Long live advertising? 3 ways social media is monetizing today
- Social media monetization has hinged on advertising for a long time, but new avenues can give the content creators more control
For nearly a decade now, the top social networks have relied on an advertising-based model to connect brands and businesses with their audience. Along with Google, Facebook is one of the largest advertising platforms around.
Without the scale and user acquisition base of Facebook, which together with Instagram and Facebook Watch gives the social pioneer around 1.8 million daily users, many social companies are experimenting with new monetization strategies.
These novel strategies take inspiration from different sources that upend the traditional advertising model, such as China’s ‘shoppertainment’ social commerce, or in-app purchases like the mobile gaming industry, or the premium membership strategy employed by some content websites.
Some of these alternative revenue models will go on to influence other sectors or might become a more dominant money-maker over time. But will they be able to supplant the lucrative ads network system employed by the top social sites like Facebook, Instagram, and Twitter?
Platforms like Youtube’s Premium service and China’s Weibo have already employed a version of this method for some time now, which is to literally offer ad-free content for those premium account holders.
More recently, Youtube revamped its Premium offering to offer exclusive, original content and access to Youtube’s music library. This is more reminiscent of the creator-type of exclusive content that we are seeing more of nowadays, where truly committed fans can subscribe to different tiers for additional access than the creator’s free platforms.
Fans who pay might get some exclusive content not available on free platforms, direct access with the content creator, or other exclusive perks such as signed merchandise. A VIP membership platform like Zebra IQ or OnlyFans also allows the creator to test out experimental content on their core fanbase and to connect more actively with followers, as opposed to the passive model of advertising.
Pinterest was an early pioneer in integrating e-commerce functions onto its user-uploaded content platform, and TikTok and Instagram have made recent strides. Instagram released Shops just a couple of months ago, where businesses can display their Shopify inventory on Instagram in real-time. This fall, TikTok announced a partnership with Shopify that allows merchants to create TikTok for Business-like marketing campaigns and track analytics on the TikTok app from their Shopify accounts.
This method incentivizes creators to promote shoppable products via their channel and be an expert opinion leader in a select category. Such specialization benefits the whole value chain when done right: the platform takes a cut, the third-party brand makes a sale, the creator monetizes their expertise, and the consumer purchases products with higher confidence.
Digital goods and in-app purchases
In-app purchases are increasingly popular in China, where it’s common for fans to “tip” video streamers with digital items (purchased with real cash) that can be cashed out. With this model, emerging social platforms can monetize without relying on creators or exclusive content.
On gaming and video chat platforms like Twitch and BIGO Live, viewers can purchase in-app items to gift streamers, and this has become a noteworthy currency model to sort of compensate the creator.
Meanwhile, it has become increasingly the accepted monetization model in dating apps like Tinder and Bumble, where users can pay for the ability to receive more matches, boost their profile among potential suitors, or extend the response time allotted before a match expires.
The long-running advertising-based model is becoming less viable for emerging social platforms, and these new revenue tactics are increasingly giving both content creators and the fans more flexibility and independence over how their funds get spent on social platforms.
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