Despite its relative youth social media is a mature market these days. Take Facebook. Immediately derided post-IPO it quickly began to concentrate on mobile and its revenues increased accordingly. Despite concerns over stagnating user growth, don’t expect its revenues to do anything other than grow this year. Social data combined with the massive user base is of huge interest to brands and video should help Facebook pull even more revenues from its platform. For Twitter it’s a different story. Overtaken in user numbers by Instagram last year it needs to address both user growth and more importantly profitability. Expect it to continue on the acquisition trail in a bid to do this. Snapchat and Pinterest also need to start proving they can generate serious revenues, but as part of the newer generation of social platforms and without the same investor pressures as a public company they’ll be more patient. Both are likely to increase the amount of ads on their networks, however, and experiment further with ad formats. Moving further down the social media ecosystem, expect Facebook to release more standalone apps as it continues to unbundle its core offering. Expect Twitter to follow suit with apps most likely based around messaging and video.
Messaging and chat apps are going nowhere and the popularity and usage will only increase with WhatsApp hitting 1bn users this year. It’s still probably too early to see Facebook making any serious attempts to monetise this huge asset yet. But it will continue to use the data derived from WhatsApp to inform what it does with its social network and it may well further integrate the two services this year. This doesn’t mean messaging apps can’t make money. Asian messaging apps like Line and WeChat have proved that in Asian markets and they may look to Western markets to help grow revenues in 2015.
More than USD2.6bn was invested in the social media space in 2014 across 243 deals. That’s down from the USD2.9bn invested across 265 deals in 2013. Decreasing investment is expected to continue as niche areas are filled and consolidation makes spaces such as mobile messaging and photo networks more difficult to disrupt. There should still be some large funding rounds in messaging apps in emerging markets, but overall social media investment is likely to slow down this year.
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