Two Faces of Growth: Linking Customer Engagement to Revenue Streams
Contemporary understanding of social media activities is facing two major obstacles—measuring customer engagement and analyzing social media financial performance. These two questions have different attributes and are predominantly interpreted by wide variety of disciplines and analytical frameworks. In terms of the interpretation of the value creation in media two focal points could be distinguished that are interpreting the demand side and the supply side of the social media activities.
Business models and business model design in social media put an extreme emphasis on the demand side of the media product—value of the media is becoming a function of its network valuation dependant on the number and perceived value of its users. This has led to proliferation of open source strategy and cooperation games played online that pulled the integration of loyalty business models within network effect models. Central point in these models is the measurement of customer engagement.
As we understand the social media activity in the light of consumer engagement and demand side economies what is the effect on social media core value in pure financial terms. If the main assets of social media companies are its ingenious competence to constitute loyal consumer base and gather data through new technologies—how much are they worth? If we rely on intangibles and analyze social media past financial results, we will find poor accountant statistics. However, the revenue growth the social media are experiencing makes these financials to have low predicting power. Growing global online advertising market and social media consumption renewed the optimism.
KeywordsSocial Network Social Medium Revenue Stream Page View Customer Engagement
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