We all know what’s up with Facebook. Mark Zuckerberg said he’s going to pivot his company towards privacy and encryption. Many speculate Mr. Zuckerberg is trying to make Facebook, the WeChat for the non-chinese people.
Also, there’s something interesting happening in Snap (Snapchat is better than Facebook, with respect to one-to-one communication, privacy, and encryption). Snap said it is launching a gaming platform.
Facebook has a long history of emulating other social networks (ahem, Snapchat) and it’s quite clear that the company wouldn’t limit itself in any way. It launched TikTok copycat – Lasso, a video conferencing device – Portal, a video streaming service – Watch, and initiated a couple of internal developments including its own stablecoin.
Considering the recent moves and Mr. Zuckerberg’s post, it looks like Facebook is trying to emulate WeChat. In fact, Facebook already has everything under its belt to become WeChat. It just has to integrate what it owns – Facebook (newsfeed, video streaming, friends, the marketplace, groups) + Instagram (photos, short-form videos, instant shopping) + WhatsApp (encrypted conversations, private groups) and eventually roll out its stablecoin to complete the picture.
Snap touted itself as a camera company and had its fair share of success and failures. But now, it is allegedly coming up with a gaming platform.
Other than it’s Snappable (VR game), I couldn’t find anything relevant to gaming – every done by Snap. Snappable isn’t a platform, but a lens where you can play games with facial and motion gestures. The alleged gaming platform is far from the VR game we’ve seen so far.
Unlike Facebook, Snap wouldn’t tend to emulate any existing applications, at least in most cases. So, why Snap is trying to build a gaming platform?
If Facebook is trying to emulate WeChat, then what about Snap? What about Twitter – Why is it testing a set of new features with some users (under the name ‘twttr’)? Why every social media network need to develop something new or emulate every time?
Made for Engagement
As simple as it sounds, our social networks make money based on the users’ engagement. The more they make you stay, the better their revenues will be.
Besides, on the product-front, there’s this virtuous cycle where user interaction helps the algorithms to learn the caveats and use the knowledge to surface most-relevant and engaging content to the users. The more users interact, the better algorithms will become at surfacing content.
When you combine users’ interactions with a boatload of personal information they’ve given while signing up for the service, you got everything you need to run a hyper-personalized ad.
In case you don’t know, social networks (dubbed as ‘walled gardens’) take in more than half of the total digital advertising budget every year. And, it will keep increasing. Facebook’s growing YOY revenue is a testament to this.
Sounds fine. Now, why can’t social networks rely on advertising? If they mastered how to make users stay (with the help of algorithms and network effects), why they’re trying to expand?
- Consumers questioning the advertising model.
- Privacy laws and regulations (GDPR, CCPA).
- Data watchdogs.
- Apple’s ITP (Intelligent Tracking Prevention).
- Browsers opposing personalized ads (Brave, Firefox).
Sooner or later, advertising wouldn’t get the ROI as it gets today. Because ‘data’ the fuel of advertising is becoming scarce for ad machines (data is scarce only for ad machines, we still haven’t figured out what to do with the gazillions of data yet) to use.
That pushes all of the social networks to diversify their revenue streams. Tencent (the parent of WeChat) already have an excellent diversification as shown below:
As you could see, advertising just accounts for 17% of the total revenue. For Facebook, Snap, or Twitter, it’s a far fetch. They have the users, but they didn’t develop the product to support multiple revenue streams.
Whatever we’re seeing today is an attempt to build the product that gets revenue, not just from advertisers but from other players in the network. No one is emulating anyone. It has become inevitable for platforms to start building the product that doesn’t rely on user engagement and data alone.
The Second Wave of Social Media
While social platforms are figuring out what to add next, there’s something more important we all tend to overlook. And, that’s the opportunity for the second wave of social media.
What is Social Media?
It may be a bit difficult to define it today. But it wasn’t a decade ago.
A platform that lets users interact and network – That’s the essence and the whistles and bells of it.
Ted McConnell from Procter & Gamble Co marketing (in an interview with AdAge – Nov, 2008):
“I think when we call it ‘consumer-generated media,’ we’re being predatory,” he said. “Who said this is media? Media is something you can buy and sell. Media contains inventory. Media contains blank spaces. Consumers weren’t trying to generate media. They were trying to talk to somebody. So it just seems a bit arrogant. … We hijack their own conversations, their own thoughts and feelings, and try to monetize it.”
“You can do really amazing things. But I’m not so sure I want to be targeted like that. … I don’t think everything every consumer says to someone else and writes down is somehow monetizable by the media industry.”
Not just users, brands, marketers, and literally everyone else considered it as a place to network.
Apparently, we’re not seeing social media as a place to just network today. There’s already more we could do – Shopping, Streaming shows, Selling services, Monetizing content, etc.
For the record, I am not against all of them. For instance, monetizing content or live streaming is an inherent part of networking. You can’t expect to get all the great content and sophistication without expanding the platforms’ abilities.
But, they don’t need some of them. Whatever they [social networks] do, they try to add it to the mission or sometimes change the mission itself.
You might argue it is the nature of the growing business and happens because of the new consumers. But aren’t social media supposed to be different?
That’s why I believe there’ll be the second wave of social media platforms who are there to just stay as social networks. As they can’t rely on advertising, what else they can do?
Subscribers/Micropayments. To put it simply, they’ll get the revenue from the users. If you think that’s a stretch, here’s the Tinder’s subscriber growth chart for you.
Unlike other social media platforms, Tinder follows a freemium model and it worked well for all. It’s long-term and proprietary. This means Tinder doesn’t have to trade data or go on a frenzy acquisition or try to please (perhaps, annoy) users with unnecessary features.
They can focus on their core product and better what they do and how they do it.