIn and Twitter.

So, you would think that this would translate into an entirely new paradigm for Internet-revenue generation, but it doesn’t. The revenue generated from these social media sites just does not come close to their popularity. Everyone tells me not to read Valleywag, but I do and do so religiously. Anyway, they had a post on Facebook’s inability to  generate revenue commensurate with their enormous number of users. Do the math and you realize social media might be headed for trouble:

1. Facebook is trying desperately to justify the $3.7 billion dollar valuation and failing.

2. Twitter just has to get bought; I can’t see anyway out for them. They’re going with the old-school Web site model — building traffic now and figuring out the rest later. There have been a lot of posts on how Twitter can make money and none have resonated with me.

3. I have hope for LinkedIn, but I am not hearing much about their revenue.

The net-net: I was asked by Steven Woods from Eloqua: Can social media scale? According to him, the market is growing and frankly starting to dominate, but won’t scale without revenue.

Stay tuned.

Craig Rosenberg is the Funnelholic. He loves sales, marketing, and things that drive revenue. Follow him on Google+ or Twitter

Filed Under: b2b Marketing, Social Media
  • http://twitter.com/EverydaySEMGuy Smarsh

    I’m 26.
    I have a @yahoo email account.
    I use it as a dumpster.

    As an e-mail option it certainly isn’t “it” but it opens the door to Yahoo! Fantasy Sports – one are where they still dominate (as validated by Google http://www.google.com/search?q=fantasy+sports&sa=Google+Search&cat=&hl=en).

  • http://www.cloud9analytics.com/ Ray Jones

    My dad attended church, not because he was religious but because he liked to socialize and he was a salesman and needed to meet professionals in his community. He belonged to the Rotary club for the same reasons.

    These traditional types of networking organizations have a lot of upside: they provide service to the community, they are focused (Rotary, for example, had dinners with speakers on different topics), and they provide face-to-face interactions. And there are literally hundreds or maybe even thousands of other social-networking organizations that people with a specific interest belong to, from toast masters, to martial arts, hiking clubs, etc.

    Blogging seems to supply some of the same upside. I’m in marketing, so I follow sales and marketing blogs and it feels a bit like a community. I see a lot of the same people commenting and referring to each other’s blogs. There is focused thought and discussion and some community service in the sense that most bloggers I follow promote causes they believe in.

    Twitter seems like something else entirely. At worst it’s an interactive National Enquirer: “I did every tip on his [Guy Kawasaki's] list, and the rest is history. Now I have more than 1,000 followers”. At best, it’s a good way to stay in touch with your friends and a way to promote stuff, like your friends’ websites. On the other hand, as you point out — http://ping.fm/QLhdS — it’s unclear how Twitter will make money and it doesn’t work for B2B lead generation.

    OK, I’m going to slink off now and see if I can make sense of how to use my new Twitter account.

  • http://www.theb2blead.com Amy Hawthorne

    Here’s some other interesting info -

    “the median age of a typical Twitter user is 31, substantially older than the median age of MySpace (27) or Facebook (26) and closer to the professional network LinkedIn (40)”

    Got to say, I’m a little surprised at the median age for Twitter users…

    if you want to read more – http://www.minonline.com/news/9962.html

  • http://www.readycontacts.com Vaibhav Domkundwar – ReadyContacts.com

    Craig, I am glad you said it! With all the hype around Social Media and B2B Marketers can leverage it, its still incredibly difficult to believe/prove how it translates into revenue. Considering that social media marketing is more than a full time job, its ROI is questionable for B2B lead generation. I can totally buy it that it can drive exposure, which is good, but its far from directly and sustainably affecting B2B revenue pipelines. If you see the recent Marketing Sherpa research report, its loud and clear.

    Lets hope we start to see a lot more realistic and value-centric advice and tips on how to leverage social media for B2B and how it fits in the overall scheme of things.