Monetization: The Inevitable Future of Social Media

Like it or not, social media is growing up. According to MAGNA GLOBAL Advertising Forecast: 2014, social network advertising totaled $9 billion globally in 2013. As companies commit more of their budget dollars to this type of advertising and more social companies issue IPOs, the emphasis on generating new revenue streams will only increase. In a recent interview with L2, NYU Stern School of Business professor Scott Galloway was asked which platform is doing the best in terms of monetizing its audience. His answer might surprise you!

Here’s a look at some of the most prominent social platforms, along with their current and planned efforts toward monetization:

LinkedIn: Professor Galloway’s vote for “platform that has done the best job of monetizing its audience” goes to LinkedIn. He attributes this largely to the company’s diversified approach to generating revenue streams beyond the standard advertising dollars. LinkedIn’s revenue comes from a mix of recruiter tools (53%), advertising (27%) and user upgrade fees (20%).

Facebook: According to Facebook’s Investor Relations page, the company achieved 728 million daily active users worldwide in Q3 of 2013. With a projected 2013 revenue of $7 Billion, Facebook is considered by many as the leader of the pack in terms of monetization. Mobile advertising will be key for Facebook in 2014. As an example, the company’s recently introduced video ad units will begin running on mobile devices in the not-so-distant future. Also, look for the company to bring its Graph Search feature to mobile in 2014—followed shortly by advertising incorporation.

Instagram: Midway through 2013, the Facebook-owned service had a total of 16 Billion photos with 1 billion likes per day. With over 150 million monthly active users, Instagram is already starting to dip their toes in the monetization pool. On it’s blog, Instagram commented on the inevitability:

“In the next couple months, you may begin seeing an occasional ad in your Instagram feed…seeing photos and videos from brands you don’t follow will be new, so we’ll start slow. We’ll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands…”

 

Twitter: With more than 230 million active monthly users, Twitter is on pace to nearly double 2013 revenues compared to last year. The company, however, reported a net loss of $133.9 million in the first nine months of 2013. To turn things around in 2014, Twitter will likely focus on two of its ad tools. First, Twitter will sell ads on outside apps. The company’s acquisition of MoPub, a mobile ad exchange, speaks to their goal of providing a broader reach than advertising within the Twittersphere alone. Twitter’s second push will be the expansion its international self-service ad platform—which, of course, is intended to drive international revenue growth.

What do you think the future of monetization looks like in social media? How do you think the platforms mentioned here will fare? What about others that weren’t discussed? Tweet your thoughts and predictions to @StrataBlue.