Social media is finally coming to a critical inflection point and make no mistake – it’s all about the money.

When I started blogging five years ago – early, but by no means among the earliest – the prevailing inclination among bloggers was to share and connect on an individual basis. Bloggers shared their content and built each other up by linking to each other in posts, creating blogrolls containing links to friend lists, even commented on blogs of individuals who worked for industry competitors. Corporations had presence through individuals; Bob Lutz at GM and Randy Baseler at Boeing were like the Columbus and Magellan of corporate social media.

Between 2005 – 2008, consumer adoption of social media shot up at a rapid pace. According to Forrester Social Technographics data, US online adults active in social media increased rapidly from just under 50% to 75%. Naturally, brands began to follow consumers into the medium. Early adopters were not happy. Debates between “purists” and “corporatists” began to emerge. What they didn’t realize is what Mark Cuban had called out years earlier – the social internet is a long tail ghetto where no content creator wants to be stuck.

In 2008, I left Forrester to start Dachis Group, because early on Jeff, Kate, Ellen, and I saw the potential for companies to go far beyond what had been imagined possible using social media to date – the thinking eventually crystallized as social business design. We knew that there was money to be made in “social media marketing” and “Enterprise 2.0” – and we weren’t alone.

I’ve been observing these trends emerge as social business evolves:

  • The nature of “social” has become much less social over the past three years. It’s now increasingly private and profit driven. The bloggers I followed in the early days write blog posts much less frequently today, if at all. However, they’re still writing and thinking about the industry – they’re just doing it behind the firewall and delivering value to paying customers. Smaller, private virtual salons have cropped up to host and monetize conversations – for example, Third Tribe Marketing, the Social Media Business Council, or the 2.0 Adoption Council. You think #Angelgate is only about Silicon Valley and startup money? Think again – similarly, there are private communities thriving today that keep thought leaders connected to one another and others, out. The exception to this trend are public community organizers like Mack Collier who coordinates #blogchat. Enjoy them while they last.
  • Companies are cashing out, performing their final tricks off of Cuban’s hypothetical vert ramp. From following the brand monitoring space, we’ve seen Cymfony, Umbria, Techrigy, and Scout Labs sell off. You’re probably more familiar with TechCrunch’s recent sale to AOL or Six Apart sold to VideoEgg. From what I hear on some of the tech deals, the companies may not be shaking the glitter off their clothes as much as pawning off whatever usable parts they’ve got left after crashing and burning.
  • Free social media sites are moving to monetize. Ning moved early and very direct. As any MBA could see, penetration pricing strategy, duh. Free doesn’t last forever, but its spectre does sell books. Dick Costolo is Twitter’s new CEO and he has one mission – to make money. You think Facebook Places is useless? Think again – the future of advertising is relevance and Facebook has it in spades: location-based services + social graph + user generated content.
  • Executives are migrating to small, socially-oriented businesses. This time around it’s not limited to traditional-to-dot-com; the similarity is from public to private. Talent is leaving Google, Yahoo, and Microsoft and heading to Twitter, Zynga, and Facebook. In a more old-school way, Erin Nelson is moving from CMO of Dell to CMO of Bazaarvoice. (BTW Dachis Group is hiring.) It’s not Shaheen from Andersen to Webvan or Dobbs from CNN to…yet.

Perhaps if the global economy didn’t crash in 2008, social media could’ve floated on in its cordial state indefinitely. But now we’ve seen more than enough proof of the concept that social media and technology drive tangible results for companies. That’s why Dachis Group calls it “social business” – we started using the phrase in January 2009 and have seen many others adopt it since.

Anyone in business knows you need to eventually capture the value you create. That time has come for social business.

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  1. Ahhh this same topic came up in conversation last week when I joined a few ex-agency friends who were now out here in Colorado (neither still working under the ‘advertising’ label) for lunch. I remember when the scene of people talking/writing about the industry, let alone actually maintaining a blog on the topic was small enough that you pretty much knew most if not all the other people who were vocal about their opinions. Because of that you’d either reach out to them or they’d reach out to you, even if only for the link-back (though usually it’d still spark some form of work related dialogue).

    If I’m not mistaken that’s how we first started chatting (and about 5 years ago sounds right for the timing)….These days it’s rare to hear of collaborations that aren’t purely financially based (or are just blind emails from someone who’s never read my site just begging for a backlink). I went back and looked at lot of what I was writing on my site (as well as other sites) even just 3 years ago and I can see the change in focus….Heck, even turning down my acceptance for the MBA program at UT a year+ ago now looks like one of the better decisions that I’ve made in my life. I would have missed out on learning so much during that time, not to mention would not have had the chance to accomplish/experience everything that’s I’ve been lucky to be a part of since then (though that still doesn’t mean I wouldn’t re-consider the program in a few years or so).

