Social Media Is Big Business

SOCIAL MEDIA IS BIG BUSINESS

Ben RubensteinTufts University EXP-50

BIG QUESTIONS

How does social media make money?

What drives the value of social media for users? For advertisers? For investors?

What risks and challenges should we be aware of?

What’s the outlook for the social media economy (and related economies)?

HOW MUCH IS SOCIAL MEDIA WORTH? (JUNE 2015 EDITION)

HYPE OR HOPE?

HYPE OR HOPE?

2009:$250 million valuation

April 2010:$1.35 billion valuation

Nov 2010: Rejects $6 billion Google offer

Nov 2011: $12.8 billion valuation

2012:$5.8 billion valuation 2015: $5

billion valuation

HYPE OR HOPE?

Nov 2013: Rejects $3 billion Facebook offer

May 2015: $16 billion valuation

Apr 2012: $4.25 million valuation

Apr 2013: $800 million valuation

HYPE OR HOPE?2015: $21 billion valuation?

2013: $1.5 billion valuation

2014: Acquired by Facebook for $19 billion

Would you invest in social media?

BUSINESS MODELS

Advertising

Virtual Goods

Freemium

Subscription

ADVERTISING

VIRTUAL GOODS

FREEMIUM

SUBSCRIPTION (PREMIUM)

Would you pay for Facebook? (or Instagram)

““If you’re not paying for the

product, you are the product.”Anonymous internet pundit

“

USER VALUE: DATA

DATA MINING + SOCIAL LISTENING

USER VALUE: CONTENT

Instagram: “A non-exclusive, fully paid and royalty-free, transferable, sub-licensable,worldwide license “

LinkedIn: “copy, prepare derivative works of, improve, distribute, publish, remove, retain, add, process, analyze, use and commercialise, in any way known or in the future discovered…”

Facebook: “...does not end upon the deactivation or deletion of a user’s account, content is only released from this license once all other users that have interacted with the content have also broken their ties with it” �

Nope.

ADVERTISING + THE INTERNET

TENSIONS

Business Objectives

User Experience

ORIGIN STORY

Advertising became dominant because:- Easy to implement- Easy to sell to investors (‘investor storytime’)- Attention is everything (vs. print ads)

�“The primary benefit of online advertising is the ability to see who’s looking at an ad.”

THE AD-SUPPORTED WEB

PROS:‘Free’ contentPersonalizationOpenness

CONS:TrackingCentralizationClickbaitFilter bubbles

ESCAPE HATCHES

ESCAPE HATCHES

ESCAPE HATCHES

WHY AM I SEEING THESE ADS?

WHY AM I SEEING THESE ADS?

WHY AM I SEEING THESE ADS?

WHY AM I SEEING THESE ADS?

WHY AM I SEEING THESE ADS?

RETARGETING

““Facebook has collected the most extensive data set ever assembled

on human social behavior.”

Targeting

Targeting

Targeting

Targeting

Targeting