Social media has evolved extensively in the past few years. From being almost non-existent, it has today grown to include a user base of more than 1 billion people worldwide. The growth of social media has been phenomenal over the last few years in India as well, with the country’s user base including more than 50 million people. The major part of this growth is driven by Facebook, which started out as a Harvard-only social network in 2004, but quickly expanded to other universities and colleges and then to high schools and businesses in the US, and eventually around the world.
Social media provides a platform on which people can interact with others and share information about each other. These websites enable individuals and groups to create and exchange content and engage in person-to-person conversations. Globally, there are many well-known sites such as Facebook, LinkedIn, MySpace, Twitter, YouTube, Flickr, WordPress and Blogger. These are in many forms and include social networks, blogs, micro blogs, professional networks, forums, message boards and wikis, as well as content, image and video-sharing sites.
Social media has now become much more than websites on which people log in to communicate with their friends. Companies want to be where their consumers are, and to achieve this, they are increasingly utilizing social media in their marketing plans. Most businesses are actively engaging their consumers on various social networks through games, contests and other content. The most active categories on social media are:
- Telecommunications services providers
- Mobile handset makers
- Automobile manufacturers,
- e-Commerce sites, sports goods manufacturers, and
- Beverage and consumer product businesses.
Many users are actively engaging with these brands and companies.
Worldwide, revenue from social media is expected to reach US$16.9 billion in 2012 — a huge increase of 43.1% from US$11.8 billion in 2011. Advertising contributes (and is expected to continue doing so) more than half the revenue generated by overall social media and is projected to reach US$8.8 billion in 2012. Revenue from social gaming is expected to contribute US$6.2 billion and amount to US$278 million from subscriptions in 2012. Other sources of revenues are generated by apps and affiliate links. 1
As of December 2011, around 1.2 billion people used social networking sites at least once every month worldwide. By the end of 2012, this number is expected to reach 1.4 billion. Worldwide, social networking witnessed a growth of 23.1% over 2011. Growth rates are expected to drop in the next few years, and the total user base of social media is expected to reach 1.8 billion by 2014.2
India had around 50.2 million social network users as of December 2011. The fastest growth in social networking is expected to be in India in 2012 (51.7%), followed closely by Indonesia with 51.6%, with China lagging behind with 19.9%. India’s social network user base is expected to reach 129.3 million in 2014.
Apart from the growth witnessed in their user bases, the time spent on social networking sites has also increased significantly. Social networking sites in India currently account for almost 25.2% of consumer surfing time over the internet — the highest among all other activities on the internet, including email. Engagement on Facebook is the highest among all the other activities on the internet, with an average user spending around 3.8 hours every month on it.4
Social media features strongly in the marketing plans of all organizations, with everyone wanting a part of the social media pie. Companies have formed social and interactive media cells to track conversations, blogs, discussions and chats on social networks to ascertain consumers’ preferences and perceptions of their products and services, and get feedback from these. Several companies have reduced their dependence on traditional print media to advertise their products and services, and focus on users of social networks as their target group because social media enables them to interact directly with consumers. Low costs, coupled with enhanced visibility and a wider reach on social media, is the major reason for this surge in the number of companies opting for this medium. The average cost per minute (CPM) across other media formats on the internet is US$2.5, while social media is the least expensive at US$0.56. Today, organizations are cashing in on the social media platform to reach young customers, since the largest active social media audience in the country comprises people between the ages of 15 to 25 years.5
Social media optimization (SMO) is being leveraged to generate awareness about brands and products by posting and sharing content across social networks. SMO is a type of search engine marketing, where the focus is primarily on driving traffic from sources other than search engines. Improved search ranking is another benefit of successful SMO, which is in a way connected to viral marketing, where word-of-mouth publicity is not achieved through friends or family, but by networking on social bookmarking, video and photo-sharing websites. Companies and brands are increasingly using RSS feeds, sharing links, posting images and videos, and carrying out promotional activities on social media sites to build a rapport with their target audience.6
Traditional media businesses have also begun taking note of social media platforms and are increasingly using these to connect with their audience.
