The Economics of Social Media
Ben Rubenstein
About me
Senior Manager, Social Media & Online Community at TechTarget
Past:
Not a guru, ninja or sage (or an economist)
Overview
The (current) business of social media Existing business modelsExpectations for the market
Social media as a tool for other businessesHow companies are using social media to
build businessChallenges for businesses and users
New business modelsSharing/collaborative consumption examplesThe future?
Web 2.0 = social media?
Wide reachData-drivenUser-centricPerpetual
betaMultiple
devices
How ‘the long tail’ applies to socialWide range of content availableParticipation is spread out along a scaleNiche communities are just as important as
the mainstreamTargeted recommendations (human or
machine) drive action
The (almost) current landscape
Social media: A good investment?
Social Media: Hype or Hope?
Highs and Lows• 2010: Rejects
Google’s $6 billion offer
• 2012: $5.8 billion valuation
• 2013: $7.3 billion valuation
Highs and Lows• 2013: Rejects
Facebook’s $3 billion offer
• 2014: Snapchat hacked
• 2015: ???
Business models (not mutually exclusive)
AdvertisingVirtual GoodsFreemiumSubscription
AdvertisingLeveraging the Long TailNative or not
Virtual goodsReal money buys fake things within the
free experience
FreemiumBase product is free, extra features (or
fewer ads) will cost you
Subscription (Premium)You have to pay to play
Freemium vs. Premium
How do Facebook/Twitter make money?
What model(s) does Facebook use? What about Twitter?
What opportunities are there to expand? What are the risks?
The ‘real’ product
A social network’s real value = Number of users?
“If you’re not paying for the product, you are the product” – Anonymous internet pundit
Why am I seeing these ads?
Why am I seeing these ads?
You are being watchedData mining based on your
profile + postsRetargeting from sites you’ve
visitedBuying a coat? Buying a car?
Facebook knows all
“Facebook has collected the most extensive data set ever assembled on human social behavior.”
You make yourself a target
You make yourself a target
Your friends make you a target
For Advertisers
The power of the social graph
Take a break
Visit your favorite social network:What ads do you see? What are they for? How did they get there?
The “thank you” economy
Who participates in this new economy?
Businesses – you don’t exist if you’re not on social media
(Content) Marketers – every brand is now a publisher
Customer Service – problem solving
Data AnalysisCustomers – what makes
it all work
Every network is a new opportunity for…
Marketing
Every network is a new opportunity for…
Sales
Every network is a new opportunity for…
Entrepreneurship (and Self-Promotion)
Every network is a new opportunity for…
Cut out call centersCreate a ‘human’ face for the brand
Customer Service
Every network is a new opportunity for…
Understand what people care aboutBuild new business from that data
Data Mining
Every network is a new opportunity for…Data Mining
Every network is a new opportunity for…#Fail
Every network is a new opportunity for …So Much #Fail
Every network is a new opportunity for…Scamming
Every network is a new opportunity for…Scamming
Brands have both more and less control
Owned vs. earned vs. paid mediaOwned: Created/controlled by businessEarned: Shared by press and publicPaid: Sponsored content/advertising
“If [Facebook’s] News Feed is the thing that everyone sees and it controls how information is disseminated, it’s controlling how information is revealed to society, and it’s something we need to pay very close attention to.”
Can businesses and users coexist?
Pressure to make money = more advertisingIf users leave, no more business opportunity
Business objectives
User experience
Your turnFind a brand you like on social media.
What marketing efforts do you see? What’s their persona?
Are they successful? How can you tell?Why would you follow them? Deals, customer
service, humorous content?
Social creates new business models
How does social media support the “collaborative consumption” economy?
What new opportunities and challenges does this economy create?
What are some examples of participants in this new economy?
Peer-to-peer sharing
Microtasks
Social deals
Location-based deals
Crowdfunding/Crowdlending
????What social business opportunities have yet to
be realized?
RecapLots of hype, but some hope for social
media businessesSocial supports existing business models –
with good executionSocial creates new business opportunitiesWith every opportunity, there is a tradeoff
Thank youhttp://www.benrubenstein.netlinkedin.com/benrubenstein@ben_rubenstein