Commerce and social media go hand in hand. The majority of social media users are ready to offer entertainment, education, fun, and enjoyment to viewers in exchange for money. That social media channels are ideal for channelizing the efforts of creators to earn money is one of the main reasons for the exponential growth of the platforms. In addition, businesses can use social media platforms like Instagram and Facebook to promote their business and conduct online business. Instagram allows users to set up shop and sell their products without having to leave the platform. Newer channels like IntrigueMe are expanding the scope of making money on social media by using innovative means with no capping on fans, followers, and tipping.
Advertisements have been the primary source of revenue for social media channels for decades. It led to the creation of social media giants like Facebook, Instagram, Twitter, Snapchat, who have built substantial digital empires. The viability of the business model emanates from the vast technical capabilities of these tech companies that use Big Data that allow them to operate at an incredible scale with the help of tools that they developed over the decades.
However, the new entrants in the sphere of social media cannot match the muscles of the bigger companies to operate on a scale that allows hyper-personalized targeting capabilities with incisive user penetration. Therefore, these companies are experimenting with new models of social media monetization by drawing inspiration from yesteryear’s ad adverse pioneers like Spotify, Tinder, and Venmo and the gaming industry and China.
In this article, we will discuss some social media monetizing methods that go beyond ads.
Offering exclusive content for a VIP subscription
This kind of business model has two options – subscriptions to creators directly while the platform takes a cut and direct subscriptions to the platform. The latter route is more popular that YouTube introduced in 2014 in ad-free Premium service, which it eventually rebranded in 2018 by including additional features like YouTube Music access and original content. However, despite direct subscriptions being more common until now, the creator subscriptions hold good promise.
Subscriptions give more freedom to followers as they can select the tiers that match their engagement level. True fans of a creator are willing to pay for exclusive access, additional content, or direct interaction with the creator. The process helps create a community in which the fans can engage with the creator and identify each other and interact among themselves.
Sell products on the platform
The close link between commerce and social media platforms is not new. Moreover, social media platforms can trigger commerce. Instagram, TikTok, and Pinterest have shown the way and made massive strides. Instagram is helping users set up shops for businesses by displaying their Shopify inventory on Instagram. Going ahead, TikTok partnered with Shopify to allow merchants to create marketing campaigns and use their Shopify accounts to track analytics on the TikTok app. Existing platforms that are making a foray into shopping must ensure that the drive toward commerce should not affect the personalized content algorithms of users.
Another widespread phenomenon that first became widely popular in China is live stream shopping that gives more options to the new entrants to magnify the scope of shopping on social media channels. Channels like LitLive, Huddle, WhatNot, and PopShop are already known names in the space of live stream shopping, while channels like The Newness and The Landing are focusing on verticals like beauty and interior design, respectively.
The creator who is an expert in the field earns incentives in the respective product category. The third-party brand makes a sale. The platforms take a cut, and the creator earns from the expertise, and consumers feel more confident to buy the products.
Paid communities with a shared interest
Some new social media channels allow users to engage with others who share some particular interest or experience similar challenges, often revolving around wellness, mental health, fitness, or career guidance. Users join these professional or personal communities to engage closely with each other. At the same time, the platforms play the role of mediators or matchmakers by connecting peers who share similar thoughts with experts and top creators. To guide users’ development, the platforms often provide some curricula or community building software. Expert guidance is available live or as pre-recorded sessions by the channels like The Grand, Topknot, and Pace.
Virtual live experiences
Virtual live experiences can take the form of ticket based shows, group meet-ups, or one-on-one interaction. Like paid VIP subscriptions, followers can have exclusive content or access by enrolling for premium live events that are one-time purchases. The new medium is an innovation triggered by Covid; it will take some more time for the playbook to stabilize. The model is essentially helpful for creators to filter out their true fans and foster a more engaged and dynamic community. Since virtual experiences transgress geographical borders anyone from any part of the globe can attend, it allows platforms to capitalize on the effects of networking. Digital concerts are gaining popularity, and some platforms are working to re-imagine it by blending the real-time experience of YouTube Live, the community aspect of Twitch, and the ticketing capabilities of StubHub.
In-app currencies and digital goods
Consumers in China are highly conversant with in-app purchases that are pretty popular. Fans are ready to tip streamers with digital goods that have cash convertibility. This emerging model allows social media channels to monetize without relying on exclusive content or creators. Although in-app currencies and digital goods are still rare in the US, it is gaining popularity in games.
The Free to play hit game Among Us allows users’ to customize the outfit of some characters or acquire a pet within the game by purchasing digital goods. The purchased goods stay with the user as they transit from one game to another. Digital fashion is also defining luxury in a new way; an example of this is the fashion game Drest released by Gucci.
The emerging social media platforms are moving away from the conventional ad model and embracing new monetization tactics that control creators on their revenue streams.
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