Social Media to Generate $23.6 Billion in Global Ad Revenues

With more than 3 billion social media users worldwide, global ad spending on such platforms is soaring. Facebook (www.facebook.com), owned by Meta Platforms, continues to be the dominant site among social media worldwide. As of January 2024, Facebook had 3.05 billion monthly active users. The company is building targeted advertising revenues based on likes and dislikes established in users’ profiles, to the extent that it is now one of the largest generators of online advertising revenue. Advertisers want to be where potential customers are, and Facebook reported in early 2021 that its average user spends 33 minutes each day on the site.

In May 2020, Facebook announced the launch of its Shops ecommerce initiative. Shops enables small businesses to set up ecommerce stores on Facebook or Instagram. Other sites such as Shopify can link to those sites. While the virtual storefronts are free, Facebook is generating revenue from in-house payment system users who will pay to increase stores’ visibility. Shopping within social media is an important trend, and social media firms hope to make this into a very significant revenue generator by collecting fees on each sale made.

Advertisers have control of where ads appear on Facebook, either in users’ newsfeeds or in a column of ads on the right side of the site’s pages. In addition, advertisers can use the site’s Custom Audience tool to specify potential customer attributes (gender, interests, location, etc.) and the Lookalike Audiences tool to find potential customers who are similar to existing customers.

LinkedIn is designed to help users network for business opportunities, and to help job seekers and recruiters connect. The site was launched in 2003, and by early 2022, it had exceeded 810 million registered users in 24 different languages. LinkedIn has revolutionized the employee recruiting industry single-handed, as each user’s home page’s functions well as an online resume. Recruiters constantly comb the users’ information in order to identify people with certain qualifications, using sophisticated online tools provided by LinkedIn on a monthly subscription basis. In 2016, LinkedIn was acquired by Microsoft for about $26 billion. Microsoft is focusing on adding services and features to its cloud-based businesses and sees LinkedIn as a logical extension of Microsoft’s services for business customers.

China’s TikTok global music video platform and social network, owned by ByteDance, is one of the top global social networks. TikTok had 1.1 billion monthly active users according to Insider Intelligence as of early 2024.

On the video front, YouTube (www.youtube.com), part of Google, has long been a free-of-charge site for sharing video uploaded by YouTube members. The company earns very significant revenues through the sale of online ads. In addition, it intends to be a major provider of premium online content for paid subscribers. The site has social media elements, since members connect to create video groups that share similar interests. Videos can be uploaded by their creators as available for public viewing, or as private videos with limited access.

In order to add to its videos contributed by amateur users and professionals or corporations who want to build video audiences, YouTube has partnered with major content providers such as CBS, Sony Music Group, the BBC, NBA, Warner Music Group, The Sundance Channel and Universal Music Group. YouTube is truly global in scope. In an effort to encourage international users, YouTube has established local sites in dozens of nations.

X (formerly Twitter) is working to attract advertisers with tools such as Amplify Pre-roll, which allows X to sell ads in conjunction with television and other media companies. Using Amplify, networks post brief video replays of just-aired programming sponsored by advertisers. A&E Networks, BBC America and ESPN were early partners with Amplify. Many TV ads and some programs feature X hashtags to promote discussions.

X and Facebook face stiff competition from other social outlets including Pinterest and Snapchat. Snapchat users share photos and videos taken on their smartphones. Snapchat offers Discover, a service that links content from a broad array of sources such as ESPN, the Food Network, CNN, National Geographic, Yahoo! News and Warner Music Group. Users swipe their mobile screens from left to right to change images, and up and down to view full video or news articles posted by the content sources, which include advertising.

Pinterest is an extremely social site that enables users to create online bulletin boards (“pinboards”) of photos, videos, ideas, dreams and comments. Each image posted is called a “pin.”

Some observers expect Google’s and Facebook’s market share of digital ad spending in the U.S. to be on the decline, due to brands spending ad dollars on alternative sites and formats, such as the wildly popular TikTok. Also, Amazon is earning an ever-growing share of the online advertising market, with its services that allow merchandise sellers to boost and advertise their products directly on Amazon.com.

In China, a social media app called Weixin/WeChat has largely taken the place of Facebook and Twitter (both of which are officially banned in China). Google sites, including YouTube, as well as Instagram, are also banned. The Weixin/WeChat app features games, chat and social media in one package. Weixin is owned by Tencent, a Chinese internet firm known for its online games and the QQ instant messenger service. Tencent markets Weixin outside China, particularly in Southeast Asia, Europe and Latin America under the brand WeChat.

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