Just like it was immediately following 9/11, Technology and Marketing spending will now be on the chopping block. Time to throw the ballast over. So why is that good news for social software?

1. With recession comes consolidation

Consolidation is not great news for point solutions but it’s fantastic for “all-in-one” products which can replace lots of point solutions. I.T. departments will begin audits of all the little apps that aren’t being used, gather their value in hard and soft costs and present it to management with recommendations for EA licenses and other consolidation.

2. The Analyst’s noise filters

Next month Forrester’s Wave Report and Gartner’s next Magic Quadrant will be released. This will provide yet more clarity. Some vendors will be on the list, some won’t but either way these reports will help the market know where to look for the value they’re trying to get out of less cost-effective to things like Microsoft Sharepoint or tons of little tools.

3. Marketing budgets go where they can measure

Most folks I’ve talked to haven’t ever seen a traditional Marketing budget. Typically, things like “Social Media” don’t even have a line item. The bulk of the budget goes to broadcast, out of home, direct mail, etc. Mostly to traditional media dollars. In recessions, those expensive line items get cut and Marketers look for where they can be creative, effective and more measurable with their dollars. It’s just as important (or more so) to be present through recessions and Social Software offers the perfect blend of innovation and cost effectiveness. I can foresee budgets tilting much more this direction.

Recessions make strong companies stronger

As tough as they are, recessions automatically separate the wheat from the chaff. As long as you have smart people, a good product, and solid customer relationships you should find yourself a stronger company on the other side. I’d anticipate that, with the elections coming up, people will be voting for change and we will see the hangover lift next year. 

  • Ken Burbary

    Business looking better for Jive then, eh Sam? As usual, nice post.

  • eric norlin

    Hey Sam-

    Great post. Somewhat perversely, I *enjoy* recessions. I’m a natural-born optimist, and helped start one of the best conferences I’ve ever been involved with (Digital ID World) in 2002 – on the very day that Comdex went bankrupt. We went on to build DIDW up in the nuclear winter of the dotcom bust, when no one even knew there would be “identity management.”

    In some ways, I think a similar thing will happen with Defrag. We’ll absolutely still be here standing when the smoke clears — and the alliances, friendships, partnerships and business deals that we help build will make us all the stronger.

    Bottom line: recessions are the BEST time to “fire test” (bullet proof) your company and business model – and the folks that make it will find themselves sitting in the driver’s seat.


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  • http://Website Alex

    Why do you consider SharePoint not cost-effective? WSS doesn’t cost much and it just works. It’s not as pretty as Jive, but the value for the money is can’t be beat with anything else I’ve seen out there?

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  • Allan

    Have we gotten good at measuring social software, social media, and social networks?

  • Dave Allen

    As long as we all realize that social networks can’t be monetized through advertising revenue then all will be well.

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