In its brief history, Social Media, as called New Media, has traditionally been viewed as a place to meet new friends, reconnect with old friends and interact in an online social environment. In short, social networks were “a cool place to hang out” but held little applicability beyond that. There has been no shortage of funding in Silicon Valley for firms launching new media platforms. With the emergence of sites like MySpace, Facebook and Twitter, there is no question that there is value in the vast amounts of information on people that these platforms have been able to collect; however, there has been no clear monetization strategy beyond bringing in advertising revenue. Arguments have been risen as to the true value of these firms; some would state that their valuations are inflated and artificial, while other claim that the value of their databases alone are enough to justify multi-billion dollar price tags.

The New Value of Social Media and The Social Media Firm
More recently social media has spawned a new value proposition, which is the business applicability of the vast user-bases these social networks have created. Regardless of which side of the valuation fence you sit on, it can be said that social media holds vast utility for businesses looking for a new way to reach out to customers and engage in two-way communications. This has never been done before from a traditional marketing, advertising or public relations perspective, and has given rise to a new business model: The Social Media Firm. This brings forth the argument of whether or not The Social Media Firm is a good investment. Is The Social Media Firm a fad that will die out in the coming years, or is this a long-term, sustainable industry that will one-day drive obsolescence to the traditional methods of advertising, public relations and marketing?

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