Industry Opportunities
Growing Number of Social Media Users
The growth potential in terms of users is one of the significant opportunities that every significant player in this market can capitalize on, leaving prospects for fast-growing companies as well. Over the past few years, there has been a steady increase in the number of people joining social media platforms. This upward trend is expected to continue as more people access the internet globally. For example, as of December 2021, Meta boasted an impressive 3.48 billion monthly active users, a 9% increase compared to the previous year (“Meta,” 2022). This extensive user base provides a unique advantage in attracting advertisers targeting a broad audience.
Each industry representative could increase its revenue by utilizing similar vast user networks to attract advertisers. The company’s focus on user growth could help it consolidate its market position and remain competitive in the long run. Furthermore, as the marketplace and technologies continue to innovate and introduce new features to all the available applications and platforms, it could attract even more users, leading to excellent expansion opportunities.
Virtual Influencers
Another potential development for the social media sector is the creation of virtual influencers (VIs) (Appel et al., 2020). While millions of celebrities have accounts on social media networks, some businesses have only lately begun using VIs to market their goods and services (Appel et al., 2020). As a result, VIs will be visible on social media much more frequently, connecting with their followers consistently and perhaps luring new users (Appel et al., 2020). To respond to the public’s interest in innovative technology, social media companies could profit from investing additional resources into the development of VIs.
Expanded sensory richness is a potential benefit of the social media sector and the advent of VIs (Appel et al., 2020). The ability to include images and videos in posts on social media sites that previously contained text has increased people’s online visibility (Appel et al., 2020). As a result, as networks introduce new methods of connecting with their users, social media is predicted to expand (Appel et al., 2020). As an illustration, some businesses are currently testing cutting-edge haptic technology miming the sensation of contact (Appel et al., 2020). To provide its consumers with fresh experiences, social media firms should keep investing in improving the sensory richness of their platforms.
Industry Threats
Change in Social Media Revenue Generation
However, the social media sector also faces severe challenges. Businesses are increasingly using social media platforms to advertise their goods and services. One risk is the expected shift in the way social media networks generate revenue in a short period (Forman, 2022). Digital platforms have generally benefited from corporate advertisements displayed on their platforms, but online operating corporations have been badly impacted by Apple’s changes to ad monitoring and the worsening economy (Forman, 2022).
Subscriptions are currently regarded as prospective revenue streams. Due to that, social media networks need to figure out new ways to make money (Forman, 2022). Users’ behavior changes, and social media firms must move with it to stay relevant. Failure to do so can result in a drop in users and income. Thus, social media businesses need to find other revenue streams besides advertising.
Political Communication in Social Media
The use of social media in politics poses a danger to the social media sector (Appel et al., 2020; Frank, 2021). People can express their ideas and opinions on social media platforms, which enables the spread of misinformation and opinions on the government and its policies (Appel et al., 2020).
As a result, social media is projected to play a much more respectable part in the struggle against power, which will probably lead to some regulations to prevent unfavorable public impact (Appel et al., 2020; Frank, 2021). Increased regulation could limit revenue sources and result in higher compliance expenses, which poses a danger to the sector. Thus, social media firms need to plan for potential limits and develop strategies to prevent their consumers from being misinformed.
Summary
The promising opportunities go alongside potential threats to the industry. Online platforms have been uniting numerous individuals with each other and various businesses and are likely to transform due to the changing nature of interactions between people and organizations (Appel et al., 2020).
The findings on potential threats and opportunities to social media networks are summarized below, indicating that any existing or planned business must be prepared for both positive and negative developments in the future.
Opportunities
- More people are joining social media platforms.
- Virtual influencers can continuously engage with their followers.
- Sensory richness can offer new experiences to users.
- Utilizing social media platforms for company purposes more frequently.
- Subscription-based revenue models.
Threats
- It is necessary to determine new ways of generating revenues.
- The usage of social media as a political tool to promote fake news.
- Governmental regulation.
- Competition.
- Changing user behavior.
It is clear from thorough research that a new entry faces opportunities and risks in the market under review. The market size is anticipated to increase dramatically over the next several years, thanks to rising demand from new countries and technological advances. Besides, the market has opportunities for innovation and differentiation, opening up chances for a new business to find its niche.
However, there are other important obstacles to take into account. For instance, established firms have a solid grasp of the industry because of established supply networks, brands, and clientele. Additionally, the sector is heavily regulated, with strict standards and criteria that can be challenging for new businesses to negotiate. Although there are unquestionably prospects for a new business to flourish in this sector, caution and forethought are required to reduce potential dangers and guarantee success.
References
Appel, G., Grewal, L., Hadi, R., & Stephen, A. T. (2020). The future of social media in marketing. Journal of the Academy of Marketing Science, 48(1), 79–95. Web.
Forman, L. (2022). Subscriptions could be key to social media companies’ future. The Wall Street Journal. Web.
Frank, R. H. (2021). The economic case for regulating social media. The New York Times. Web.
Meta reports fourth quarter and full year 2021 results. (2022). Meta Investor Relations. Web.