Wednesday, February 6, 2008

Lessons from Dot Com Turkeys

About ten years ago Strategic Communications Group (Strategic) began an exciting growth phase as a public relations provider to venture capital backed start-ups.

Unfortunately, our fall was just as dramatic when the rules of the game changed and private equity firms actually expected their investments to make money. At the time, it was referred to as establishing a “path to profitability.”

We represented a number of dot com turkeys. They were companies that had no game plan for how to monetize their technology or the communities they had created. They shut down…quickly. Strategic was left client-less with uncollected fees.

Fast forward to today. I am all for social media technologies and believe they present an exciting channel for companies to communicate and engage with influential audiences – customers, partners, employees, investors and the community.

Yet, the market is still figuring this all out. What is the ROI for an executive blogging program? How about creating a personalized social community? Or perhaps establishing a corporate page on Facebook?

We’re simply not sure yet and that is OK. It just means that we are going to be measured in our approach using these tactics and the recommendations we provide clients.

As for the social networking companies, it’s important for their management and investors to visit the dot com graveyard so as not to repeat the mistakes of the past. In business, you have to establish a clear value proposition for customers. It’s not about community. It is revenue and profits.

Here’s a great blog post from Jordon McCollum that looks at this issue within the context of Facebook’s financials.

Will Social Networking Ever Make Money?

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