Why Social Media is Becoming a Business of Its Own

Silicon Valley

As the worlds of Wall Street and Silicon Valley meet we will see many changes to social media. The prize for profitability remains unclear, however, this has not stopped tech companies from aspiring for a future public offering.

In 2012 we witnessed the efforts of Facebook’s IPO and the conversation surrounding stock price. Today, Twitter is prepared to file for its own IPO this November even after some major concern over the company’s future potential to earn a profit. Why is this important? As we continue to use these social media platforms, our experience will change, quarterly, to keep up with Wall Street.

 

What Does it Mean For Tech?

The tech industry experienced a huge boom in the last decade. Our workforce shifted to ecommerce resulting in a rise of tech start-ups and traditional businesses incorporating social media strategies. These ventures are certainly responsible for a number job creations but now there is a growing concern of sustainability for profit in the tech industry and among social media companies.

These tech companies will compete to further differentiate their offerings, but this must make sense for consumers as well. Currently most tech companies generate a majority of revenues from the sale of ad space or promoted content through various formats like the new tablet pc innovations and the growing popularity of mobile ads.

Twitter is strategizing on how to turn a profit with its own upcoming IPO; while twitter has generated a continuous revenue stream, the company continues to notably lose money each quarter. Social media companies will need to develop new strategies based around the user audience. A better understanding of the primary motivators for consumers is needed rather than the stale focus of selling ad space and gaining revenues.

 

What Does It Mean For The Consumer?

The average eight year old may be considered a social media expert by some. There are so many platforms and we all use them differently. For social media consumers this changing focus to profit from service is something to be weary of.  We will begin to notice ads in our news feeds as we expect commercials on cable.

Be conscious when you click and understand the double edged sword of social media. We are shaping the direction social media. Tech companies are collecting cookies and analyzing our demographics to try news ways of gaining revenue from our efforts. The social media community depends on the people.

These sites are traditionally a place for people to search and share or catch up with distant friends and co-workers. While I don’t believe people will stop using social media, the reasons for which we do may change as a result.

 

Putting It All Together

One absolute takeaway are the trends and movement of social media and the companies responsible. The issues of ad space and ad revenues will continue to rise and consumer reactions to this are going to shape social media as a business. We once used social media in its simple form, but we are now in the middle of a shifting environment; we will see social media become more of a brand portal and concern for content rather than a place to share pictures of food or your friend’s birthday party.

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Reddit Looks to Investors for Help and Buzz, not Cash

Reddit Front Page

Reddit doesn’t have a cash problem. They had $20 million in the bank when they were given partial independence by Conde Nast two years ago and unless they’re buying solid gold servers and platinum-plated Macs to run the site, they probably have enough to keep going without a hitch for another decade. When Techcrunch reported rumors that the social news giant was looking for investors against a $400 million valuation, many of us wandered why they would risk losing their status as one of the most community-driven websites on the planet by playing into the hands of profit-driven venture capitalists.

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Social Discovery Site Tagged.com has More Engagement than Facebook

Tagged Social Discovery

It’s fitting that a “Social Discovery” site holds people on the page longer than Facebook. In today’s ever-increasingly over-connected virtual world, we are no longer as fascinated with the daily machinations of our friends and family. We have become good at shuffling through pictures of little nephew Timmy sliding into third base with a quick Facebook like or clicking the retweet button when a friend declares their local sushi bar has the best Sake in Long Beach.

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Who’s Who in the Alley and the Valley [Interactive Infographic]

For decades, Silicon Valley has been synonymous with innovation. It is difficult to dispute this claim given that it’s the home to technology and Internet giants such as Apple, Google, and Facebook. While it hasn’t lost its staying power, other hotspots for entrepreneurship and technology have emerged over the past ten years, in particular, New York’s “Silicon Alley”.

Although cities like Chicago, Austin, and even our own Research Triangle have produced a number of web-based businesses in recent years, New York’s startup scene is growing exponentially. The amount of capital and seed funding continues to rise as well as the success of local companies like foursquare, Gilt Groupe, and Tumblr. The city’s ecosystem also has the support of Mayor Michael Bloomberg, who recently appointed Rachel Sterne as the city’s Chief Digital Officer along with Steve Rosenbaum, the city’s first Entrepreneur at Large.

There’s no shortage of debates in the blogosphere as to whether one coast has the advantage over the other. Regardless of what side you’re on, many would agree that there’s no better time to be an entrepreneur. Organizations and incubators like the Young Entrepreneur Council (YEC), Startup America, Y-Combinator and Tech Stars are providing an unprecedented level of resources and support. In a recent TIME article, the YEC’s Scott Gerber even posited 2012 as “The Year of the Entrepreneur”.

Interested in seeing the growth that has been present on both coasts over the last 5 years? Interact with the graphic below to explore some noteworthy companies in both Silicon Valley and Silicon Alley, quotes from stakeholders, as well as the rise in Seed Funding from 2009-2011.

 

Silicon Valley & Alley - MBA@UNC
Via MBA@UNC: Online MBA

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