During their short history, social networks, as the new media called them, have traditionally been seen as a place where you can meet new friends, reconnect with old friends and socialize on social networks. In short, social media was a “great place to communicate,” but otherwise they weren’t used much. In Silicon Valley, there is no shortage of funding for companies launching new media platforms. With the advent of sites such as MySpace, Facebook and Twitter, there is no doubt that the vast amounts of information about the people these platforms have been able to gather have value; however, there is no clear monetization strategy other than generating advertising revenue. Arguments were made about the real value of these companies; some argue that their estimates are too high and artificial, while others argue that the one cost of their databases is enough to justify the multibillion-dollar price tags.
The new value of social media and business in social media
More recently, social media has spawned a new value proposition, namely the commercial applicability of the large user bases created by these social networks. No matter which side of the valuation barrier you find yourself on, social networking can be seen as extremely useful for businesses looking for a new way to attract customers and establish two-way communication. This has never been done before in terms of traditional marketing, advertising or PR, and has led to a new business model: “Social Networking Firm.” This raises the question of whether social media business is a good investment. Is social media business a fad that will disappear in the coming years, or is it a long-term sustainable industry that will one day make traditional advertising, public relations and traditional methods obsolete?
Taking into account the current state of the economy, venture capital and sources of financing business angels keep their paper dollars as close to the chest as possible, keeping investments only for companies with a decent history of activity, income streams, solid and unlimited growth potential. Does social media companies fall into this category? I answer yes. Bottom line: social networks are not going anywhere. Social media has become an integral part of the life of the younger generation, and the fastest growing users of new media are people over 30 years old. Since the recognition of the business potential of social networking, large Fortune 500 companies have spent a significant portion of their marketing dollars on social media and campaigns in new media. For example, Pepsi has spent $20 million from its marketing budget on a social media program called Pepsi Refresh, and many large companies are starting to follow suit. It goes without saying that The New Media Firm’s profit potential is significant.
Is it sustainable?
As mentioned earlier, the new media will not go away. For the most part, this has become a standard part of the Internet, as has email. Sites that are considered gorillas on social media can become destabilized; however, there will always be something new to which these online communities migrate. For example, the migration of social networks has so far shifted from MySpace to Facebook and Twitter, and is likely to be inevitable following major changes and/or additions to this huge social online realm. The long-term sustainability of the social media business depends in large part on the ability of these businesses to identify and anticipate the next big changes, as well as to develop effective methods of using old and new platforms to generate revenue and increase profitability. sales volume and identity for their customers.
Just as large corporations hire advertising agencies to develop campaigns in traditional media, this approach can and will be adopted for new media. By hiring The New Media Firm, businesses can get rid of both the administrative burden of hiring large numbers of new hires and the learning curve that will inevitably be present when trying to adapt these employees to their corporate culture. It is more cost-effective, both financially and administratively, to outsource these campaigns to professional teams that are fully capable of harnessing the potential of today’s media, navigate the codes of conduct of these online communities and stay one step ahead. reveal the use of the latest media trends.
To sum up, I believe that investing in The Social Media Firm offers great potential for many funds; However, it is essential that venture capitalists and angels make sure that the company has the necessary staff and guidance to make full use of this fast-growing industry when vetting these agencies. The gap is full of individual companies and so-called social media experts who are nothing more than victims of the recession who work for Facebook or Twitter. It is imperative that the architects of new media campaigns are familiar with the complex details of new media and the huge amount of resources available on the Internet so that businesses can make full use of the world of social media. Using lesser-known social networks such as Digg, BrightKite, hi5, Xanga and countless others can make the difference between a large-scale, reliable campaign showing real results, and an inefficient and unorganized attempt at new media that wastes dollar marketing.
Since this industry is still in its infancy, few companies really know how to uncover the value of new media for business. Those who do will quickly get to the top, and if there is enough due diligence, these companies are ready to invest. A strategic capital injection is probably the impetus needed to move these businesses from a sustainable treasury company to the next industry giant with A-list clients.