Social Media, or New Media as it is sometimes known, has been seen as a place where you can make new friends, reunite with old friends and interact online. Social networks were simply “cool” for hanging out, but they had limited application beyond that. Silicon Valley has plenty of funding available for new media platforms. The rise of social media platforms like MySpace, Facebook, and Twitter has made it clear that there is value in the huge amounts of information these platforms have been collecting about people. However there has been no clear strategy to monetize the data beyond advertising revenue. The true value of these firms has been the subject of heated debates. Some argue that they are artificially valued and inflated while others say that the database’s value alone is enough to justify their multi-billion dollar price tags.
The Social Media Firm and its New Value
Recently, social media has been recognized for a new type of value proposition. It is the applicability to businesses that these vast user-bases have provided. No matter where you stand on the valuation fence, it is clear that social media can provide a great way for businesses to reach customers and engage in two-way communication. This business model is new and unlike anything else in marketing, advertising or public relation. This leads to the debate about whether or not The Social Media Firm represents a worthwhile investment. Is the Social Media Firm a fad or an industry that will fade away in the future?
Venture Capital and angel financing sources have been cautious about investing in the current economy. They keep their portfolio dollars close at their chests, making sure to invest only in companies with an operating history that is solid, reliable, and capable of unlimited growth. What does this mean for the Social Media Firm? My answer is “Yes.” My answer is yes. Social media has become an integral part of our lives. People over 30 years old are the most frequent users of this new media. Fortune 500 companies have begun to dedicate a significant portion of their marketing budgets and resources to social networks and other media campaigns, recognizing the immense business potential that these networks hold. Pepsi, for instance, has dedicated $20 Million to a social-media program called PepsiRefresh. Other large corporations are starting to do the same. The New Media Firm’s earning potential is significant, it’s not surprising.