    It’s never been about what people are talking about, it’s always been about what people are doing and who they’re doing it with. Some people are just now getting into what we were leaving years ago because they think it’s the bleeding edge of marketing right now…all because it’s just what is being talked about these days by everyone who were silently just going with the flow not to long ago instead of looking at where others were headed. Looking at the scene and being able to see what people are actually trying to do and who or what company/technology they’re trying to do it with always will outweigh what they’re saying….guess I lucked out.

    Speaking of lucking out, so you say Dachis is hiring? Winter is about to kick in again and after one full season living in the snow I don’t really feel excited about going through that experience a second time. We need to catch-up sometime soon……It goes without saying I still miss Stubbs’ brisket and ribs. The BBQ out here isn’t even worth mentioning.


  2. Great to hear from you and glad that we’ve been connected for the duration. Of course you should ping me when you’re ready to move to Austin. Coincidentally, this weekend is ACL Festival – another great part of this city. If I were to steal a classic VW campaign, our tagline would be “do-ers wanted.” Our clients need this help more than ever.

  3. I take it your email is still the same? (me) at

    Ohh please don’t remind me about ACL. I had tickets for this year, then my friend got engaged + they didn’t want to wait a year so after a 4 month engagement they’re now tying the knot during the festival (and in FL) …. I guess no one can be “that lucky.”

    I’ve got a bunch of write-ups to do this AM that need to get out the door as fast as I can type them so will probably shoot you an email later this afternoon and if not then definitely tomorrow AM.

    I love it here but It’s a race against mother nature now that it’s October…..

    Have fun at the festival

  4. The move from social media into social business was inevitable and Cuban’s insight to see it coming is just one of the reasons I love him.
    It just made sense. Businesses were always trying to be where the people (their customers or prospective customers) are. With so many people getting into social media it only made sense for the businesses to follow them.
    However, there are going to be some things that don’t try to monazite everything. I couldn’t see people still wanting to use sites like Twitter or Facebook if they had to pay to log in, so those companies are currently and will continue to look for ways to keep making money while allowing users to use their service for free.
    I’m actually quite interested to see what the new CEO of Twitter has up his sleeve to help them make more money while still trying to keep the Twitter space appealing to the everyday users.

    Sheldon, community manager for Sysomos

  5. Hi Sheldon – while some people will be turned off when sites like Twitter and Facebook turn the advertising up to 10, site owners will gladly take the attrition in exchange for the revenue. Advertising alone doesn’t kill sites, but finding better experiences elsewhere does…

  6. This is true across not just social media, but the internet in general. It enables a lot of people to make “ok money” but very few to make substantive money. In the early days of eBay there were 500,000 people making a few dollars a month selling product, and 5,000 “Powersellers” making a living. We see the same thing today with YouTube creators and bloggers, but also with App and Game developers.

    In a lot of ways, however, this reminds me of the offline world where you see a few rich local retailers and many more “mom and pop” store owners just making a buck.

  7. So true Keith – and the winners become the aggregators, the ones that can collect a basis point or two from each transaction. When volume hits in the tens of millions, it’s a business model. And aggregators need the handful of success stories to lure the rest of the pyramid into play.

  8. So very true. About a year ago I tweeted: “Forget this ‘all about relationships’ stuff – we all know it’s really all about who puts out.” I still stand by that.

  9. Nice post Peter. As one of the people who attempted to demonstrate the application of the Dachis Design Framework on Social Business in several posts over at Skilful Minds, I’ve obviously appreciated the perspective. As I watched the Rise of Social Commerce summit yesterday I tweeted the question, “What is the difference between social business and social commerce?” @marciamarcia replied that, “One could argue, @lirons, that the difference btwn social commerce & social business is the type of transaction.”

    Few people appreciate a debate about semantics, aside from linguists anyway. However, the more the thought leaders with execution experience deliver their insights “behind the firewall” as you put it, or in the online equivalent of gated communities, the poorer the overall understanding of how social relationships add to the value proposition for customers and other stakeholders. The Dachis design framework impressed me because it visualizes the underlying processes that make social business work. It would be nice to see more of how it works in execution.

  10. Thanks Larry. I’m not at liberty to share details of our work publicly, out of respect to our clients. However, I’d be happy to explain further if we ever get a chance to meet up in person – the past couple of years have been critical to activating and testing the social business design framework and I’m happy to report that it’s still solid.

  11. I was introduced to the above via Mark Cuban’s twitter accout – glad I found it. Your quote “capture the value you create” resonated strongly and enjoyed reading the article and following the associated links.


  12. Do you ever watch ESPN’s X Games? Think about the end of a run, where an athlete is worn out and has to pull out one last trick to score points and try to medal. Succeed and you take bows to the adoring crowd. Fail and you end up sprawled on the pavement, limping off and getting out of the camera’s focus.

  13. Peter, I’ve been a fan of yours for a while and just wanted to say thanks for the continual flow of good work and info. In my mind you are among the few (maybe dozen or so…) true experts in this space. I recently guest-taught an MBA marketing class at Chapman University focused on social media strategies and sent a few classrooms worth of students to your blog as required reading. Keep up the good work!


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Being: Peter Kim