How to Make Money with Social Media

 |  Article Source: Sunil Singh  |  2,368 Views

How to Make Money with Social Media

How to Make Money with Social Media

Well folks, it’s finally here: SnapChat is going public. This will place SnapChat among the growing list of mulitbillion dollar Social Media (SM) companies out there. But here’s the kicker – it’s thought that it will probably be the biggest IPO Planet-wide in 2 years (Alibaba’s LTD went public in 2014 for US$150billion more than SnapChat’s current IPO valuation).


In fact, the SnapChat IPO – possibly occurring as early as March – is valued higher than any US-based IPO since 2012, when tech giant Facebook went public at a US$81.2 billion (Twitter didn’t even break US$15 billion – bums). SnapChat is one of the few tech startups known as a “Unicorn” company; these are companies that have a valuation of at least a billion dollars (not too shabby).


But SnapChat is actually on an even more selective list: the list of so-called “Decacorns.” These are Startups that are worth ten billion dollars at least. Pinterest, Uber, AirbNb, and SpaceEx are all on this list too.


However there’s a something here we need to look at: out of the 9 or 10 top decacorns, Pinterest appears to be the only other Social Media-oriented Startup. And it’s probably worth pointing out that Pinterest barely makes the list at a measly US$11 billion. The other companies on the list are aimed at eCommerce, Big Data/Data Security, Sharing economy, and so on.


But Snapchat is not only on the list, but it’s actually one of the most highly valued decacorns on the list – probably double Pinterest. This brings up the obvious question – Why? What;s the reason that SnapChat, a company that takes and sends photos between users (photos that disappear and are erased in the blink of an eye).


Turns out that there isn’t just one reason that SnapChat is probably worth almost double SpaceEx, a company planning on colonizing space. Turns out there are 150 million reasons why. That’s the potential number DAILY active users (DAU) on SnapChat (globally). Not the number of users, which we were unable to confirm, but is rumored to surpass 217 million by next year.


That’s more than Twitter, and more about the same amount of monthly active users (MAU) Pinterest has. To some of the old guard of entrepreneurs, the importance of Active Users can be difficult to understand. Afterall, you don’t judge the success of a Woolworth’s by the amount of people who stop by the store everyday. You judge it by how much it makes as compared to how much is spent – aka a profit.


So what is SnapChat’s current revenue? US$60 million to date. Not annually, just total. Which is pretty astounding for a company worth double digit billions. Partially that’s misleading, because that US$60 million was made in the final quarter of 2015 alone; prior to that SnapChat was not even attempting to generate a revenue.


But still, if you extrapolate that out at a constant rate that’s not even $400 million annually. Again, SnapChat is currently valued at US$20 billion. Even the best estimates (adding in corporate sponsors and SnapChat’s hardware like they’re recent Sunglass Camera Gadget) put SnapChat’s revenue potential at about a billion (US) within the next few years.


The truth is that revenue is simply not weighted as heavily (at least at first) when it comes to evaluating SM companies as MAU and/or DAU. While SnapChat’s Ad revenue was disappointing to many investors, more realize that the potential of sites like SnapChat are in the fact that they provide access to a massive market.


Seriously – where else can you reach 150 million people on a single platform? More than that, where can you get extremely targeted, data-driven insights into specific markets? Social media companies make money by providing access to a curated, targeted and potentially massive market.


Basically what we’re trying to say is that Social Media sites have uncapped potential revenue opportunities. That’s why they investors are willing to give them so much money and why their valuations far outstrip current revenue; the potential revenue is always far more important. Heck even Myspace has 30 million MAU – 30 million!


So what does this mean to you, the entrepreneur? It means that Social Media websites and apps are a massive money making opportunity. Even Niche websites targeting small markets can still be worth millions of dollars. It means that you can call our development team and have your own SM platform in less than 2 months.


Give us a call at 0422 710 780 – or click to contact us!