DEFINITION OF A BUBBLE

Now before we get into the dirty detail, let's define what exactly a "bubble" is. From the InvestorDictionary:

"An economic bubble occurs when speculation in a commodity causes the price to increase, thus producing more speculation. The price of the good then reaches absurd levels and the bubble is usually followed by a sudden drop in prices, known as a crash.

Economic bubbles are generally considered to be bad things because they cause misallocation of resources into non-productive uses. In addition, the crash which follows an economic bubble can destroy a large amount of wealth and cause continuing economic malaise as was the case of the Great Depression in the 1930s, Japan in the 1990s, and the Tech Bubble in 2000."

Hold that thought. This should be fresh in your memory. On December 5, 1996, Alan Greenspan, then chairman of the Federal Reserve Board while speaking before the American Enterprise Institute coined the phrase "irrational exuberance" to describe the rise in equity prices in the United States.

To find a group "full of unrestrained enthusiasm" in PR today, one need to put one's ear within a mile or two of the blogosphere. To people like Richard Edelman, Jeff Jarvis, Steve Rubel, BL Ochman, Shel Holtz, Debbie Weil, and friends... blogging and specifically corporate blogging, is tantamount to the Second Coming. It's certainly, they profess, the cure for whatever ails ya. Just a week ago, almost in unison, they spoke out that surely Dell's lower second-quarter earnings all could have been avoided if only Michael Dell had been blogging.

It doesn't stop there. You got cataracts... blogging can cure that. Toe jam and sweaty palms, try blogging. Erectile dysfunction or a dry vagina, blogging will wake up Mr. Peabody and lube Sweet Sally up good. From money problems to personal relationships, blogging is a universal cure. As the blogosphere has doubled about every six months, the world has obviously become a much happier place.

Okay... here's where the bubble analogy comes in: These rabid evangelists are particularly fond of whistling their pro-corporate-blog tune on their way to the bank and back. And as I've written about in the past, even though the adoption of this has been slow in corporate America, they're betting the farm. If you're in PR, they're betting your farm, too. They are "all in" and then some.

That said, last week Porter Novelli and Cymfony released the finding of a survey of corporate blog owners. Ironically, the Messiah of corporate blogging, Steve Rubel, tried to spin it:

"According to a new study by Porter Novelli and Cymfony 76 percent of corporations that blog have seen a direct spike in Web traffic and related media coverage. Additionally, some 42 percent said at least one post on their blog has affected the company or brand, in most cases in a positive way. The study also found that 63 percent of the companies surveyed said they had to blog because of a perceived need to participate in the blogging phenomenon rather than to reach a specific objective."

In straight honest English, what that says is: "With corporate blogging, you get a spike in traffic that could affect the company in a negative way but I kinda feel I have to do it, not that it's related to any actual business objective." To which any responsible CMO would respond, "You're fired! Now get out of my office. Ms. Jenkins, call security."

BY COMPARISON

I think what bothers me most about these knuckleheads, is their lack of conscience. What happened to critical thinking? Isn't that supposed to be inextricably related to what they sell? If they cannot do it for themselves, how can they be expected to do it for their clients?

Well, the answer to that is that a bubble is totally blinding. The rapid increase of belief only serves to fuel more speculation. And those left holding the bag, so to speak, are hell bent on avoiding having to admit it. It's one thing to admit you've been duped; quite another to admit you've duped yourself. Like a pyramid, the last patsy always believes in the investment.

Anyway, by way of background, we just went through this!! We are still feeling the residual effects of the Tech Bubble for Christ's sake.

I remember when that broke, too. On August 7, 2000, there was an article in the Wall Street Journal that asked 10 noted Wall Street analysts as to their opinion as to whether we were in the midst of a bubble. Six said yes and four said no. The conclusion of the article was that indeed the tide had turned and the party was over.

That was August. Nearly a year later I attended a First Tuesday (a VC confab) in New York where Newt Gingrich was giving the keynote to a crowd of about 700 various and exceedingly bubbly entrepreneurs.

Newt, a historian by training, told them:

"In the 1980s, Japan was an economic superpower. During that time the Imperial Gardens were worth more than the entire state of Florida. However, the market then seemed totally oblivious to the fact that it is mathematically impossible that the Imperial Gardens are worth more than the state of Florida. Six months later, the bubble burst. But even still, they refused to absorb, they refused to digest, they refused to process the failure."

