Social media is one of the most valuable tools any modern business can use. It allows brands and businesses to share with the world their expertise and skills, so it is no wonder social media and social media value are some of the most talked about topics for over a decade.
The roots of social media can be traced back to the early 90’s – forums and bulletin boards were examples of social media integration into business practice. From that point on, many social media tools started appearing and adapting to help businesses deal with the new and exciting world of social media.
As well as vast improvements in recent years in the range of technology available for businesses, and its heightened ease-of-use and affordability, there is one added factor that is key to understanding why social media implementation is core online business practice these days, and why ignoring such means is a missed opportunity.
The key is as much in the difference that has taken place in recent years within the skills and knowledge base of customers and consumers, as it is in new business models and practices of companies.
The massive jumps in levels of computer and gadget ‘literacy’ that can be seen across much of the world is an inevitable consequence of the progress of technological advancement, and its ever increasing implementation in many aspects of modern life.
In short – whatever your business sector, turnover or market share, it is most likely that many of your customers have at least basic, if not advanced, technological competence – and that includes knowledge of social media platforms. It seems quite logical to acknowledge this potential channel of communication and its possibilities, and explore how it can help develop services.
Ultimately it is customer needs and understanding of the nature of one’s market that shapes how successful businesses construct strategies. It seems that in the age of Web 2.0, whether your typical customer is 7 or 77, or maybe both and everyone else in between, they can all largely send and receive texts, write on each other’s Facebook walls and follow their favourite blogs. Any business which seeks to establish a relationship with such customers can hardly afford to ignore the massive potential of social media and the possibilities of Web 2.0
But is it enough to just use these channels? Or should you pay close attention to seeing results as well?
We’ve become used to all the standard ways of comparing the relative values and rankings of social networks, and the markers for monitoring their growth. Unique users have always been the most key factor, and useful as it was – it was also rather limited and actually sometimes told us very little. The data always felt slightly one-dimensional, as if there were more pieces to the jigsaw that we weren’t seeing – like a football score that only tells you one team’s result and not the others.
To solve these issues, some new ways of calculating the true value of social networks had to be introduced. One of them is based on a key principle – that users in countries with higher average online advertising spend are worth more (financially speaking) to social networks. Therefore, in terms of monetising networks, a UK user (1st in average online ad spend) is worth more to a network than a US user (4th).
This method was first used long ago (in 2008 to be precise) – but user numbers and distributions have changed drastically since then. The estimates dating back to 2009 value the total social networking market at $27.1 billion, with Facebook representing around $10bn of that figure. Obviously networks which have lots of users in countries with relatively low advertising spends – rank far lower under this new method of valuation. Nowadays, these numbers are even greater, with some reports mentioning $33.8 billion in 2017. Social media value is definitely growing!
There is a danger in dismissing huge players in the social network game with this new ranking system – simply because of their relative weakness in terms of immediate monetisation potential. However looking over how much the results have changed over the past years shows just how temporary these standings in fact are. One year a particular social network can be popular, while the next one it may not even be included.
Minor shortcomings aside though, this interesting way of calculating represents a real breakthrough in terms of our ways of understanding the real market values of social networks, and provides a more complex system of generating data that directly represents the revenue-generating processes of the networks. It might also lead to a slight change of tactic for up and coming social networks – moving away from an ‘as many users as possible’ goal, and more to targeting already saturated markets (like the UK) knowing that even a handful of users here is worth more in a financial sense than a hundred elsewhere.
All in all though – good news for social media teams and social networks which seem to be expanding each and every day – social media value keeps on growing!
