Social networking As an Investment

In its brief history, Social Media, as known as New Media, has traditionally been viewed as a place to meet new buddies, reconnect with old friends and interact in an online social atmosphere. In short, social networks were “a cool place to hang out” but held little applicability beyond that. There has been no shortage of funding in Silicon Valley for firms launching brand new media platforms. With the emergence of sites like MySpace, Facebook and Twitter, there is no question that there is value in the vast amounts of information on people that these platforms have been able to gather; however , there has been no clear monetization strategy beyond bringing in advertising revenue. Arguments have been risen as to the genuine value of these firms; some would state that their valuations are inflated and artificial, while other claim that the value of their databases alone are usually enough to justify multi-billion buck price tags.

The New Value of Social Media as well as the Social Media Firm
More recently social media provides spawned a new value proposition, which is the business applicability of the vast user-bases these social networks have created. No matter which side of the valuation fencing you sit on, it can be said that social networking holds vast utility for companies looking for a new way to reach out to clients and engage in two-way communications. This has never been done before from a traditional marketing, advertising or public relations perspective, and has given rise to some new business model: The Social Media Company. This brings forth the debate of whether or not The Social Media Firm is a good investment. Is The Social Media Firm the fad that will die out in the coming years, or is this a long-term, sustainable industry that will one-day drive obsolescence to the traditional ways of advertising, public relations and marketing?

Provided the state of the current economy, Investment capital and angel funding sources happen to be keeping their portfolio dollars near to their chest, reserving investment simply to businesses with a decent operating history, strong revenue streams and unlimited growth potential. Does the Social Media Firm fall into this category? My solution is yes. The bottom line is: social media is not really going anywhere. Social media has become a staple of the lives of younger decades, and the fastest growing adopters of new media are people over the age of 30. Since the recognition of the business potential that social networks holds, large Lot of money 500 firms are devoting a great portion of their marketing budgets in order to social networks and new media promotions. For instance, Pepsi has devoted $20 Million of their marketing budget for a social media program called Pepsi renew, and many large firms are beginning to follow along with suit. Needless to say, the earning possibility of The New Media Firm is considerable.

Is it sustainable?
As mentioned earlier, new media is not going anywhere. In most cases it has become a standard part of the Internet experience similar to email. The sites which are considered the gorillas in social networking may churn; however , there will always be something new to which these Internet-based organizations will migrate. For example , the social media migration to-date has gone from Bebo to Facebook to Twitter, and the next major shift and/or conjunction with this massive online social world is likely just around the corner. The long-term sustainability of The Social Media Firm is largely dependent upon these companies’ ability to identify plus pre-empt the next big shift, and to develop effective methods of leveraging both the old and new platforms for the sake of driving revenue, profitability, sales volume and identity to their clients.

The reason why Outsource to The Social Media Firm?
One particular question that may arise is: why would large companies hire a social media agency when they have the monetary resources to do it in-house? The answer to this is the simple fact that it is cheaper to outsource a new media campaign to some firm that has a skilled team already in place that is intimately familiar with navigating the complex world of new mass media. In the same manner that large companies hire advertising agencies to design traditional press campaigns, this approach can and will be taken for new media. By hiring The New Media Firm companies can eliminate both the administrative burden that comes with finding a multitude of new employees, as well as the understanding curve that will inevitably be present when trying to integrate those employees to their corporate culture. It is more cost effective, in both monetary and administrative respects, in order to outsource these campaigns to expert teams that are fully adept in leveraging the potential of modern media, navigating the codes of conduct of these online communities and staying ahead of the curve when it comes to identifying the exploiting the most recent new media trends.

Closing Comments

In summary, I do believe that investment within the Social Media Firm holds great possibility of many funds; however , it is essential that when vetting these agencies, Endeavor Capitalists and Angels need to ensure the company contains the correct personnel and management team to fully exploit this particular budding industry.
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The ditch contains large amount of one-man shops and alleged social media experts that are no more than victims of the recession who happen to be proficient at Facebook or Twitter. It is imperative the architects of new media campaigns are familiar with the intricate details of new media, and the vast array of assets that exist online to for a business to take full advantage of the social media entire world. Utilization of the lesser known social media outlets such as Digg, BrightKite, hi5, Xanga and countless others could be the distinction between a full-scale robust strategy that shows real results, and an ineffective and unorganized try at new media that waste products marketing dollars.

Due to the infancy of this industry, there are few companies available that truly know how to unlock the cost of new media for business. The one’s that do will quickly rise to the top, and when sufficient due diligence is done, these companies are usually ripe for investment. A strategic infusion of capital is likely the improve needed to take these companies from a lasting cash-flow business to the next industry giant with A-list clientele.

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