Making social profitable again
Shifting social ecosystem offers media the opportunity of generating sustainable profits from social
What’s changed?
Social revolutionised how brands interact with audiences, gaining traction based on the combination of mass audience adoption, virtually unlimited organic reach and revenue-sharing for content creators, able to reach >85% of target audiences. It’s no surprise this proposition acted as a catalyst for a new generation of social businesses.
This all changed in 2015 as Facebook’s audience acquisition plateaued. To maintain growth, free reach was reduced by 52% with ad costs simultaneously rising by 171%, completing the migration from free social to a paid ad platform by 2017. This fundamental shift in business model has resulted in <5% of digital media revenues originating from social, whilst CPM margin pressure continues to threaten the bottom line.
Making social profitable again
Creating a sustainable business model for social demands an evolved response. Through combining the mass market benefits of legacy platforms, with a new generation of social controlled by brands themselves, focused on precision and profitability, to efficiently monetise social again.
Dependant on the business model adopted, media brands might expect to generate up to $9.18 ARPU so for a number of media brands with P&L pressure, it’s a game changer.
Elements of a sustainable social business model:
1. Becoming a social entity
The most successful media brands operate diversified channels. Many will consider becoming social entities in their own right, to regain control over social business models, and increase diversification to include paid content, social ad inventory, anonymised data sales, and sCommerce.
2. Own the conversation, understand audiences, and maximise conversions
Understanding, and predicting, live audience behaviour depends on owning audience conversations. Enabling the alignment of content, interaction, and live business models, creating resonance between audiences and engagement, maximising conversions through precise targeting.
‘Generation social’ is key to fashion retail, with more than 70% of traffic coming from mobile social, up to 32% of women aged 18–34 have stated that they’re open to buying clothing directly from a social media platform. Clearly increasing social conversions is pivotal.
As an alternative to brands spending increasing amounts on paid social, to drive anonymous traffic, achieving c.3% conversion rate, media has a golden opportunity to evolve the value to brand partners by helping them to understand audiences to achieve precision marketing that will raise conversions.
3. Increasing the value of brand-partnerships
Media can now offer brand partners a window into audiences, on a sustainable platform they control, enabling partners to also operate precise campaigns based on true audience understanding.
This level ownership and understanding of audiences is profitable and retentive, presenting another opportunity to mitigate increasing CPM pressure through accurate, programmatic targeting.
What next?
If media concludes that social is here to stay then then shifting social business models should act as an impetus for brands to get control and to include their own social entity in distribution channels.
Brands have the opportunity to find a sustainable place within the social ecosystem, monetising audiences for themselves and fundamentally evolving the proposition to brand partners.
Legacy social remains for awareness and promotional campaigns, but if brands are going to make social profitable again it will demand combing mass audience reach with precision to gain new opportunities for audience ownership, monetisation and understanding.
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GLOBALDRUM is a mobile social platform enabling brands to monetise audiences. The Company works with brands who become social entities in their own right, returning control, revenues, and data, enabling a new generation of live social business models on demand synchronised with social networks.
