The Notorious IPO – Like The Future For Social Networking?

October 16th, 2012 by David Fransen

To paraphrase whomever The Notorious B.I.G. was paraphrasing in 1997, it would appear that the new financial expectations levied upon social media platforms are about to start making life much more complicated for users, advertisers and entrepreneurial site designers alike. You’re now looking at me almost as if there’s no rationally defensible way that Biggie could have been posthumously addressing the 21st century plight of social media startups back in 1997, and to that I can only respond with two simple words: holograms, son.

All juiciness aside, some recent developments on the business end of social networking are sure to have a lasting impact on the way the average person uses these platforms. This flux goes hand-in-hand with the way advertisers and shareholders will have to go about making money off of the average person’s use of these platforms in the future. Unsurprisingly to anyone at least fleetingly familiar with the planet Earth in 2012, the central player in these developments are the perennial big poppa of social networks, Facebook.

As you’re probably aware, Facebook’s revolutionary IPO move several months ago arrived with financial expectations about as humbly understated as the dialogue in an Aaron Sorkin script. As you’re also probably aware, things didn’t actually end up going all that well. Regardless of whether or not this should have been that much of a surprise in retrospect, Facebook’s disappointing yield for shareholders will have a major impact on how other social media resources have to approach the development of their platforms in the future.

As The Atlantic‘s Derek Thompson points out, new pressures being placed on Tumblr to shift its focus from accommodating users to establishing and adhering to a strict and viable business plan marks the first step in what will likely be a sweeping change in the general philosophy governing social media:

The first few years of the social media revolution have been a golden age of tech utilitarianism, where maximizing users’ delight was considered, quite literally, the only currency that mattered. In Part II of the revolution, the desired currency is poised to change from attention to profit

It is not difficult to envision a pageview-centric future where quirky overnight Tumblr sensations like Dogshaming or McKayla Is Not Impressed are promptly equipped with chain pet store-sponsored submission forms or Kodak-provided stock photo templates of the moon landing and the Tiananmen Square protest for greater ease of Maroney-meme insertion. While such developments wouldn’t necessarily strip such silly internet curios of their fundamental entertainment value, instant monetization would definitely take a bit of the fun out of discovering such pages and watching them circulate and expand in popularity. Much of the appeal of these sorts of Tumblr pages — and all social media-generated sensations — involves the users’ ability to at least pretend that they or one of their “friends” were the first to discover a particular page or meme. Obviously, this illusion is immediately eliminated once sponsorship is pulled into play; it’s hard to envision any business model by which these sites could remain free to use without more deeply integrating corporate sponsorship into site content.

Meanwhile, corporate entities are starting to consider newly raised issues related to social media advertising on their end in the wake of a controversial decision by Australia’s Advertising Standards Bureau regarding Facebook user comments. Essentially, the Bureau ruled that (in Australia) a company must screen its page and posts to ensure the accuracy of all product-related information contained not only in its own officially posted content, but also in the content added via general user comments. The implications of such a decision could be outright devastating for the future efficiency of Facebook promotion, should such regulations be incorporated on any sort of broader international scale. I don’t think I’m going to shatter any advertisers’ utopian dreams by stating that the types of people who purchase and “like” your product aren’t necessarily the same people you’d want writing your advertising copy. And in the case of the Australian company in question, Smirnoff Vodka, they might well be the absolute last people you’d want having any impact on your legal standing.

This whole situation leaves companies in a quite precarious position. It seems like a magnificent waste of time and brainpower to constantly screen a boatload of throwaway Facebook user comments; however, disabling user interactions altogether would seem to fundamentally defeat the purpose of marketing on social media platforms. It’s not difficult to see how some companies could determine that it’s simply not worth the trouble.

What we have in place, then, is an interesting sort of standoff. I couldn’t possibly isolate any direct inspiration for this, but I like to envision the advertisers and investors as one grizzled old gunslinging action hero, with the anonymous multitudes of invisible social networkers seated at their computers represented, perhaps, simply by a single empty chair. Advertisers still salivate at social media platforms’ unprecedented access to consumers in age brackets and demographics they have been unable to effectively reach otherwise, but getting too close to these general users just might land them in legal trouble. Social media investors naturally dream of throwing their weight around to help shove these advertisers closer to these same consumers, since that’s the most logical way to enhance the financial prospects of their investment.

Of course, at stake is that essential feeling of “mine-ness” that drew users to social networking to begin with. Push advertising too hard on these users, and they could vacate the premises as quickly as that neon pink anime-style cat that wallpapered your big sister’s old MySpace page. General social media users, meanwhile, are facing a looming decision as to whether their enjoyment of the social networks they’ve become accustomed to using sufficiently outweighs the frustration of finding more and more of their personal lives either directly monetized or, at the very least, more strategically molded into streamlined business plans.

These problems are by no means new revelations, but the stakes are suddenly much higher. Facebook has proven that merely getting a ton of people on board and radically redefining the concept of “word-of-mouth” isn’t enough to make real, investor-friendly truckloads of cash. The Australian Advertising Standards Bureau has proven that the line between mingling and marketing is likely going to become a lot less blurry than it probably seemed for advertisers developing marketing strategies over the last few years.

If there’s one thing that’s fairly certain in all of this, it’s that a major shake-up is imminent. Sticking with the Facebook example, it’s unlikely that advertisers are going to coolly walk away from a massive, captive audience simply because it might be a bit of a hassle to adhere to ad copy standards thus far unenforced in most of the world. It’s equally unlikely that Facebook investors are going to calmly give Mark Zuckerberg back his old T-shirts, say “sorry it didn’t work out,” and shuffle home to listen to Morrissey records until they find another fish in the sea. Most unlikely of all, perhaps, is that Facebook users will coolly kick back and say, “hey guys, we’ll be here waiting for you no matter what. You just figure out what you think is best for us and let us know how it’s going to work from now on.”

Whatever happens, it feels like the optimal time for enterprising online marketers to start getting more familiar with alternate social networking platforms. Given the inherently fast-paced, fleeting nature of social media, the very fact that many of us might feel a sense of comfort or predictability with marketing on Facebook and Twitter should be some kind of indication that those bubbles are soon to burst.

Will the great user-friendly potential of Google+ finally be met with the corresponding cultural acceptance and ascribed relevance it has lacked to this point? Will users gravitate toward the conceptually alluring “private” approach to social networking, as demonstrated by the forever-in-progress Diaspora? Will users decide that they are serious enough about social media to begin paying to keep their online networking strictly social on a site like App.net, as many are starting to suggest? Perhaps in a few years, the very concept of unchecked social networking will have become a quaint little “two thousand-late” fad, just a laughably nostalgic relic of misguided youth like slap bracelets, Power Gloves and Britney Spea… oh. Right.

In any case, even if Facebook and Twitter users prove willing to endure a more thoroughly streamlined and business-friendly approach to their online interactions, this will likely lift many of the restrictions that currently define appropriate approaches to marketing on these platforms. If television audiences are still willing to revolve entire Sundays around roughly 11 minutes of football for every hour of commercials, it’s certainly possible that marketers can beef up their approach without driving away the very audience they’re courting.

I realize that this post has done more in the way of raising questions than providing answers, but that’s really the point. For businesses, marketers, shareholders and general internet users alike, the catch-all answer for everything has long been that “social networking is the future.” The recent travails of Facebook and the future implications of these troubles for other sites should be making everyone stop, take a deep breath and ask just what is the future for social networking. As a man much wiser than I once said, things done changed.