Are All Social Networking Sites Doomed?

I’ve joined another one. Gooruze. In order to have my blog syndicated there, I need to have “tanyaferrell.gooruze.com” in the first few lines of a blog post. Now isn’t that a great promotional tactic?

There have been a lot of posts floating around about the end of social networking. How many social networking sites does a person need? One blogger at Marketing Profs Daily Fix proposed that a person could only be an active participant one or two networking sites. Three tops. Steve Rubel predicts that eventually it will all come back to the search engines. People will always visit Google, Yahoo, and MSN. These three own our email accounts - Gmail, Yahoo Mail, and Hotmail. When sites like the Facebook burn to the ground, Google, Yahoo, and MSN will still be around because everyone needs their email and their search. These sites have also started adding social networking features to their site - the latest being the mash up of GoogleEarth and YouTube.

My favorite article so far has been one by Mark Simon at MediaPost comparing today to the dotcom boom of the late 1990’s. One only has to subscribe to Mashable! to see where he’s coming from. Mashable has all the latest news about social networking sites. According to my Google Reader, I have 104 pieces of news I’ve missed over the last two days. 104! Mashable reports on social networking site startups, acquisitions, and venture capitalist funding. Can I say it? Things have gotten a little out of hand with the social networking sites.

Mark predicts that the bubble will burst as it did in 2001. I wouldn’t go that far. A large part of the burst was the small stock market crash. Sites like Yahoo! were overvalued on the stock market. There was VeriSign, InfoSpace, theGlobe.com. InfoSpace alone reached a high of $1385 per share.

That’s the biggest difference I see between now and then. Back then companies went public as soon as possible, hoping to gain some extra dough. Now it seems that the creators of social networking sites are keeping their sites private, getting as much venture capitalist funding as possible, and praying that someone big like Google or Yahoo will buy them out. Examples include YouTube, Flickr, Del.icio.us.

Eventually all of these social networking sites will fall out of fashion. Of course the best ones will survive, just like Amazon.com survived the burst in 2001. But when these sites do fall out of fashion, all of the ones that are living on venture capitalist funding, aren’t generating revenue, and aren’t owned by one of the big portals will fail.

As for Google, I agree with Mark, their stock is overvalued. It opened at $635+ today. Over 99% of Google’s revenue comes from Google AdSense, and as SEO becomes more popular, I can’t see PPC being the goto for internet advertisers when only 34% of internet users trust sponsored links.