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End of the Dream: Expectations for Social Media Return to Earth

by Aug 7, 2012, 5:28 am ET

from imdbLast week 21 Fidelity Investments fund managers announced they were reducing their holdings in Facebook, after barely six weeks. Some were bailing out altogether. The moves are unusual for a company like Fidelity, whose funds tend to be conservative and with a focus on the long term. But Fidelity was only the most recent large investor to have lost money on Facebook. What Fidelity’s move signaled was that the firm has low expectations that Facebook can generate the kind of money it was supposed to. I guess they don’t have much faith in Facebook’s new job board to succeed.

It wasn’t supposed to be this way. Social media is supposed to be this boundless source of plenty — sales, candidates, solutions for every problem. For some years now you can’t attend a recruiting conference without some guru expounding on what a dinosaur you are if you don’t buy into the hype. Expressing reservations was considered heresy. No criticism was acceptable.

It was like being in the old Soviet Union where anyone who questioned the communist system was automatically labeled insane since only a crazy person could not see what a great place it was. When I mentioned in an article that research on social networks suggested that some of the most active users were also people with low self esteem, one genius wrote a comment that if this was true then most of America must be people who were depressed. Well comrade, that’s certainly true of most investors in Facebook.

Pay No Attention to the Man Behind the Curtain

What’s changed now is that as a public company Facebook can’t sustain the myth that social media is a great source of anything. It is a source for sales, candidates, and solutions — but one of many that may work for some and not for others. Some still cling to the dream that Facebook provides access to 900 million candidates. Sounds impressive, but think about it for a moment and you’ll realize that this is just more of the same hype: 99.99% of those candidates are neither qualified, available, or interested in any job that’s open. The simple fact is that most jobs are still filled by people who live within commuting distance of the job site, so even if every person on the planet was a member it wouldn’t really matter much.

There are about 135 million Facebook users between the ages of 18-64 in the U.S., representing about 69% of working-age population. That seems like a lot, but their reasons for belonging to a social network are mainly social (surprise). Research by the Pew Internet & American Life Project shows that the overwhelming reasons people use social networks are to connect with friends and family. They’re not interested in buying anything — further confirmation of it came from a recent study that found that four out of five Facebook members have never been influenced by ads run on the site.

The Pew data also shows that engagement and activity on Facebook is heavily skewed toward users under 35, and women, suggesting that targeting those demographics as candidates is more likely to be effective than others. But the same study found that women are significantly more likely to choose private settings, so targeting efforts may not be very effective after all. So the claim that Facebook provides access to 900 million candidates is, well, an eight-letter word for bovine waste.

Remember the Social Part of Social Networks

The Media research firm Ipsos found that people on social networks are most influenced by their friends — 22% of people say they bought a brand because a friend follows or “likes” the brand. That should be no surprise. A close friend represents a trusted source so a recommendation from one carries far more weight than any advertising. The same should be true for jobs: a friend who suggests a job usually has some idea of a candidate’s skills and interests. If it’s a job with their own employer, then the friend’s referral implies that it’s a good place to work, or at the very least gives the candidate better information than they will get from any corporate career site.

Our own research shows that this is how candidates prefer to use social networks to find jobs. That is, by making connections involving their friends. And these candidates are more satisfied with their decisions in the choice of a job. Of course this isn’t a straight line from recruiter to candidate. Involving third parties slows down the process and is a lot more work, but the results are better than posting jobs on social networks.

One can’t blame people for following the yellow brick road to the social network version of Oz. Too many people were spreading too much hype and it was easy to get sucked in. Even highly successful investment analysts bought into it. But anyone who still thinks that social networks are an easy solution to filling jobs should be reminded of that most memorable line from the Wizard of Oz: “What would you do with a brain if you had one?”

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Aernout Stigter

    Good stuff! Don’t we all wish we will find something that will make our lives easier, such as easy recruitment (or sales, solutions, etc)?

    I think the main challenge with any social network is that the exact purpose of the intitiatives have not yet been defined and broadly adopted as such. We are still trying to find out what to use them for.

    For me personally LinkedIN and Twitter are for professional use and Facebook is for pesonal use. But none of them have a 100% defined purpose (yet). Not like email for example. Email is for emailing (surprise) and the available tools do just that, you send and receive emails establishing some form of communication.

    Let’s analyze the other three I mentioned:

    Linkedin: I use it to link to other professionals with whom I may have a mutual beneficial professional relationship, it is my digital business card archive.

