Social Media

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Technical Brief

Social Media how they makey money, role in the market and economy, and the leading social medias


Social media has been a rapidly growing industry in our economy and society. The Internet and social media have made the world a lot smaller and allows for the almost instantaneous sharing and communication of people throughout the world. Social media has been used to gain political leverage and gain traction in social movements. This technical brief will discuss how social media makes money, role in the economy and the leading social medias.

How Social Media Makes Money

Large social media companies are worth billions of dollars. Social media platforms like Facebook has about 2.32 billion active users. With that many people comes a lot of money to be made through advertisements. Advertising companies tend to pay more money when placing their advertisements on a social network with a larger audience. Facebook advertisers increased their spending by 49% which equals about $40billion with ad revenues up 50% at $11.8 billion. Advertisers see value through advertising through social media because many social media users refer to using a social media platform on which they made a purchase. Instagram has also been successful in gaining revenue through advertisements. eMarketer predicts that Instagram will earn $5.5 billion in ad revenue in 2018 claiming five percent of the US digital ad market. Using Instagram story feature advertisers are becoming successful in maintaining the audiences attention. 60 percent of Instagram Stories video ads were viewed with the sound on in 2017. The costs of advertisements are also increasing resulting in more profit for social media platforms. The average cost per click in the US was $.27 at the end of 2016 and it is increased by 39%. Advertisements are also becoming more relevant to the users. Overall Ad revenue is up and forecasted at $51.3 billion USD in 2018. According to a recent study conducted by IPG Mediabrands, 73 percent of Twitter users agreed that ds on their feed was informative and 67% said ads were not intrusive and were relevant to their interests. 52 percent of markets are planned on increasing their Twitter video ads in 2018. Youtube is one of the most effective platforms for video marketing. 79 percent of marketers think that Youtube is the best for video advertising. Over half of the U.S marketers that eMarketer surveyed used part of their budget to videos ads on Youtube. In 2017, Youtubes top 10 ads generated 539 million views, or 14 million hours of watch time. Another way social media makes money is using offering premium options. LinkedIn has a premium option for job seekers which allows certain users to have more special privileges than free users. Youtube also has a premium option for users called Youtube Premium. It costs around 11.99/month and allows users to have no advertisements, ability to download videos, and background play on Youtube and Youtube music. Social media platforms can also use creative products and promotions in order to generate revenue. Facebook uses its feature Facebook Gifts which allows users to send virtual gifts to their friends that appear on their profile. The cost of the gift is 1$ and allows the donor to customize the message. Another method of earning money as a social media platform is through venture capital. Most social networks use this method to gain initial capital. Investors will invest and take a risk on a company if they believe the investment will pay off in the long run. With the vast amounts of revenues social media earns through advertisements, venture capital and premium memberships, creative products and promotions, social media plays a large role in the global economy.

Social Medias Role in Economy and Market

Social media plays a large role in the economy through creating jobs and markets. Social media has become one of the most effective way for business to engage audiences on a global scale. Social media has created new jobs, balancing the flow of information, and pushing brands past their local markets. Social media created new jobs such as a social media manager which is a role that did not exist 15 years ago, and now most big brands today have one. Social media has driven economic growth by unlocking opportunities and connecting people and business more effectively. Social media influencers have also risen from the growth of social media. Influencers have become a valid form of employment in the recent years with some individuals making a 7 figure yearly salary. The number of Youtubers who earn five figures per year has increased by more than 50% since 2017. Also, the top ten YouTubers earned 42% more revenue in 2018 compared to 2017. Social media has also democratized information allowed for individuals and companies to spread their information easier people because of the reduced barrier of reaching people. Before social media reaching your audience was much more difficult and expensive. Smaller business without that much capital would not have the capability of advertising their product because the cost of TV advertisements is too expensive. Instead of relying on traditional advertisements like newspaper and television every person and company is its own media brand. Social media enables brands to scale globally. Social media has created a form of communication at our fingertips where content and products can be shared instantly, across the globe. Examples are platforms such as LinkedIn and Glassdoor are used for job seekers to find information that was previously unavailable. Users of LinkedIn and Glassdoor allow users to view salaries, benefits, and positive or negative experiences. Hootsuite and We Are Social reported that there are 3.028 billion media users worldwide which are 3 billion people that brands can engage and attempt to sell to as many users of social media look for product recommendations, research and inspiration. With social medias role and effect in the economy not all social media platforms can be fiscally successful. There are a few top dogs that come out on top of other platforms that have vast market worth.

Leading Social Media Platforms

Facebook is currently the biggest social media site around with more than 2 billion users using it a month. There is current around 65 million businesses using Facebook pages and more than 6 million advertisers promoting their business on Facebook. Facebook has been successful for business because it works for all media contents like text, images, videos, live videos, and stories. Facebook revenue has also doubled in 3 years, in fiscal value Facebook earned $13.2 billion in revenue in the first quarter of 2018 then a 42 percent increase in a year and then a year after that. Facebook has also large business implications because 78% of American consumers have discovered retail products to buy on Facebook. A close 2nd is Youtube currently with about 2 billion users and has racked up around a billion hours of videos every day. YouTube is a successful social media platform for a lot of business because it is easily accessible and creating an account and producing content is free. Youtube mobile is also good for advertising businesses because their ads are 84% more likely to hold attention than TV ads. Along with being the 2nd biggest social media it also the second largest search engine after Google. WhatsApp with about 1.5 billion users comes in as third. WhatsApp is a messaging app is used on over 180 countries. It initially was for personal communication with friends and family and eventually became prominent in business. WhatsApp has been emphasizing its business platform to allow businesses to have a business profile, provide support, and share updates with customers about their purchases. Facebook messenger app has been made a standalone mobile app with around 1.3 billion users. Facebook Messenger has many business implications that allow for advertising, creating chatbots, and sending newsletters. Facebook Messenger is also the top mobile app on the Apple app store. Instagram has around a billion users. With its large reach of audience, it allows you to share a wide range of media such as photos, videos, and Stories. The Instagram business profile allows businesses to provide rich analytics of your profile and posts and the ability to schedule Instagram posts using third-party tools. A common trait that these social media have that allow them to be successful is that their barrier to entry is almost nothing as the costs of using these platforms are almost free.


Social media has transformed the global economic land scape and will only continue to grow in the future. Social media has grown tremendously with billions of dollars in revenue and has become a large role in the economy allowing smaller businesses to reach a larger audience. Social media will continue to be prominently used by businesses and society in the future.