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.