The Evolving Business of Social Networks

From Myspace to Instagram, how companies took advantage of the rise of social media

Social media has witnessed considerable evolutions over the past few decades. From early forms such as message boards and forums, the rise of platforms like MySpace and LinkedIn marked the beginning of modern social media. The rise of Facebook, Twitter and Instagram in the early 2010s marked the beginning of a new era for these platforms, which have become a necessity in our daily lives ever since. While the initial focus of these platforms was on user-generated content, the last decade has seen the launch of new features, functionalities, and platforms that changed the way we used them.

Social media continues to evolve and transform the way we communicate and share information to the point where it has become a popular new tool for business and commerce. But who could have imagined such a craze around these applications? And how have companies taken advantage of social media?

The beginning of social networks and their evolution

The origin of social networks goes back to the early days of the Internet in the 1990s. Their purpose was simple: to facilitate communication at a distance and share information online.

Today, they offer many benefits to individuals and communities thanks to the proximity they bring to families and friends who want to stay connected. They can offer entertainment and enjoyment without any hassle. Users can watch funny videos, play games, follow their passions and get away from reality. Social networks also offer more freedom of speech than ever before. They are an effective way to share and debate ideas, views and perspectives.

However, over time, social networks have taken an important place in people’s daily lives, which has damaged their use and tainted the initial goodwill. We now talk about the loss of privacy and mental health risks that make the use of these platforms unhealthy. Personal image has taken a more important place in society, making people concerned about their looks, their appearance, their lifestyle and more. Authenticity lost its place while the feeling of insufficiency has become common practice.

Over the past decade, the use of social media has grown and evolved considerably. The objectives and functionalities have been diversified by adapting to the changing needs of users, creating big milestones.

Major milestone

In addition to their basic functionality, social media platforms have also been used for professional and commercial purposes, such as advertising and online shopping. For example, it can be about creating a personal brand, networking with others in a specific industry or promoting a company or product.

Social networks in general are having a real impact today. Just by looking at the numbers these platforms generate, we can see the influence they have. For example, nowadays, there are more than 2 billion users on Instagram. This represents more than 1 billion monthly active users including more than 500 million daily. In terms of daily posts, that’s over 100 million photos posted and over 200 million consumers who consult at least one professional profile. Instagram has become a rich source of information about places to visit, public figures and trends to follow.

The rise of social media professionalism marks a turning point in the use of these platforms as more and more people and businesses recognize their value. They allow people to build relationships, find job opportunities and market products or services. Indeed, social networks have become a direct connection between customers and companies. This practice is revolutionary because it allows for audience growth, opportunity creation and brand development.

But how do companies use social media?

1. Online advertising: Social networks have enabled companies to deliver targeted advertising based on users’ interests and online behaviour. Brands are aware of the influence these platforms can have and are investing the required budget.
2. E-commerce: Social networks have enabled businesses to sell their products directly to their customers via features such as Instagram Shopping, Facebook Marketplace, etc. This is a major step change that shows how powerful social media is and how influential it is.
3. Influencer monetization: Social networks have also facilitated the emergence of new business models such as “influencers”. These new trendy jobs have an important role to play in the communication strategies of companies. It is an exchange between companies and these personalities who use their image and their influence to sell products to their community. According to Digimind’s figures from their study of Instagram’s 2022 must-have figures, the right social network would be considered by influencers as the one that generates the most engagement with the communities. To give an idea of the source of income that this generates, we are talking about rates ranging from 1000€ to 50000€ for a campaign. These amounts prove the impact of influencers as their salary is proportionate to the gain they generate for brands.
4. Data monetization: Social networks have also collected a large amount of data on their users that can be used to target ads and online market research.
5. Platform knowledge: Social networks need to evolve their platform to keep up with market trends and competitors, as well as content creators who need to inspire consumers. Here, we are talking about being aware of the latest trends in the market as well as those of the social network itself. All these platforms evolve very quickly so it is always necessary to stay up to date to continue to interest consumers.

Companies have been able to use their large audiences, the functionality of advertising targeting, and the emergence of new business models of social networks to their advantage.

In summary, social networks have evolved dramatically since their launch in the 1990s. The initial goals were mainly focused on connecting people and facilitating communication. However, over time, they have evolved to include new features for business and professional purposes. In short, social networks have become a profitable business for companies that can use the features of these platforms to improve their communication, marketing, and online presence.

About this article

This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminating the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.