Social Media 2.0: How Platforms Are Going For The Money

Social media is undoubtedly a buzz phrase nowadays. Social media has become the single most central element in the lives of many people across the world. Almost 4 billion people actively use social media on this earth with the average user having 7 or so social media accounts. This is something that has been achieved in just less than 20 years – social media is huge! In this article, I am going to delve into the issue of how social media platforms are monetizing their platforms. I will unravel for you the basic dynamics and later on will touch on some latest interesting paradigm shifts by some platforms regarding revenue generation.

Ways Of Monetization

Before I get into that let me point something I feel is important. Often time people wonder how social media platforms make money especially considering that the platforms are freely accessible. Know this when it comes to social media sites; if you are not paying for the product then it is you who is regarded as the product.

You will notice in a moment that I shall be talking about ads (targeted ones) as a key revenue stream for social media sites. Advertisers are more than willing to pay for the social media platforms to get your attention towards their ads. In that way, you are being regarded as the product by the social media platform. I had to briefly explain this so that you get a picture of how social media platforms approach monetization.

Digital Marketing

The most common means of monetization is ads. Global surveys indicate that over 50% of businesses will dedicate at least 50% of their marketing budgets on social media ads this year. Due to the advancements in data sciences, machine learning and artificial intelligence it is now easy to come up with effective digital ads. This is also coupled with innovations such as ad words, keywords and search engine optimization amongst others.

All these, and more, have been packaged and incorporated into or synched with social media platforms in ways people are willing to pay for. If you have ever used Facebook or Instagram you are familiar with things like boosting posts which involve most of the aforementioned aspects.

Investment Capital

The other way social media sites make money is through capital investments that they receive. That money becomes a key element of monetization because it can be effectively used to even drive other monetization frameworks or infrastructure.

Some Interesting Upcoming Developments

Facebook And Instagram

There are reports that the Like feature will soon be removed from these two platforms. Interestingly, there is an on-going debate on the real reason why this is going to happen. Facebook maintains that the move is aimed at addressing mental and emotional health issues on the platform. Here is the thing, most people are seriously affected when they post stuff about themselves and they receive zero or few likes. This might sound odd or funny to you but there are many people suffering from mental or emotional health-related issues because of this.

So Facebook’s rationale is that people will better express themselves without worrying about likes and all. However, this argument might not really hold water because the Comment feature will still be there. The need for public validation will still be there and the same concerns about mental and emotional health might still prevail. So where does this leave us? This could mean that the real reason behind removing the like feature has more to do with monetization issues than anything else.

It quite interesting actually, let me explain the logic. Removing the Like feature seriously compromises social media influencers’ ability to have or measure their influence. Remember it is their influence that advertisers pay for so as to tap into their followers’ base. By so doing advertisers are left with no option but to resort to in-app features such as boosting and the like to reach customers. Resorting to those in-app features means that advertisers pay the social media sites directly thus usurping the social media influencers that used to get the money directly from advertisers. So as you can see the strategy is to realize more revenue at the end of the day.

WhatsApp

In about 6 months’ time, WhatsApp shall be rolling out WhatsApp Pay. This will be aimed at bridging the gap between users and businesses by incorporating a payments framework. This is more like what the mobile app Sasai is doing. Essentially through WhatsApp Pay, it will become super easy to send someone money, for example. The feature will provide room for users to send or receive money and to carry transactions with businesses using their bank accounts. Once this becomes globally widespread lots of money will be realized from this by the platform.

It is evident that social media platforms are so intent on making more money now. Given their large followings they can bet on it that monetization strategies will pay off big time. People are now so hooked to these platforms that they will be more than willing to play into whatever monetization methods might be put in place.