    Twitter: I use it to ‘twitter’ and be ‘twittered’ in order to gain useful professional insights from people, companies, subjects and industries in order to…well I am actually not sure yet…

    Facebook: I use it to connect with friends and family to share personal experiences, sometimes it is actually quite voyeuristic but again the real purpose I am not so sure about yet. Maybe just a digital sociala ativity archive/ timeline of my life?

    Finding a new job or hunting for candidates? For me it would be less trustworthy on Facebook than either of the other two, but hey, who am I..?

    What do you use them for?

  • http://www.techtrak.com Maureen Sharib

    You Heretic, You.

    Oh. Wait. Seems like maybe you’re on to something… Why did Facebook’s 51st employee decide to deactivate her Facebook account? http://wapo.st/Ne9Rv9

  • http://betterweekdays.com Chris Motley

    Great article and while it is not surprise – you lay out the points very clearly. @Aernout, you also make great points, and I think the question you ask is highly relevant. One one side, the primary question is: ” How do we (as individuals) use these sites/tools?” and on the other, “for what purpose did these companies build these tools?” Whenever there is a mismatch – growth stalls and people lose a lot of money. LN is the world’s largest rolodex, FB is the worlds largest social network, and Twitter is the worlds largest forum. That is what I as an individual have been sold on, and that is how I use them. That is what these brands represent in my mind. That is a very hard thing to change. LN is doing something right because they have found something useful to offer recruiters and are doing quite well in monetizing their asset. FB and Twitter are still trying to figure this part out, but at least FB has the dough to experiment for the time being, albeit at the expense of hopeful investors.

  • http://www.talenttech.com Praj Patel

    Good post Raghav. Your points and the comments above reflect some of the core problems that Facebook presents for recruiting. If recruiters view Facebook as yet another “marketing channel” they need to apply the same discipline they would apply before choosing to spend money on any other marketing tactics. So questions such as:
    1) Which users are really using it for job search and therefore which demographic would it make sense to target?
    2) What % of that demographic have the skills/experience and are qualified for positions you’re trying to fill?
    3) What of the many mechanisms that Facebook provides should you actually use to reach these users
    etc.

    LinkedIn, through design and intent, has better job-related information on candidates and tools to target and communicate with them. So for the purposes of recruiting a certain demographic (30+, professional, office-based etc.) it is overwhelmingly being chosen by recruiters, as its recent quarterly results indicate. I’m sure Facebook analyzes its “heavy users” demographic and if it can created better tools to specifically target and communicate with them, it may yet prove to be a legitimate and effective recruiting channel. I’m sure Facebook investors hope so!

  • Jim Cargill

    Raghav,

    Regretfully, I have reached the point where your articles are pretty much the only ones I read. Undoubtedly, you are intelligent, yet you don’t let your intelligence override common sense. I guess I stopped reading other’s articles when it became clear that the recruiting industry had taken up the mantra, “ALL HAIL THE MIGHT MATRIX”, and chased their precious matrixes right off the cliff.

    I vividly recall in 1999, following the first Monster Super Bowl commercial, a highly-regarded leading recruiting guru writing, “Monster will be the death blow to recruiting as we know it”. Paul Hawkinson sneered at such comments, and he was correct. Similar predictions were made in the advent of social media, but rather than being the death blow, it was going to become “so much easier to recruit qualified candidates”. The same was said of video-conferencing.

    Nothing in recruiting has really changed much since 1980, unless you count the change from faxing to email (a bit of levity). As for Dinosaurs…they roamed the earth longer than any other Animal Class, before or since. Do not discount the Dinosaur simply because he or she does not embrace the Holy Grail known as Social Media.

  • J.P. Winker

    Good post, Raghav. And nice comment, Jim Cargill. I too recall the predictions that the internet would end recruiting as we know it. Resume dbases would make all people available and auction sites would cause talent to flow to its highest level.

    Of course this hasn’t happened. The prognosticators don’t seem to integrate human behavior into predictions of what technology can do. Common sense should suggest that, while technology makes may things possible, people will do as they please.

  • Sylvia Dahlby

    “Too many people were spreading too much hype and it was easy to get sucked in.” So true, and I am so not surprised the gild is finally off the lily. It’s about time someone pulled back the curtain on social media and revealed it for what it really is – merely a another MEDIA choice. And btw, “social networks” have long been a recruiting tool, networking goes back to when humans first fell from the trees.

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