Gallup Poll Results on U.S. Consumer Buying Habits Support a Skeptical View of Social Media Business Valuations

Public companies in the Social Media business (facebook, Twitter, LinkedIn, Google, etc.) have all implemented global business strategies. Nevertheless, some substantial proportion of the business plans for each of these businesses, over the next near term, depend on sales to advertisers for the U.S. consumer markets. But the results of a Gallop® report on the buying habits of U.S. Consumers, published on June 23, 2014 may point to excessively optimistic revenue forecasts in these plans, and, in turn, even more inflated business valuations than previously appeared to be the case.

Here are some important points coming out of this report:

  • 62% of a cross section of respondents to the survey reported Social Media had “No influence at all” on their purchasing decisions. Two caveats on this statement should be noted: 1) the numbers of respondents from each of four groups — “Millennials”, “Generation X”, “Baby Boomers”, “Traditionalists” — are not included in the article about the report, which is now widely available to the public (a link to the article is included in this post) and 2) despite a landing web page for the report, itself, the landing page does not offer the visitor any access to the report, so it is not possible to explore the report, at least at the time this post is being written
  • But this percentage drops to 48% of “Millennials” who responded to this survey. “Millennials” are defined as people born after 1980.
  • Only 5% of a cross section of respondents reported social media exerted “A great deal of influence” over their purchasing decisions. The percentage rises by 40%, to 7% when only responses from “Millennials” are considered.

In Facebook’s 10Q filing with the U.S. SEC, dated April 25, 2014, for the three months ended March 31, 2014, 45% of total global business revenue for the quarter was reported for the United States market, alone. The sources of revenue are clearly defined in this report as follows: “We generate substantially all of our revenue from advertising and from fees associated with our Payments infrastructure that enables users to purchase virtual and digital goods from our developers with applications on the Facebook website.”

Given the claimed results included in Gallup’s report, it might make a lot of sense for investors to recalibrate the cost of an investment in Facebook. In the opinion of this writer Facebook is grossly overvalued, as are most of its peers in this segment. Online advertising is simply better suited to the promotion of tangible items, or intangibles highly dependent on tangible factors, (for example, geographical location) than it is for purely intangible offers.

Since the range of items suitable for online promotion is, therefore, limited, the extent to which valuations have been inflated is even more extreme than this writer previously assumed to the be case.

Disclaimer: I have no current investment in any of the businesses mentioned in this post

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Some Perspective On the Role Played by Personal Data for Online Search

On Saturday, February 15, 2014, The New York Times published an article by Claire Cain Miller, titled ‘The Plus in Google Plus? It’s Mostly for Google’, Miller clearly presents a challenging component of the type of highly effective personalized search ISVs (principally Google) need to leverage to deliver satisfactory returns for the advertisers buying their online promotion services in the form of click advertisements.

Google Plus, for Miller, is ” . . . a lens that allows the company to peer more broadly into people’s digital life, and to gather an ever-richer trove of the personal information that advertisers covet.” (quoted from an article written by Claire Cain Miller and published in the New York Times on Saturday, February 15, 2014. A link to the complete article has been provided in the paragraph above).

I personally think Google “covets” this data a lot more than its advertisers. As I wrote recently, anyone listening to the webcast of Google’s most recent quarterly results will note mention of a more “precise” search technology. This “precision”, in my opinion, can’t be delivered without extensive collection of personal data. Apparently, Google Plus provides Google with a very valuable method of collecting this information.

From Miller’s article, it’s clear Google Plus provides Google with a method of innocuously collecting this data. Is this activity bad? I don’t think so. Rather, it’s an example of present day technical limitation on online search methods like the Google search engine.

A couple of posts back in this blog I argued for a different technical approach, namely one less likely to produce the kind of “bull in the china shop” (pardon my use of a cliché) effect on personalities which, unfortunately, plagues today’s methods.

To reiterate: any ISV with the technical components required to produce a less “person-dependent” online search method stands to make a bundle. If you’ve got the technology, please let me know.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Google+ Brings Social Media To a New Level of Usefulness for Marketing Complex Products & Solutions

With Google+ complex product marketing finally has an online vehicle that works. This step forward in the refinement of the “one to one” marketing capabilities of web 1.0 and the “one to my select many” marketing capabilities of early-stage web 2.0/social media includes a number of features that will deliver significant returns to complex product marketing for the enterprise:

  1. Group your contacts in “Circles” to selectively inform and promote
  2. Share news, notions, etc to stimulate dialogue with prospects, stakeholders, etc
  3. Embed videos, Product slide shows, etc to readily present groups of prospects with the message you need them to get without the danger of excessive mass market exposure via YouTube
  4. Visually meet, remotely, with multiple prospects with “Hangout”

In my opinion, with Google+ there is no longer any reason for complex product marketers to avoid online venues for promotion and branding. Conferencing, news, networking and intelligence-gathering (via shared discussions) can all be effected from within the confines of a Google+ page.

While many of the features of Google+ have been available elsewhere (for example, on FaceBook) the branding and extreme type-casting of many social media venues as spots for “friends,” game play grounds, etc. diminished the appeal of social media for complex product marketers who need to be entirely focused on enterprise business prospects and their unique needs. The sole exception to this rule has been LinkedIn. Admittedly, Google is not making a big push right now for Google+ as a strong online medium for business, but the features built into this website will deliver wonderfully for business applications.

A quick comparison with LinkedIn reveals a much richer interactive experience for the Google+ Share feature. For some reason participants feel more comfortable posting comments. Therefore, the discussion is richer, wider ranging, and includes more participants who, in turn can opt to dialogue among themselves and build new connections. In my opinion, LinkedIn is too formal and too recruitment-centric to deliver the type of results that I need for my marketing plans for complex products & solutions.

With interested participants, low return web 1.0 efforts like email blasts can be relegated to the circular file while “shared” news, etc can be posted with significant positive effect. As well, and with regard to online video calls as offered by Skype, Google Chat, etc. there is a new option with Google+. All told I must say that I find Google+ to be a very promising online medium, one which I intend to explore and exploit, as appropriate, for my clients.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved