Nivedit Majumdar Nivedit Majumdar

Discussing the trends and numbers in the Social Network sector

According to Maslow’s hierarchy of needs, one of the fundamental factors responsible for motivating a human has been being a part of a social group. And it is this very basic need of humans which has promoted the rapid rise of social networks in the past few years.

While we talk about technology and trends here at the Emberify Blog, it is quite interesting to also note the impact of social networks. We live in a day and age where the line dividing the virtual world and the real world is being diminished. Communication and interaction has improved manifold, and information is accessible almost instantly, thanks to social networks.

In this particular piece, I dive deep into the world of Social Networks. I discuss the biggest players, their growth in users, their revenue figures and how all this affects the sector as a whole.

GROWING NUMBERS

The trends in recent times have been quite evident in this regard. Social networks have become part and parcel of our lives to such an extent that most of the populace today practically depends on social media. From teens in the U.S, to software engineers in India, to journalists covering events, to even celebrities : social networks have proven their necessity in almost every field.

emberify_number_of_social_network_users_worldwide
(Data Source : Statista)

The graph above is pretty suggestive regarding the extent to which social networks are penetrating worldwide. In fact, a statistic from 2012 showed that 63.1% of all Internet users worldwide were also social network users.

And that figure has grown extensively ever since : according to WeAreSocial, out of 3.010 billion Internet users in 2014, there are 2.078 billion active social media accounts. which basically implies about 69% of Internet Users also rely on social networks. And looking at the trendline, these figures will grow in the coming years.

THE MAJOR PLAYERS

The biggest names in the social network field are, without a doubt, Facebook and Twitter. While I’ll be covering them extensively, I’ll also be throwing light on Instagram, which is quite up and coming as well!

FACEBOOK

Talk about Social Networks (or search for the term on IMDb!), the first thing that will come is Facebook. Zuck’s brainchild has done wonders in the arena, and the number of monthly active users (MAU) gives a very clear picture about the rise in popularity.

emberify_number_of_monthly_active_facebook_users
(Data Source : Statista and Facebook Newsroom)

In fact, according to a recent research by PewInternet, it was estimated that over 71% of online adults have used Facebook over 2014. In a separate research conducted by Digital Insights, it was estimated that the number of Facebook users from India alone is over 100 million.

With such huge numbers on a social networking site, there’s also presence of advertisements and brands pitching their products to consumers, which I’ll be elaborating upon in the Facebook revenue model.

TWITTER

Who would have thought that the concept of 140 characters would make it so big. The micro-blogging site Twitter has grown in popularity – not just because of the instant updates, or the system of hashtag to easily access relevant information, but also because of the ability to interact with celebrities who actively maintain their Twitter accounts.

emberify_number_of_monthly_active_twitter_users
(Data Source : Statista)

From the MAU data, it’s pretty evident how popular Twitter is becoming. With over 288 MAU for Q4 of 2014, it’s definitely not as big as Facebook, but it still is a force to reckon with.

REVENUE MODELS

 

FACEBOOK

The majority of Facebook’s revenue comes from advertising. The banners and various other product placements over Facebook have been a reason of annoyance for many, but for the team at Facebook, it is the biggest source of revenue.

The following graphs will explain my point more clearly.

Alright, so first off, there’s Facebook’s average advertising revenue per user from 2009 to 2014.

emberify_facebook_average_advertising_revenue_per_user
(Data Source : Statista)

Now taking into consideration the number of Facebook users worldwide, and the various platforms over which Facebook is prevalent, the following graph can be drawn up.

emberify_facebook_average_advertising_revenue_worldwide_segment
(Data Source : Statista)

In a nutshell, that’s about $7 billion in the revenue incurred from advertisements alone for 2014. Their net revenue for 2014 stood at $12.46 billion. Big figures, yeah.

But then, one should also consider the net income of Facebook, as opposed to the revenue.

emberify_facebook_revenue_net_income
(Data Source : Statista)

Now these numbers primarily indicate not just the number of users, or the outreach, they also indicate the user engagement. A driving force behind brands attracting consumers on Facebook is the user engagement factor, and this is growing, which ultimately leads to the growing figures which I’ve portrayed in the graphs.

All in all, revenues and incomes of Facebook are growing. And this only indicates the sheer strength that can be achieved by a popular social networking site.

TWITTER

Twitter has a comparatively less percentage of online adults as its members (the statistic for 2014 was 23%). It isn’t as mainstream as Facebook, and yet its revenue model is continuously growing, which again showcases the strength of social networking sites.

emberify_twitter_worldwide_annual_revenue
(Data Source : Statista)

Like Facebook, Twitter too relies on digital advertisements as its main source of revenue…

emberify_distribution_of_twitter_annual_revenue_by_channel
(Data Source : Statista)

… Because of which, the revenue incurred from advertising is also constantly growing.

emberify_twitter_worldwide_advertising_revenue
(Data Source : Statista)

As was the case for Facebook, advertising is also the key source of revenue for Twitter, and it is indeed amazing to see how far they’ve reached so quickly!

INSTAGRAM

Coming to the darkest of all dark horses, Instagram has proven how a simple act of sharing photographs with filters would create a new chapter in the Social Network saga. Here are a few key statistics:

• Between March and December 2014, Instagram grew by over 60% and exceeded the 300 million user mark. This is actually more than that of Twitter (288 million), and it’s also showing a much faster growth momentum.

• Owing to the large number of users, there have also been more brand presence here. Over 86% of the world’s top brands have Instagram accounts (from a research in Q4 2014).

• As a result, there’s more engagement from the end user.

The reasons for this are simple. People prefer visually appealing material, as opposed to text or videos. With simple images, brands can reach out and promote their products in a better way on Instagram, which makes it one of the leading social networking platforms in recent times.

SPEAKING OF GROWTH…

While I’ve explored Facebook and Twitter and have briefly touched upon Instagram, it is quite interesting to note that neither of these three biggies lead in terms of growth in number of monthly users.

Don’t believe me? Here, take a look.

emberify_growth_in_new_members_and_active_users_social_networks
(Data Source : Our Social Times)

Over the last two quarters of 2014, the website which has radically grown has been Tumblr. Pinterest is another favourite, and has been accessed multiple times specially on tablets. As for the big fish, there seems to be a saturation coming about in the growth. Number wise, they’re leading. But growth wise, not so much.

PLATFORM

A contributing factor for the rampant growth of social networking sites has been the introduction of the mobile platform. The increased worldwide usage of smartphones and mobile devices has paved the way for more features embedded within social networking applications. These can be either in the form of data sharing, user generated content, location based services and usage of the overall hardware of the phone.

emberify_distribution_of_time_spent_platform_social_network_us
(Data Source : Statista)

Moreover, recently Facebook has also introduced free internet access to its site in India over the Reliance carrier. Which again, promotes the usage of social networking sites on a mobile platform.

CLOSING COMMENTS

So, the ultimate question is this. Which social networks are leading the charts?

The statistic from Statista for March 2015 showcases the ranking of various social networking platforms based on the number of users. Facebook leads, followed by the Chinese social networking site QQ.

emberify_social_network_sites_ranking_2015
(Source : Statista)

The trends in social networking sites is going hand in hand with the consumer preference, and this is in turn building up a marketplace for big brands and businesses to promote their products and services. Social networking sites have evolved way beyond the scope of simple communication – they also offer possibilities to share user-generated content like photos and videos and incorporate features such as social games.

Like I said before, the lines between the virtual and real worlds are being blurred. And social networking sites are the most significant causative factors of this trend!