I’ve taken three interesting posts, from three wise men, and combined them to ask one very challenging question. Each are well worth a read, but I’ll do my best to provide a quick summary if you don’t have time.

1. David McWilliams – Exposing the lie of the land

The real fair value means that, in a world where house price speculation is over, Irish house prices will have to fall on average by 50 per cent from where they are today to be worth buying. Madly, even after a year of house price contraction, the P/E for the average Irish house stands at over 29 times – twice the historical average for property.

2. Seth Godin – Ignore sunk costs

You have tickets to the Springsteen concert. They were really hard to get…… On your way into the event, a guy offers you $500 cash for each ticket….. If you wouldn’t be willing to PAY $500 for these tickets then you should be willing to sell them for $500. Spend $250 on dinner and go buy better tickets for tomorrow night’s show.

3. Ronan Lyons – Is it cheaper to buy or rent?

Taking the three posts together we are presented with these observations:

• Property prices are most likely going to continue to fall
• If you sell your house now and rent for the next few years, you won’t be significantly out of pocket cost wise.
• If you chose not to sell your house now, and agree with David McWilliams, then you should treat the drop in house prices as a real cost. As in Seth’s example, if house prices are to drop by 50%, the question you need to ask is “would I be willing to pay 50% more for this house than I did?”

Which leaves us with an almost uncomfortable conclusion – If my house could sell for €400,000 today, and I assume that the drop will be only half as bad as David’s estimate (25%), am I willing to PAY €100,000 for the luxury of home ownership over the next 3 – 5 years?

Facebook, Bebo, Youtube, Twitter… you know what I’m talking about when I use the term “Social Media”, but how accurately does it describe this collection of online spaces, sites and applications?

I Hate It

Part of me hates the term, because I know what it implies and how so many marketers use the term. When we think of “Media” we think of newspapers, TV and Radio. Media have always been broadcasters of information with large captive audiences, and because of this they’ve always been a brilliant medium for businesses to communicate their message to consumers (via advertising).

There have always been other channels of communication, such as word of mouth or customer service, but they’ve never proven as powerful as traditional media. In a disconnected world, word of mouth was rarely as powerful, and never had the reach of traditional advertisement.

This created some unfortunate economics – once a product reached an adequate level of quality, it was usually more efficient to invest in a good advertising campaign than in improving the product further. Leaving morals aside, it was often a smarter move to plaster “David Beckham uses this product” all over the TV and papers, than it was to invest the time and money into making your product truly remarkable.

Because of this, when many marketers hear the word Media, they think one way communication and mass market advertisements, rather than conversations with people. As we’ve all seen, when this thinking is applied to “Social Media”, the results are hideous – boring ads on youtube, using twitter to spam followers and using social networks to fling marketing materials at users.

I Love It

“Word of mouth“, recommendations from a friend and plain old conversations with customers have always been a medium of communication for companies, but for the reasons laid out above they were never considered to be part of The Media.

Nobody (on either side of the company/customer relationship) has ever loved advertising, but with communication channels being what they were, it was the most efficient way to get messages to large amounts of people.

With the advent of the internet, other mediums of communication, such as talking directly to customers, or customers talking to one another, have become much more efficient, more economical and more wide spread. These channels have always been media of communication, (even if nobody called them The Media), and that’s why I think the term Social Media describes them so well.

So…

I’m going to keep using the term Social Media. Mostly because I can’t think of another term that describes it better.

In an ideal world business people would see Facebook, Twitter, Youtube etc. and realise their power and potential, and then, upon hearing the term Social Media, would fundamentally re-evaluate their concept of “Media”, realising that it’s no longer as limiting as it once was, and that communications are becoming immensely richer.

In practice, however, I assume the opposite will continue to happen for the next while. Marketers will hear the term Social Media and will use all the same practices they’ve used with traditional media – by communicating at people, by assuming one directional, mass advertisements are still the most efficient way to convey a message, by presuming that listening to customers is still too costly and cumbersome –  and will taint our lovely Social Media term in the process.

But not to worry, it just means a bigger advantage for the people who understand what Social Media really means!

note: obviously with all media any message can be communicated. Social Media could be about bands talking to fans, or politicians to their constituents, or even just friends and family talking together, but this is a blog about business and marketing, so that’s what I talked about.