- TV broadcasters are keen to provide viewers with an engagement platform beyond TV screens. Apart from launching their social media page in Facebook and Twitter, many channels are coming up with innovative applications and games in the digital space that help them interact with their target audience, boost their audience aggregation and create a “buzz” about their shows.7
- Bollywood filmmakers are increasingly using social media to market and promote their movies. Yash Raj Films has recently partnered with mydala.com to promote its upcoming movie by leveraging social media marketing. mydala.com has been actively supporting the movie's promotions through social media channels such as Facebook and Twitter as well as through video blogs. It has been offering discount coupons and organizing contests in which people have won branded merchandise through social media channels.8
- Radio companies are creating “curiosity on-air” by announcing contests and events, and using social media as a platform to engage their audience. For example, an RJ runs a contest, creates curiosity on-air, and then enables engagement on its social media page. The winner is thereafter selected on the basis of the response on the page and taken back on-air. This creates a bond between RJs and their listeners beyond that achieved through the primary medium of radio.9
While social networks have been able to aggregate their audience and engage them, they are facing difficulties in monetizing them. One can measure the number of likes, followers or tweets, but it is difficult to convert these into product sales. Social media has not been able to effectively translate its popularity among users into a revenue-generating business. On the other hand, search engines and portals such as Google and Yahoo have made their advertising revenues far more effectively. Google generated around US$38 billion in revenue in 2011, as compared to Facebook that generated US$3.7 billion. There are serious doubts relating to how social media will actually maximize its revenue model.10
Keeping users coming back is crucial for all social media services. Social media websites need to continuously innovate and introduce new kinds of interaction to maintain the novelty factor. Facebook is trying its best to innovate, with new features such as the Timeline interface and its newly acquired mobile photo-sharing app Instagram. The micro-blogging website Twitter now supports Asian languages, including Hindi, to engage a larger audience. Companies and brands using this medium also need to be aware that social media does not only mean having a Facebook profile or a Twitter account. One needs to go that extra mile to stand out in the clutter to reach one’s target audience and have a relevant and effective “conversation” with people.11
Social networking sites have done a good job in aggregating and engaging a large audience, although they need to devise an effective monetization mechanism to generate sustainable revenues from this growing pool. The increasing use of smartphones and tablets also highlights the need for social networks to devise methods to monetize their offerings across multiple platforms. Currently, most social networks only offer limited or no advertising options on the mobile version of their sites, thereby limiting their revenue-generation capability. Niche and content-based social networks, with a targeted user base, are also expected to grow in coming years.
Raghav is a Manager in the Business Advisory Services practice at EY. He has assisted both traditional and new media companies in market entry strategy, feasibility studies, operational developments, technology design and techno-commercial due diligences. Raghav is the segment champion for gaming and mobile entertainment at EY.
Telephone: + 91 22 6192 1517
1“Social Media revenue to touch $16.9 billion in 2012,” imedia News Bureau website, http://www.imediaconnection.in/article/1317/Research/report-social-media-revenue-to-touch-$169-billion-in-2012.html, 26 July 2012.
2“Social Networking and UGC,” New media trend watch website, http://www.newmediatrendwatch.com/world-overview/137-social-networking-and-ugc, accessed 17 September 2012.
3“Social Network users worldwide, 2011-2014” eMarketer website, www.emarketer,com, February 2012; “Creating relevant social media campaigns in India,” econsultancy website, http://econsultancy.com/in/10368-creating-relevant-social-media-campaigns-in-india, 1 August 2012.
4“Rise of India’s Digital Consumer Rise of India’s Digital Consumer,” comScore press releases, www.comscore.com, August 2012
5“Marketers To Get On The Social Media Bandwagon!” EFYtimes.com, 12 December 2011, via Factiva, © 2011. EFY Enterprises Pvt. Ltd.; “India Online Advertising Industry growth and Forecast 2016,” AM Mindpower Solutions, October 2011, via ISI Emerging Market
6“Leverage SMO to Gain More Visibility,” PCQuest, 19 March 2012, via Factiva, © 2012. CyberMedia.
7“TV channels take a whacky approach to apps,” Exchange4Media.com, 11 September 2012, via Factiva, © 2012 Adsert Web Solutions Pvt. Ltd.
8“Bollywood Leverages Social Commerce Power Through mydala.com,” EFYtimes.com, 12 December 2011, via Factiva, © 2011. EFY Enterprises Pvt. Ltd. ”Social networking sites:new hotspot to promote Bollywood films,” The Press Trust of India Limited, 7 March 2010, via Factiva, © 2010 Asia Pulse Pty Limited.
9“7 Ways in which radio can leverage social media,” Impact, 6 November 2011, via Factiva, © 2011 Adsert Web Solutions Pvt. Ltd.
10“Is Facebook Advertising Justifying a Brand's ROI?,” imediaconnection website, http://www.imediaconnection.in/article/1135 /Digital/Internet/is-facebook-advertising-justifying-a-brands-roi.html, 6 June 2012.
11“Twitter To Support Filipino, Malay, Hindi, and Chinese In Coming Weeks,” techinasia website, http://www.techinasia.com/twitter-asian-languages/, 12 September 2012; “Introducing Timeline,” Facebook Website, https://www.facebook.com/about/timeline, accessed 20 September2012.