How Over Valued Are Social Media Companies? Not All That Glitters Is GOOGLE!

Posted: May 31, 2011 in News, Opinion
Tags: ,

Now that these companies who just a few years ago were laughed at for being the next tech trend and would fade as fast as they started are selling for Billions of dollars. (Yes thats with a B!) Are the over rated or do they have legitimate worth.  From the standpoint of market research alone they are worth a pretty fair amount.  In the past companies hired market research firms to conduct surveys and to analyze focus groups all which cost a pretty penny.  Now Facebook is the largest focus group in the world.  You use to get paid 75$ an hour to tell companies you “LIKED” their product now you do it just be cool.  The question is, How accurate and valuable is this information really?  Before in market research you provided responses anonymously now they are in the eye of the public every time you hit the LIKE button.  This leads to big swings in fads because people LIKE things just because everyone else is.  When the individual users actually get down to seeing if they like these items many of them realize they are not so “LIKE-ABLE”.   Also if all of this information can be squired for free and in Google’s case, with their analytics software, given to customers who want this marketing information for free. Does it still hold a monetary value?

It all smells a bit like the 1999 Dot-Com boom to bust for me and i would be careful to not get over extended with any of these IPO’s most likely none of them will turn out to be as good as an investment as Google is.

Is There a Social Media Tech Bubble?

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