Social Media & the Shift Towards Diverse Monetization Strategies
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Social media platforms are under tremendous pressure to generate revenue. This article by Greg Castro, VP Of Global Partnerships, Mobvista, explores the challenges social media giants face, the need to adapt, and how this adaptation may look.
In the face of increasing competition and a slowing ad market, social media platforms, particularly giants like Twitter and Meta, are under pressure to explore new avenues for revenue generation. While newer social media platforms like Threads initially experienced a surge in user growth, retaining these users has proven to be a significant challenge. This could be attributed to their inability to cultivate a distinct platform culture or perhaps due to the initial curiosity surrounding the app dissipating over time. Regardless, almost all established platforms grapple with a need for diversification and innovation in their monetization strategies.
Twitter’s Revenue-Driven Innovations
Like many of its peers, Twitter is now navigating a business landscape where survival relies not only on innovative advertising but also on the introduction of and introducing features that can fuel retention and monetization. For instance, to retain its most influential users, Twitter (recently rebranded as X) launched an initiative to share a portion of the ad revenue generated from user replies with the content creators. This strategic move led to the official launch of X’s Ads Revenue Sharing platform. While not new amongst its social media peers, this model of compensation not only strengthens the bond between the platform and its influential users and fosters a community of enthusiastic content creators.
Threads: Missing the Cultural Mark
Contrarily, Threads, the new entrant in the world of social media, starkly lacked a unique culture on its platform. Unlike Twitter (X) or other popular social apps like TikTok, Threads failed to introduce innovative features or concepts for users to build a distinctive culture. However, the underperformance of Threads should not be seen as a victory for X or other social media platforms. The competition extends beyond these new entrants, with social media channels increasingly locking horns over attracting advertising interest.
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The Super-App Vision
Elon Musk’s vision for X is inextricably linked to diversification, principally illustrated by his aspirations to launch a super-app. This model, successfully implemented by Tencent’s WeChat, amalgamates multiple digital services within a single platform, providing immense opportunities for mobile marketing and increased user engagement. Super-apps throughout Asia have seen their most notable success by including elements such as mini-games and mini-programs, creating robust social elements, and integrating payment and utility features. Musk’s previous experience with PayPal gives him, at the very least, an advantage over Western competitors, as he possesses distinct insights on integrating and optimizing payment systems within the super-app architecture.
WeChat, China’s premier super app, boasts a staggering 1.01 billion monthly active users. It has revolutionized mobile and social media in China, with 88% of Chinese respondents using it daily for various tasks. WeChat Mini Programs offer a variety of features, allowing almost every function to be completed within the app. Their implemented WeChat Pay allows the platform to control and utilize various touchpoints in the user journey, all the way to the purchase stage. Its mini-programs generated over $400 billion USD in annual transactions in 2021. In terms of overall IAP revenue, WeChat generated $55.97 million USD within China, highlighting its strong monetization potential.
Navigating Regulatory Complexities
However, the creation of a super-app isn’t without challenges. Regulatory pressures, particularly those concerning super-apps, represent a significant obstacle. As these platforms expand and wield greater influence, they attract increased attention from governments around the globe. Regulators are growing increasingly worried about the monopolistic nature of these super-apps, resulting in potential antitrust issues. Companies like Facebook and Google, which have a vast reach and control over multiple digital services, have already encountered a myriad of regulatory challenges in Europe and the United States.
Social media platforms must navigate implementation complexities, regulatory considerations, and user acceptance while contending with users’ established loyalty to current platforms. These issues have highlighted the intricate dance social media companies are performing – they’re required to innovate to continually meet user demands and delve into new business models, such as super-apps, while traversing a complex regulatory landscape.
Future of Social Media: Adaptation Imperatives
The challenges are high, but so are the stakes. The pressures of the ad market slowdown, coupled with the rapid evolution of the digital landscape, necessitate swift and effective adaptation. But the question remains: What form should this adaptation take?
The expansion of eCommerce and mCommerce introduces a fresh set of fresh challenges and opportunities. Championed by TikTok, brands can now connect directly with consumers through social media platforms, establishing new touchpoints and reaching audiences more effectively. Likewise, livestreaming or ‘social shopping’ has emerged as a popular mCommerce marketing strategy. Influencers deliver authentic, human-centric content that fosters consumer trust, decreases churn, and boosts conversion rates.
Furthermore, the mobile gaming industry provides a unique solution to the ad market slowdown. In-app gaming boosts user engagement and creates a vibrant community of like-minded users. It also improves the effectiveness of app install ads, providing downstream benefits that help social media platforms combat the adverse effects of the ad market slowdown.
In a survey conducted in Q1 2023, more than two-thirds (68%) of US adult Gen Zers chose that they were likely to purchase TikTok, on par with YouTube and behind only Instagram. In June 2023, 19.2% of digital buyers aged 18 to 34 made purchases via TikTok Shop. The platform is known for its dynamic trends, making it crucial for brands to stay updated on trending products. TikTok’s algorithmic power enables content, including that from micro-influencers, to potentially go viral. Users spend an average of 54 minutes daily on TikTok, making it a significant platform for engagement. TikTok Shop’s integration of livestream shopping simplifies direct sales during live events, offering promising opportunities for brands.
Potential in Mobile Gaming
Furthermore, the mobile gaming industry provides a unique solution to the ad market slowdown. In-app gaming boosts user engagement and creates a vibrant community of like-minded users. It also improves the effectiveness of app install ads, providing downstream benefits that help social media platforms combat the adverse effects of the ad market slowdown.
Integrating mobile gaming into social apps transforms user engagement and revenue generation. Several social platforms now feature in-app gaming, like Facebook’s Instant Games or TikTok’s game filters, which keep users within the platform longer. Live streaming and esports integration, such as on Twitch or TikTok Live, foster social gaming experiences with millions of viewers. You could leverage in-app purchases, virtual goods, or advertising opportunities to monetize gaming content. These strategies provide valuable insights for advertisers leveraging user engagement data and innovative monetization models within the mobile gaming landscape.
However, the complexities of this evolving landscape challenge advertisers in allocating budgets and reaching target audiences. The path forward is clear in such a context: adapt or perish. Their ability to adapt and strike the right balance will determine their success in the coming years.
What alternative methods can social media marketers employ to enhance their revenue generation? Share with us on Facebook, X, and LinkedIn. We’d love to hear from you!
Image Source: Shutterstock
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