Home » Bear Case Scenario » Little Grunt vs Big Noise Coming Rationalization in Social Media $STWIT, $TWTR, $FB, #SEO, $LNKD,

Little Grunt vs Big Noise Coming Rationalization in Social Media $STWIT, $TWTR, $FB, #SEO, $LNKD,

Social Media mania is at fever pitch. Everything is blue sky buy buy buy. Seen it before? Almost tedious isn’t it. Everyone is looking for eye balls, viewers, likes, clicks and such. Brand advertising vs Sell Through Pay Per Performance is the competitive stage. But there are no market or demographic differentiators.

Do you buy because you have children and have predictable needs? Do you buy because you love to travel? Do you buy because you are house proud and know how to improve real estate? Why do you buy.

Twitter (NYSE:TWTR) and Facebook (Nasdaq:FB) with billion dollar valuations essentially are one big messy pile of opportunities which have yet to resolve themselves. Twitter will eventually attract a certain type of mentality. Someone who likes it short and sweet.

Facebook will have a different follower who wants something more than 140 characters. As advertisers teach their social media networks they will find certain tactics work to sell a car and certain tactics work to sell hamburgers. Just like print works for certain offerings and television is better at others.

Twitter and Facebook are still relatively undifferentiated. They will default into certain genres because they are offering agnostic technology not because they are offering focused solutions. A radio station in New York city will have a different client list than a radio station in Tokyo. An internet radio station will need to develop a loyal demographic that will reward them economically either through subscriptions or advertising or both.

StockTwits (STWIT) is intriguing as it focuses solely on stock market investments. It operates in English which is the lingua franca of the business world. Twitter should buy them before a hungry rival decides a foothold in the investment information business is strategically important. So maybe it will be Bloomberg or Rupert Murdoch and Fox or Wall St Journal that buys them.

Amazon purchased Goodreads to control the reading community. Same logic to a certain extent.

You can speculate about StockTwits because it is focused. Twitter is hoping a broad-based tsunami carries them somewhere nice. It might work but the Beta on that business model is much higher.

George Gutowski writes from a caveat emptor perspective.