2015: Prepare for seismic shifts in social media.

2014 saw major acquisitions take the marketing technology world by surprise. 2015 promises to be another eventful year, as social media networks and vendors have big ambitions to innovate and grow, and enterprises face seismic shifts created by social media.

David Carratt
January 14, 2015 - 4 min. read

A review of the social media management world should begin with the major changes happening in social media networks themselves, as they continue to add users and new offerings.

The Global Web Index compares changes in the number of active users of the world’s biggest social platforms. According to its stats Tumblr took first place, growing active users by 120% between Q1 and Q3 2014. Pinterest followed closely with 111% growth. Instagram (64%) came third, then LinkedIn (54%), Twitter (26%), YouTube (25%) and Google+ (16%). Facebook finished last with active users growing by just 2%.

However, with 1.35 billion active monthly users, Facebook continues to be the world’s largest social network and has big plans to tackle concerns about its sluggish growth.

In February last year, Facebook shocked the market with the acquisition of WhatsApp for a massive $19 billion in cash and stock. With more than 600 million users, the mobile messaging service opens up new ways for Facebook to connect with people globally and develop mobile experiences.

It also plans to gain more coverage outside the English speaking world, particularly in China. With more than 632 million web users, China represents a huge growth opportunity for Facebook. Facebook’s CEO Mark Zuckerberg has been trying desperately to lay the groundwork for a pared-down version of the social media network with trips to Beijing and even learning to speak Mandarin. Facebook has been blocked in China since 2009, due to strict censorship laws.

Apparently, Facebook is also planning to launch a professional network to further extend its audience and increase the amount of time users spend on its site. This would put the company in direct competition with business network, LinkedIn.

Facebook recently purchased ad server Atlas, so that advertisers can target people based on what they know about them and their Facebook profile, and reach them in places outside of Facebook. Not content with world domination, Facebook also entered the realm of immersive reality gaming with the acquisition of Oculus Rift, a company that creates virtual reality 3D goggles.

Twitter, was also on the acquisition trail in 2014, with the purchases of data companies Gnip, Mesagraph and SecondSync. It appears that Twitter wants to offer more analytical applications and rely less on its partner network. With 284 million monthly active users, Twitter needs to grow its user base to counter the threat caused by Facebook’s acquisition of WhatsApp.

BIGGER MARKETING TECHNOLOGY BUDGETS

With continued growth in social media, enterprises realize the importance of social media marketing and budgets are set to rocket. IDC predicts marketing software will be a $32.4 billion market by 2018. In particular, we will see increased spending on social media management systems. As organizations employ more people to manage social media, CFOs are focusing on ways to reduce employments costs and improve efficiency through technology.

CONSOLIDATION CONTINUES

Many marketing technology vendors offer platforms with specific point functionality. However, due to demand for complete marketing solutions, they will look to develop integrated platforms that cover more social networks and a broader range of digital marketing activities. This will continue to drive mergers and acquisitions (M&A) in 2015, as major public players and private vendors try to acquire the competition and add new functionality.

Last year acquisition activity was rife in the social media platform marketplace, as providers raced to add new features. For example, Hootsuite acquired Zeetl, Brightkit and uberVU.

The acquisition route is unlikely to be smooth. Software companies will have to pay for lengthy research and development projects to integrate systems before they can go-live. Here, Falcon Social has an advantage, as it has always focused on delivering complete, ready-to-use social media management platforms and has grown organically.

Despite potential integration costs, investor appetite and valuations remain strong. Average valuations in recent M&A transactions of marketing technology vendors were 5x TTM revenue. Investors will be prepared to pay high premiums as marketing technology continues to be a growth area, whereas other sectors will remain stagnant.

To fund growth we will see more marketing technology companies go public. Last year, cloud-based marketing automation software provider, Hubspot, launched on the New York Stock Exchange (NYSE) raising an impressive $125 million.

 

zendesk-office

Another SaaS IPO in 2014 came from Zendesk

European start-up Zendesk proved it is possible to develop a global SaaS business, raising just under $100 million. While this was less than initially planned, its launch on the NYSE was viewed positively and the stock price continued to hold up after its IPO.

CONNECT WITH CONSUMERS

Companies are aware that consumers prefer to talk to each other on social media networks and don’t respond to being shouted at by brands using crude advertising. But there are a lot of social sites to cover and consumers’ networking habits are changing. Businesses will have to continuously play catch up with where consumers spend their time online. Social media is no longer just another communication channel – it is totally reshaping marketing as companies look for more effective ways to reach consumers through social media networks.

Eventually, social media sites could become major e-commerce players, where consumers can chat to brands and complete purchases, without leaving the social network. Japanese e-commerce platform provider, Rakuten, is one to watch. It bought US cashback shopping site operator, Ebates, in September 2014, to build its loyalty rewards driven e-commerce market. Rakuten is investing heavily in emerging technologies to fuel growth and innovation in e-commerce globally. It also has a stake in Pinterest, which is tipped to become a social commerce site.

It seems the possibilities for digital marketing and social media are endless. 2015 will see more innovation in technology, along with further consolidation, as vendors and social networks attempt to get ahead of the competition. Enterprises will need technology to manage the ever changing world of social media.

FURTHER READING

 

How to Sell on Social Media.

Why use social selling, how to get started, and best practices.
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