Social media will probably maintain course in the new year

Photo: Let's All Drink Lemonade Credit: RayaGr

All signs point to a fairly predictable year for social networks.

Instagram is clumsily positioning itself to monetize, Twitter is preparing for an IPO (that they deny) and Facebook is trying to squeeze money out of every crevice of their service complement.  Maybe the foreshadowing award goes to Foursquare, who sent an email out to its users at the end of the year informing them of changes to their Privacy Policy that will reveal a greater amount of personal data to advertisers than they had previously.

Bigger social networks will balance monetization with risk aversion.  Upstart social networks will try to grow into bigger social networks (so that they can become money hungry and risk averse).  Sounds a lot like 2012.

Paper chase

Facebook is the ultimate case study for social networks.  Despite having unprecedented social audience and time on site, they have struggled to adequately monetize since going public.   Their stock price is up recently, but not in response to any revenue.  Their stock has the potential to be quite volatile (Stock lockup expire, revenues may be less than expected, Sandberg may be leaving the company and Zuckerberg may sell shares, and the recent fiasco monetization effort for Instagram).  If the company with the best resources is struggling, it is illustrative for others.

When you look at a platform like Foursquare, they have a pool of much fewer users spending much less time on site (or in app).  Their struggles to generate revenue may be even more difficult, causing them to look at additional opportunities to make money.  Selling more personal information is one tactic that they can use (and in Foursquare’s case they are).

Twitter is in a similar situation to Foursquare.  In its quest to go public this year (a quest they continuously deny), they will probably continue to integrate more advertising into the platform and continue to pare down third-party access.

This isn’t to say that there won’t be changes but they won’t be anything mind-blowing.  There will be ancillary services introduced like Facebook’s Snapchat knock-off Poke and Twitter’s Instagram-ish photo filters, but the risk is probably too great for these big social networks to change too much.  If you don’t believe me, marvel in the fact that Facebook may change the columns on Timeline from two to one.  Boom!

Think small.

The really exciting stuff in social will probably be happening on the periphery.  Considering that Facebook, Twitter and the like aren’t the preferred social networks of Gen Z, the jockeying will probably occur in upstart social network to be the preferred network for younger folks.  Myspace is an example of a network with a slick design around a clear niche (score an assist to Spotify for doing a poor job of creating a social space around music).

There are thousands of other upstart social networks as well, led by Instagram and Tumblr who face monetization challenges this year.  Because they are so entrenched in a younger population it will be interesting to see if they can accomplish higher revenues without alienating the “multitasking” generation.  Google Plus is going to introduce ads this year as well, albeit with an older population of users.  It will interesting to see if this stunts its recent growth somewhat.

I’ve read a lot of bold predictions for 2013 (like Facebook going the way of app.net and having users pay to play), but I think the end of 2013 will find us in about the same place as 2012, except both Facebook and Twitter stocks will both be underperforming (instead of just Facebook).

What do you think?  What does the next year hold in store for the big social networks and the upstarts?  Anything unexpected on the horizon?

PS

A recent post by Lindsay Bell on Spin Sucks, “Why I left Twitter for Facebook” reinforced to me the staying power of Facebook (and inadvertently Twitter and Google Plus).   Lindsay’s comments (and the reaction to her site) reveal that the audience and user experience of these social networks (though diminished) still hold a lot of appeal, which is why I think most social networks are after the younger population of users.

Jim Dougherty

Jim Dougherty

Writer and chief of miscellany at leaderswest.com
I'm the guy that wrote the article you just read. Sorry for the typos.
  • TheTysonReport

    Very insightful Jim, thanks. I think that the big change in 2013 as far as the ‘social’ landscape is concerned is that G+ (though it’s an extension of Google and not a social network per se) will reach critical mass and mainstream acceptance.

    I predict that will set up an interesting high stakes battle with FB in 2014!

    • jimdougherty

      Thanks Tyson! G+ is indeed gaining a lot of acceptance, but I suspect the big issue there this year will be how they integrate advertising and how it integrates to AdWords. If Google gives Facebook a run for their money that would be great, but probably would require unprecedented growth. Let’s revisit in December! Cheers for the comment!

  • http://twitter.com/belllindsay Lindsay Bell

    Hey Jim!! I just saw this (d’oh) – thanks for the mention – though I’m not sure what you mean by the younger generation – I’m old!! LOL Enjoyed this piece, cheers, Lindsay

    • jimdougherty

      Thansk Lindsay – I referenced your piece to death, I think it’s really special how you articulate the value of Facebook and how it resonated for readersw of the piece. I was pretty opaque about the younger generation, but what I meant to articulate was that I think our generation (Gen Y, X and the backwards alphabet) are pretty set in our ways and how we interact. Yahoo has a huge audience but it’s aging – this is why they’re deemed irrelevant. I see Facebook following that path. I think it’s quite clear that the prize for social networks is Gen Z and the tail-end of Gen Y, which is why Instagram is worth $1 Billion to Facebook and people are irrationally excited about an app like Snapchat. I think Facebook, Twitter and social networks know they have the goods to keep you or I (which is why I think your post was so special). They just want someone with more idealism and fewer gray hairs than me! :)