Who didn’t have a “MySpace” account? The hours spent listening to friends’ music, viewing profile pictures, creating interesting (and preposterous) page backgrounds are imprinted on us and our memories. My first social media account, admittedly was not MySpace, but Facebook in early 2005, when only College Students were allowed to join. MySpace, Facebook, Friendster were just “A Place for Friends”, as MySpace put it so eloquently in their original slogan. These sites have come and gone in countless corporate and popularity battles, but today Facebook now commands a great deal of market with a market capitalization of over $350 Billion, Twitter at $13 Billion, Instagram at $37 Billion (according to Bank of America Merrill Lynch analysts), and LinkedIn at $25 Billion.
With these sites continuing to mature, the ways in which users interact with them continue to change. With social media beginning to encompass new features, users view social media less as a casual social hub, but a place to network (professional and casually) and a center of information. Users are spending more time than ever on social media, as Digital Trends reports social media users check their sites 17 times a day, at least once to twice an hour. How are social media sites taking advantage of these trends, and how do they continue to draw users in? Let’s look at common social media features, the largest advertisers, monetizing their user-base, and the future of social media.
The Big 3
Developing a social media platform is outwardly simple: create an attractive, easy to use UI (Instagram), create pathways within the network to keep users seeking information from sources they may not conveniently have access to outside of their network (Twitter), and provide users multiple ways to generate and share content on a single platform (Facebook). Since Facebook was launched in 2004 there have been a number of social networks that have been founded, launched, and closed. What differentiates a “good” a platform and a “great” platform is their ability to maintain users and harness their user-base to build and maintain advertising revenue. Platforms like Facebook have been relatively successful at advertising and generating ad revenue, whereas companies like Twitter have recently faltered, with single digit growth projections.
Digital Ad Kings
Let’s be honest, when is the last time you “Yahoo’d” something? I bet it felt strange saying “Yahoo’d,” didn’t it? The truth is, much like Google owns nearly all search traffic, Facebook dominates the social media advertising game with last quarter’s ad revenues topping $4.3 Billion with total revenue rising 52%.
Google (now Alphabet) currently generates more than 40,000 search queries per second. However, with users generating more information from social media (and spending significantly more time on social media sites), ad revenue for Facebook continues to grow where Google ad revenue has begun to plateau, growing only modestly from $17.3 Billion in 2015 to $20.3 Billion in the first quarter of 2016. While Google still commands the lion share of the market, the numbers show Facebook is continuing an upwards ad revenue growth trajectory driven by increased user engagement through their platform.
Monetizing the User-Base
Within a social media platform, users have the ability to customize news feeds and follow pages or celebrities. Mainstream media, such as news outlets are so active on these platforms that a user no longer needs a standard news app. Companies are capitalizing on Facebook’s live streaming and Snapchat stories in order to bring amazing experiences right to the consumer from anywhere in the world. Instagram, Twitter and Facebook all have direct messaging services, making communication an ever-growing component of social media designed to keep you interacting with the platform longer periods of time.
So what are these platforms doing with this strong user base? They’re monetizing it with paid advertising. Facebook, Twitter, Instagram, Pinterest and LinkedIn (and many others) all have comprehensive ad platforms complete with reporting, creative assets, and competitive bid recommendations. As the active user-base continues to grow, social advertising will become more in-tune with these user bases, allowing marketers to zero-in on custom audiences and deliver high-quality, effective advertising.
Moving Onward & Upward
Social Media has evolved from an extended online chat room to a powerhouse of functionalities and features with unprecedentedly large user bases. It is not just “A Place for Friends” anymore. Whether you’re an avid social advertiser or a general consumer, your presence on social means that these networks will continue to evolve to suit your interests, behaviors and needs. Social media will continue to join forces with popular consumer brands, so much so that you may no longer be able to notice the transition from your Facebook native feed to your Amazon cart (notice the right-hand column ads in your Facebook feed, those items look familiar, huh?). One thing is for certain, Social Media isn’t going anywhere but up anytime soon, so keep on posting!
Co-Authored: Michael Brown & Ben Dickshinski of Ascend Integrated