Social commerce set to bolster social media
The global social media market is forecast to reach 153 billion EUR in 2023. Drawing on a range of strategies, Facebook and Twitter earn substantial advertising revenue. And now their shift to commerce is opening up a new avenue for growth.
Steady growth expected in the coming years
According to IDATE DigiWorld, the global social media market will be worth 153 billion EUR in 2023, thanks to average annual growth of 15.7% between 2019 and 2023. In Q2 2019, there were 3.5 billion social media users worldwide (46% of the global population!). Generating 77% of total revenue in 2019, advertising remains the chief driving force behind this growth.
Social media have become an essential part of the communication and marketing strategies for companies across the globe, especially in Asia-Pacific where the increase is at its highest. On the other end of the spectrum, growth in North America has slowed due to rising concerns over privacy and data security. At the same time, more and more users are deleting their apps and profiles, as part of a digital detox trend.
North America: biggest contributor to the social media market
Progression of revenue generated by social media, by region
Little change in the social media market, despite the arrival of new entrants
Facebook, Twitter and Instagram are still top dogs in the B2C social media market, while LinkedIn remains the leading B2B platform, but all are having to contend with a handful to powerful local players, notably in China. Market leader Facebook is transitioning towards a private platform by introducing new features. At the same time, the social media giant is introducing advertising on Instagram to bolster a flagging growth rate, and lift the dark cloud of privacy violation accusations (revealed by the Cambridge Analytica scandal). Other platforms are also working to increase revenue and user numbers. In 2018, Twitter launched a new mobile advertising system to incorporate a new video advertising format: a feature that now generates 50% of its ad revenue. Newcomer TikTok is proving disruptive: catching on all over the globe, it has become one of the most popular apps with teenagers since it first launched worldwide in 2017.
Facebook still the world's most popular social media platform
Social media site rankings by active user numbers, Q3 2019
Social media embracing social commerce
Top social media sites are taking a more commercial route by capitalising on their massive user bases. Every platform is reinventing social commerce by designing new mechanisms. My Story was a new feature developed by Snapchat that Facebook then adopted on all of its platforms, notably on WhatsApp and Instagram in 2016. In January 2019, Facebook Stories had 500 million daily users. More than 3 million companies advertised via Stories, up from 2 million in 2018. Other platforms also offer rich visual content and a range of features to improve the consumers’ shopping experience. Snapchat teamed up with Amazon to launch Visual Search, a feature that steers consumers directly to their product on Amazon. Pinterest is continually adding new online buying options, enabling consumers to explore and buy a wide range of products.
Social commmerce: a growing trend
Progression of social commerce revenue in the US
TikTok’s global rise
TikTok is today’s fastest growing mobile social media app. Since it first launched in 2017, it has become the world’s most downloaded free app (1 billion downloads). Standing out from rivals Facebook and YouTube, the application allows users to make 15-second videos, add sound and visual effects and share them, which has made them hugely popular with teens and Millennials around the globe.
TikTok is owned by Chinese Internet company ByteDance, which owns several popular AI video apps. Compared with other global leaders, the app is still only nascent. And even though the company has not disclosed its revenue, and the current version of TikTok is free, there is little doubt that it will soon be offering advertising opportunities.