Gingrich concluded his speech by telling the now dumbstruck audience, "You have to get up off the mat, rather than borrowing money for the next ten years from your banker." It was like being at some Trekie convention and William Shatner had just told the crowd to grow up and get a life. There were a lot of long faces walking out of the auditorium that night.

Newt concluded simply saying, "The worst thing you can do is mask it."

And that sadly is exactly what they all did. That's human nature unfortunately. The party continued (at least tried to) for at least two more years. Last call or not, some stragglers just refuse to go home let alone grow up.

A FEW TELL-TALE SIGNS

Now this didn't just happen. There were signs along the way. Back in May, Makovsky & Company did a study on the adoption of corporate blogging in the Fortune 1000. As the results were not all that favorable, they tried their best to spin it: "Fortune 1000 Senior Executives Slow to React to the Growing Credibility of Corporate Blogs." But facts don't lie. The study found that only a small minority of top executives think that blogging is growing in credibility either as a communications medium (five percent), brand-building technique (three percent), or a sales or lead generation tool (less than one percent). If anything, the finding indicated that blogging was appearing on the corporate radar as a threat.

Not good. The evangelists kinda paused for a brief moment (if that) and then continued on their merry way.

But then there was a stinky poodie that embarrassed even the most ardent of flatulent-filled flacks. About three weeks ago, Jupiter Research released the finding of a study that contends that "35 percent of large companies plan to institute corporate Weblogs this year. Combined with the existing deployed base of 34 percent, nearly 70 percent of all site operators will have implemented corporate blogs by the end of 2006."

Right. And the Imperial Garden is worth more than the State of Florida. Even evangelist Kami Huyse couldn't swallow it. In her words,

"Lately it seems as if there is a lot of research out there and few are offering critical thought around how to interpret all of these results. Just last month, Jupiter Research released some survey results, which had several bloggers sounding the alarm. On my bookshelf is an interesting book titled, How to Lie with Statistics."

Personally speaking, Jesus had me right up to the walk on water trick and then I went home.

WHAT THE HELL HAPPENED?

So why did the bubble break?

The answer to that is apparent in the weak Porter Novelli release. It's not what is says; it's what it doesn't say. There's no compelling reason for corporate blogging. If anything it comes with a hint of threat. That said, for it to take hold like the evangelists predict, they've got to do what Jarvis promotes, i.e. storm the gates with "pitchforks and torches." It's "surrender your company or else."

"Cluetrain," damn that David Weinberger, that's what started all this noise. For those who've been living under Iraq, The Cluetrain Manifesto was a seminal book that predicted the rise of Web 2.0 and it's implications on society and business.

Regrettably, we are in the throws of proving some of its essential tenets wrong.

1. Populism is inherently a universal good. False! What's good for me is not necessarily good for society. Also, the elevation of populism completely ignores that the nature of a mob is more likely schadenfreude than good will. Mobs like bonfires and hangins.

2. The idea that "network markets know more then the company" is nonsense. Sure a million monkeys typing mathematically make sense but there is only one Shakespeare.

3. The total refutation of hierarchy is a destructive myth hailed by the proletariat and inspired by those that want to use them. Hierarchy is Nature's way.

4. Mob Rule is "guilty until proven innocent." That usually takes place after they've burnt down your house. It is essentially antithetical to the cornerstone of our union, the rule of law.

But THE Achilles Heel of the Cluetrain is property. No one consulted the corporate owners! And truth is, the evangelists actually have contempt for the owners. In the words of Shel Holtz, "Screw the owners. Customers (we) come first."

NOW WHAT

Well, Ochman can always get a job at IHOP, I suppose. Jarvis can go back to TV reviews. I see Holtz opening up a summer camp for the intellectually challenged. And Rubel, I am sure he'd do well as an assistant manager of a Sharper Image.

It's really Richard Edelman I am worried about. Seriously, the "all in" part comes with pride. I just don't imagine him saying, "Excuse me but I really fucked up with that Me2Stuff." Not ever.

Nope. I imagine him riding this all the way down. I imagine that PR's image will be diminished further. Keep in mind, the Tech Bubble, and we were the air that filled it, is just five years ago. This will be our second screw up in less than 10 years. Unfortunately, bubbles take at least 10 to for the marketplace to forgive and forget.

Anyway, I am guessing finally that the Industry will be pretty resentful, too. The resources they've squandered on this. Someone is going to hang someone for the malaise that will surely follow.