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ValueTheMarkets.com NewsCommentary - Total worldwide internet users numbered 5 billion inApril 2022, with Statista data showing 4.65 billion people use socialmedia as numbers continue to rise. But with advertising spendingknocked lower, how are social media businesses adapting? This articlediscusses the issue with reference to Twitter (NASDAQ:TWTR) , Snap (NYSE: SNAP) , Microsoft (NASDAQ: MSFT) and QYOUMedia (TSX: QYOU) (OTCQB: QYOUF) .
QYOUMedia (TSX: QYOU) (OTCQB: QYOUF) operates as amedia company, producing and distributing content created by socialmedia influencers, artists and digital content creators on televisionnetworks, satellite television, over-the-top media and mobileplatforms.
Thecompany also manages influencer marketing campaigns for major filmstudios and key household brands.
QYOUMedia’s most recent earnings , which covered the three-month period ended 31 March,showed that the company had grown revenue by an astronomical increaseof 2,410% against the same period 12 months prior.
The business expectsthat, even with advertising headwinds, each of the rest of itsquarterly updates across the year ahead will show record revenues.That expectation comes as the company’s Chtrbox subsidiary, which isone of India’s leading creator-powered companies connecting brandsand social media influencers, has announced the launch of a new division.
The ChtrSocial divisionwill focus on helping brands multiply their social audiences withmodern creative methods, including micro-videos and personalized brandstorytelling. QYOUMedia says the operation will offer cost effective andscalable solutions to community building for brands, allowing brandsto become digital creators themselves.
It sounds like an attractive offering in anenvironment where many advertisers are cutting back on advertisingspend, while also focusing more on social media. With QYOUMedia’s wealth of experience in influencermarketing on-hand, ChtrSocial could be an exciting project.
Twitter (NASDAQ:TWTR) , which was cofounded by Jack Dorsey, provides online socialnetworking and microblogging service, offering users the ability tofollow other users' activity, read and post tweets. It might beone of the planet’s major players when it comes to social media, butthe business has had a rocky ride over recent months.
The company’s earnings saw average monetizable daily active usagerise by 16.6% on the same period in 2021. Even so, revenue droppedfrom $1.19bn to $1.18bn amid advertising headwinds.
However, the companyalso blamed the drop on instability associated with Elon Musk’s$44bn takeover bid.
In fact, Twitter is now the enigmatic South African billionaire in an effort toforce him to follow through on the accepted bid.
Legal wrangling couldhurt the business further, but Twitter is unlikely to let the matterdrop as Musk’s bid, which equated to $54.20 per share, represents apremium on the current share value.
These difficulties may have contributed to thedecision to increase the service’s monthly price, which is climbing from$2.99 to $4.99 for new subscribers.
However, subscription and other revenue decreasedin the company’s most recent quarter, falling by 27% to $101m. Thisdecline, coupled with the miniscule contribution from subscriptionrevenue compared to ad revenue, calls into question the company’scapacity to deal with slowing ad revenues.
With advertising revenue likely to dip, otherindustry peers also seem to be on the lookout for new or enhancedrevenue streams.
Snap (NYSE: SNAP) is one company trying out thesubscription model for size. The business provides technology andsocial media services, developing mobile camera application productsand services that allow users to send and receive photos, drawings,text and videos.
The company, which runs the Snapchat platform, has changed itsexecutive team amid advertising troubles but is having some success with newmonetization efforts. The business is offering users a ‘premium’service in the form of Snapchat+, available for $3.99 a month.
It has seen somesuccess, with Snap confirming that it had brought in more than 1 million subscribersless than six weeks after launch.
Even without the potentially major impact of thissubscription service, Snap reported revenue growth of 13% in its mostrecent earnings update . In its current state, this contribution is minorcompared to the company’s overall revenue of more than $1bn in itssecond quarter, but the company will be hoping it is the springboardto further growth.
CEO Evan Spiegel has hinted there could be further changes,stating the company is aiming to cultivate “new sources of revenueto help diversify our topline growth”.
But when it comes to social mediasubscriptions, there is one offering which leads the way.
Headed by SatyaNadella, Microsoft (NASDAQ: MSFT) offers applications, extracloud storage, and advanced security solutions, serving customersworldwide. It might not be the first company you associate withsocial media, but the software giant’s business networking orientedsocial media offering, LinkedIn, looks to have been going fromstrength to strength.
Microsoft for $26.2bn in 2016, with the aim to grow thesite and integrate software such as Office 365. Since then, it hasachieved significant growth and become something of a moneyspinner.
In thecompany’s most recent earnings , which covered the three-month period ended 30 June 2022,LinkedIn revenue jumped by 26% compared to the same period a yearprior. This increase came even as Microsoft’s platform was impactedby a general downturn in advertising spend.
The company has longoperated a premium subscription service for users, which allows themto access in-depth statistics about their profiles, better visibilityin messaging and access to training courses.
Microsoft is alsopushing ahead with integration of LinkedIn with its huge library ofsoftware applications, with one of the latest updates includingintegration with video chat software Teams .
Thesoftware giant will be hoping that its multiple revenue streams andpowerful synergy with other applications will mean that LinkedIn cancontinue to rake in the revenue despite an advertisingslowdown.
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