How Global Credit Crisis will Impact Social Media

Search for “social media monitoring” on google website and you are bound to find pages on the subject. There are social media trackers, thought leaders, vendors, and a whole new genre of professionals wanting to cash-in on the current buzz word in the industry. If you show ignorance towards this new form of networking, you are not considered to be part of the Web 2.0 revolution.

The success of social networking websites and craze among netizens to be seen on these websites has definitely given a fillip to the social media industry. In a way it is good for the industry and professionals associated with it. However, it looks like the dream run is over before it ever started.

At the time when the world is witnessing economic and credit crisis, layoff and credit squeeze have become the order of the day. Corporates, the world over are trying to tighten their purse strings in order to curtail losses that are bound to reflect in their holy grail---the balance sheet—in the forthcoming quarters.

In such a scenario, when the developed economies in US and Europe are facing fears of recession, one needs to dissect the business repercussion on social media.

It is evident that companies facing credit crisis and reduced business opportunities will try and curtail peripheral costs such as advertising, public relations and marketing budgets. This in turn would mean calling all stop to new initiatives such as activities in social media sphere.

The first casualty might be the vendors selling social media tracking, measurement, and analysis tools. As they bill on the basis of cost per seat, it is likely that going forward companies may not renew their subscription or move over to free social media tracking tools such as technorati, google trends and analytics respectively.

The second casualty would most likely be the in-house social media tracking and measuring team, mainly considered a cost centre. Layoffs and pink slips could become a reality in the social media department of a company.

Till recently we were seeing the launch of social networking websites almost daily. The credit crisis will most likely put a stop to this trend.

Now let us look at the scenario a little differently. It is seen often enough that during economic slowdown or a recession, firms tend to innovate and ideate to curtail expenditure. And what better way to reduce advertising, marketing, public relations cost by using low cost web 2.0 version i.e social media to reach audience globally.

Let us wait and watch if innovation is the virtue companies adopt globally to fight recession.