Social Media is big business. More than 3.6 billion people worldwide engage with social media platforms, and that number is only projected to grow. It could be as high as 4.41 billion by 2025. If you’re curious about investing in social media, here are some reasons why you might want to get in on the ground floor of the newest platforms.
- The Millennial Influence
Millennials represent the largest percentage of the U.S. workforce, according to the 2020 Consumer Culture Report by 5W Public Relations. In this year alone, Millennials are projected to spend 1.4 trillion dollars, making them the highest spending generation of 2020 (5WPR, 2020).
Running parallel to their spending habits: their social media usage. This demographic is more likely than any other to state that “external sources,” including social media marketing, online personas, and celebrity endorsers, influenced their purchasing decisions (5WPR, 2020).
It comes as no surprise, then, that they are also the most likely to incorporate social media in their daily routine. Over 90% of Millennials participate in a social networking site (eMarketer, 2019).
- The Gen Z Takeover
Gen Z is well on their way to reaching Millennial spending power. The Gen Z population comprises 32% of the world’s population (Bloomberg, 2019), and more than 40% of US consumers (Fast Company, 2015).
As opposed to their Millennial counterparts, Gen Z is more likely to experiment with new social media platforms. While Millennials gather on Facebook, Gen Z flocks towards YouTube, Instagram, and, most notably, TikTok.
Why has TikTok exploded among Gen Z? It caters to their interests. Using content-driven apps, Gen Z is repurposing social media as a tool for entertainment rather than social networking (GWI, 2018).
- Booming Startup Market
As the demand for social innovations remains high, so does the draw towards investing in social media. Take Snapchat. Created by Stanford students, the app quickly gained traction among young users. According to the New York Times, one of the founders shared the app with his mother, who then shared it with his teenage cousin. Within weeks, the founders noticed unusually heightened activity in Orange County. This activity then spread throughout Southern California, booming from 3,000 to 30,000 users within a single month. Where was most of the activity taking place? High schools.
Within two years of its inception, Snapchat saw an average 350 million “snaps” per day (Gallagher, 2013). This high usage rate was achieved through its new adaptation of the social media experience. Offering the ability to fleetingly share photos, seemingly without ramification for their content, this app catered to its audience. Younger users are raised in the world of Facebook and digital permanence. Snapchat gives these users the opportunity to digitally distance themselves from generations prior, and indulge in a more “private” freedom of expression.
Snapchat isn’t the only startup that gained wild success among investors. Launched in 2017, Cameo is a service that allows users to connect with celebrities via video shoutouts. After its launch, Cameo quickly rose to Time’s “50 Most Genius Companies” in 2018 (Time, 2018), and was recently named one of the “World’s Most Innovative Companies of 2020” (Fast Company, 2020).
- The Opportunity for Growth
This particular industry is rooted in rapid innovation; in order to appeal to young users and an expanding market, it’s imperative that platforms maintain consistent growth. According to a 2020 overview by DataReportal, digital participation is rocketing:
- Internet users are growing 7% annually
- There are currently 5.20 billion mobile phone users in the world
- More than 180 million people started using social media between July and September of 2020
This heightened demand for digital connection is driving expansion among social media developers. As access to the internet broadens globally, growing social media startups will continue to innovate their services to appeal to wider audiences. These internal innovations allow both new and established social media platforms to reassess their base without compromising their original platform.
Diversification of Platforms
Newer social media platforms are steadily gaining market share on the industries leaders (StatCounter, 2020). Users are heading to platforms and communities more specialized to their interests.
One up and coming social media platform is Audition Showdown, where musicians go head-to-head in American Idol-style competitions for cash prizes, studio recording time, and exposure to launch their careers. And you can get in your investment before Audition Showdown’s IPO.
There are risks with every investment. When considering investing in social media, but it’s important to keep in mind that early risks can reap massive rewards. As young, tech savvy users take control of the digital sphere, new social media platforms will continually innovate to match demand for entertainment rooted in digital connection. You can share in their success by investing early.