Sequoia Capital held a not-so-secret meeting this past week where they outlined a bleak picture for the world economy and offered strong guidance to their portfolio companies for how to survive the crisis.
The full presentation is worth a read and can be seen here. Amidst the doom and gloom — one thing in particular captured my attention as it relates to social media. Slide #32 (shown below) highlights the simple fact that advertising markets — including Internet advertising — are under significant pressure.
While it is obvious that a global financial melt down will drive decreased ad spending — it is not at all obvious what types of marketing behavior will emerge to fill the void.
Yes. I said fill the void.
In my opinion, there will definitely be lot’s of marketing activity to fill the void — because, no matter how bad things get, we know one thing is absolutely true — businesses will still be looking for customers. So if businesses are buying fewer ads — what will they do instead?
I believe that SMBs will resort to "do-it-yourself" strategies and get creative in "beating the bushes" in an effort to drive word-of-mouth marketing (WOM) — because such efforts are much less expensive than traditional marketing programs such as those referenced above.
An example of this can been seen in research from the Kelsey Group which shows that Auto Dealers intend to dramatically increase their use of Web 2.0 and social media tools over the next 12 months.
In summary, i think the global crisis is actually going to be good for social media marketing and user generated content (UGC) platforms such as BT Tradespace and Facebook Pages.
Of course, I fully realize there are plenty of skeptics — who would suggest that UGC equals garbage and only true marketing professionals are capable of creating valuable and interesting content — however, i think the current macro economic environment will serve as a massive kick-in-the-pants to small businesses — and will motivate them to get more engaged in social media marketing — despite the fact that it’s hard and requires time, effort, and energy.
WOW ~ What a very interesting post that brings up a good point, and one I’ve read on other social networking websites. The worse the economy gets the more people are logging on and spending more time on social websites, using the web 2.0 services they offer. Digg.com just had an article about web trends and how the economy plays a roll in visitor patterns. Social media including social commerce has grown to be the heart of the internet and I look forward to the continued growth in the future.
Very interesting blog.
Social networking / media will continue to grown and generate a lot of revenue for companies willing to invest in it. At this day and age, it’s silly not to. The statitics and patterns say it all. Here is some interesting backup.
http://www.bizjournals.com/extraedge/consultants/succeeding_today/2008/10/13/column531.html?market=portland