A few days ago, we wrote about Facebook going from Social to E-commerce with its MarketPlace.

Eager to explore other ways to monetize or grow it seems. Is that a sign that Social Media hit peak innovation?

Social Media business model

With smartphones and mobile internet, entrepreneurs are able to create platforms to connect people in a way even different from even the desktop era (which by itself is already a massive jump from the pre-microcomputer age).

The initial business plan was probably very simple – based on connecting people & sharing information.

Advertising was probably in the minds of the first social media entrepreneurs – but we are highly sceptical any ever thought of exact targeting, mobile payment and social ecommerce.

Six Degrees First Social Networking 1996

Turning walls into doors

It turns out that “Online connection” and “Sharing Information” effect conditioned people to communicate between each other and share more ideas.

That naturally points to opportunities such as having influential voice in the digital world, which transcends into decisions in the virtual as well as real world.

Once new doors opened, new opportunity came out. More and more people became attracted by this new phenomenon – the buzz effect.

Cost of acquisition became close to zero – if as marketers you do it smartly.

Think about it, once you connect people many things can be created.

First door, second door… So on and so forth.

In a way, Pinduoduo became what it is today leveraging its effect: more than 300 million active users acquired within 3 years.

Imagine how much money they would have spent if each user is spent via digital (I mean, paid) marketing.

Snowball effect

Once a platform has large amount of active users, it became easier to build new services.

It is natural for them to do so as well – you need to find more reasons for users to stay on your platform.

The example of WeChat shows how great (and possible) it is to go from a social platform (chat app, really) to payment, mobile ID, government recruitment tool and, everything, really.

Let’s take the example of few social media who diversify their apps:

  • Wechat with payment, mini programmes & minigames
  • FB with apps, marketplace, customer service chatbots (privacy became a bigger issue here, making Facebook cautious)
  • Snapchat with VoIP & Media space
  • Twitter (unwillingly) as a predictor of nuclear crisis & global stock markets
  • Instagram with stories & very, very popular influencers
  • Line with food delivery in Bangkok

Yes Social media as a whole are becoming bigger and bigger.

However, It get at a point where the marginal returns of further innovation diminish drastically – just like any growth story.

The main focus of offering new services brings user satisfaction changed to keeping the user on the platform the longest time.

Then… Another war began.

War of Ad (space)?

Snapchat Ads Tool

Everybody is investing money to get at a point when company can control their customer acquisition cost. In fact, Having a large audience/followers is the way to promote different products and services through using organic traffic.

Well, whether it’s an SME or big corporation, marketers are looking for high traffic and high conversion rate at low(er) cost.

Not always easy but marketers have to keep searching (or face diminished ROI on their marketing spend). And if your online marketing manager (or whoever spending your online marketing budget) does not even understand traffic – it is safe to FIRE them.

Also here’s why agencies have seen the traffic opportunity and reach out Social media platform to use their ads space.

As Traffic is the new gold, social media created their own ad platform for creating campaigns.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].