Investing Caffeine

Social Media Revolution Taking Over World

August 25, 2009 at 4:00 am 1 comment

When I speak of revolution I’m not talking about religion, politics, or wars; rather I am talking about “social media.” Should I care that Ashton Kutcher and Ellen DeGeneres have more twitter followers than the populations of Ireland, Norway, and Panama? Some say social networking is just a fad, but if you blindly sit along the sidelines, the whole world may pass you by in a blink of an eye. Erik Qualman, author of the book and blog Socialnomics, has a must see video that details the revolutionary growth of social media and explains how it is changing the world.

Ever since the early 1900s when the commercialization of radio took hold, millions of people were able to connect all over the world through the spread of technology – in this case the spread of AM (Amplitude Modulation) and FM (Frequency Modulation).  Other technologies, such as the telephone, television, and now the internet, have also allowed people to connect. Mr. Qualman details how social media is spreading faster than ever.

Through a chain of details, Qualman highlights the following facts: the invention of the radio took 38 years to reach 50 million users; the television 13 years; the internet 4 years; and the iPod 3 years.  Pretty staggering figures until you realize it only took less than 1 year – actually 9 months – for Facebook to add 100 million users! We know the trend is real when my mom (in her seventies) asked me last week how she can register on facebook. Currently, the 55-65 year old female segment is the fastest growing member segment on facebook.

Facebook is just one of many social media networks, which includes twitter, orkut, bebo, flickr, digg, myspace, YouTube, and countless others. The networks are expanding at break-neck speed, and the types of networks are becoming more focused and strange (for example, Spot-a-Potty, or Weird Beard).

Regardless of your view – fad or revolution – the younger generation is consuming more of it. It doesn’t take a genius to follow consumers where they are spending more time. The smart advertisers and businesses are moving to where the action is.  As Mr. Qualman notes, Generation Y (the so-called “Echo-Boomers) already outnumbers the Baby Boomers – hmmm,  I think advertisers are slowly getting the picture.  Investors should be paying attention too. I am investing my own money (and my clients’) in areas like these, where I see companies benefitting from technological change. If pushed to make a choice regarding social media, I pick revolution over fad.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

www.Sidoxia.com

DISCLOSURE: At the time of publishing, Sidoxia Capital Management and some of its clients owned certain exchange traded funds, AAPL, and GOOG, but had no direct positions in twitter, Facebook, orkut, bebo, flickr, digg, myspace, or any other security referenced. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

Entry filed under: Financial Markets. Tags: Ashton Kutcher, bebo, digg, Ellen DeGeneres, Erik Qualman, flickr, myspace, orkut, Social Media, Social Networking, Socialnomics, YouTube.