Social media sites suffer from the ultimate business conundrum: they have customers, but they don’t always make money. The path to monetization is still long, convoluted and the experts are still drafting and debating best practices.
This week’s earnings report from Twitter reveals that one of the web’s biggest success stories still has untapped financial potential. Yet, Twitter is on a tear, setting up local offices around the world and hiring like mad. Its ever-growing staff is innovating like crazy, testing out a hashtag “translator” that explains some hashtag short-forms and debuting monetizing features such as organic tweet analytics.
While the business side of a social media site and its content interface seem like separate entities, in truth every online moment is deeply influenced by the money piles (or lack thereof) in the background.
Facebook may be ahead of other sites in achieving financial stability, but the experience for businesses and end users has gone through an often rough ride as the site has tried and tested dozens of ideas. Sites such as Foursquare, once a hopeful mainstream player that many small businesses got involved in, keeps pivoting and rebranding as it struggles to find an audience and income. Following the money on potential booms and busts helps you know who to invest in (and how much they’ll be asking for), and who to write-off. But since every monetization milestone on these sites not only costs you money, but often results in a surge of user complaints, you can’t keep your eye off the ROI for a second.
The bottom line is, businesses ARE the bottom line for social media sites. Few sites expect to make money off users, but they fully plan to dig deep into the pockets of B2B clients. Keep your eye on their finances, because they will be impacting your budget soon.