The story of social media started 15 years ago with the launch of LinkedIn. This was followed by Facebook in 2004 and Twitter in 2006. Facebook then went on to dominate the world and become one of the top ten most valuable companies in the world. The two other main players in the game are Instagram and Pinterest, both of which were founded in 2012. Instagram was bought by Facebook for $1.0 billion, and Pinterest has been growing and making acquisitions since its inception.
For industries that are dependent on the Internet, the concept of power laws applies. This means certain companies will take a dominant position and will be 10x (or more) bigger than the runner-up in the space. This is essentially what happened with Google in the online advertising industry, and it has occurred with Facebook. When you compare market capitalizations, the effect is clear. Facebook is the behemoth with a market capitalization of $312.78 billion, whereas LinkedIn and Twitter are the runners up at $15.49 billion and $11.69 billion, respectively.
The reason for these giant market capitalizations is the huge penetration rates that social media has achieved. It is estimated that social media has a 66% penetration rate in North America and the penetration rates in the rest of the world aren’t much lower. Everywhere in the world besides some parts of Asia have penetration rates above 50%, which means there is an addressable market of over half of the world’s population.
Advertisers need to understand which target audience is best reached through each medium, and the first way to segment out the market is by gender. The two most male dominated social media networks are YouTube and LinkedIn, with 57% and 56% of users being male, respectively. Instagram and Facebook are the most female dominated, with 65% and 57% of the users, respectively. By understanding each of these platforms, companies can then choose which one they want to invest their time into advertising with.
Besides gender, companies are always thinking about the age demographic of their viewers. Teens have very different viewing patterns than their older counterparts, and should be treated differently. The statistic to end all statistics about teenagers is that 92% of them report going online daily. That is literally a billion dollar opportunity for some companies if they find a way to reach them. As we have all lived in the age of social media, we no longer question it’s presences and we have been indoctrinated to have a cellphone. As teens today grew up in the era of social media it is much more common for them to share photos, as about 60% of them have done. Another interesting statistic is how 71% of teens use over one social networking site and can be reached through multiple channels.
On the other hand, you have adults, who consume far less social media than their younger counterparts. Facebook is still the dominant social network for adults, as 58% of them use it, but LinkedIn is the runner-up at 23%. This says something about the different desires adults have and how they are being addressed. Adults view social media in a few ways. They see it as a way to stay up to date with what their friends are doing, what is happening in the world, and what is happening in their professional life, like on LinkedIn.
Using social media as a news source has become a prominent trend in the space as aggregation has occurred. Twitter is often the first to break a news story, and Facebook has become a content-sharing source for media websites over the last few years. The result is that there is no reason to go to any single news site when the information is available all in one place. 68% of millennials consume their news through social media, with Reddit, Facebook and Twitter having the highest usage (70%, 66%, and 59%). High school students are fine getting their news through Instagram, and 24% of them use it as a primary news source. These differences are why companies need to keep segmenting their markets to achieve maximum returns.
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This resource was published by skilled.co30 June 2017
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