4 Booming Industries That Are Stealing Social Media's Growth Playbook Why alternative business models based on social media are taking off.
By Mike Swigunski Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Internet users spend approximately two hours a day on social media. That's enough time for brands to show them dozens of marketing messages, including paid ads. The volume of these messages is so high that Facebook is essentially one of the largest advertising networks.
But some organizations aren't just marketing through social media. They're using social media to create new, alternative business models. Some of these models, like the monetized Instagram page, are well known; others are unpublicized but highly profitable.
Related: 3 Common Mistakes Companies Make With Their Social Ad Strategy
So what are some of these alternative business models that are booming right now? We'll cover the traditional status quo, emerging trends in online business, and a few concrete examples of new ways to make money online.
The traditional digital business model
In the traditional digital business model, your website is the heart of your online operations. It's where you display your products, market to prospects, and take orders.
This is the model used by digital service providers, online stores, and brick-and-mortar businesses. You create a website and drive traffic to it, generating leads and sales. That's how things have worked for over 20 years.
The biggest change to this traditional model is the emergence of mobile apps. Mobile devices now drive over 50% of all web traffic, and 78% of mobile users prefer apps to websites. As a result, more and more businesses are using branded apps.
That said, apps are mostly an alternative way to present website content. They still fit within the traditional digital business model.
This is where social media comes in and it is helping entrepreneurs market, monetize, and scale businesses in profoundly new ways. Here's how.
The rise of social business models
As recently as 2012, Google's ad revenue was about 1,000% that of Facebook's. Google was the platform for discovering new content, shopping for products, and just about everything else.
Things are different now. After buying Instagram and growing Facebook Video, Facebook boasts 1.79 billion daily users, compared to Google's 3.5 billion daily searches. Social traffic is on par with search engine traffic - especially when you factor in other major platforms like Snapchat, LinkedIn, Pinterest, etc.
This kind of broad user base means businesses can choose to go without search engine traffic or a website. They can do everything they need to do online - drive traffic, market, close sales - entirely inside social media platforms.
This is the gist of the new, alternative business models we're about to share with you below. They leverage social media for some or all of their online operations, carving out new niches in the process.
Alternative business models powered by social media
1. Influencer ecommerce
In the past, we've seen brands sponsor Instagram and YouTube influencers. In this older business model, content creators get a fixed sum for mentioning or showing a product in their photos, write-ups, and videos.
More recently, this has been superseded by a different model, in which influencers are directly monetizing their own content.
For example, on YouTube, many producers place affiliate links in the descriptions below their content. By doing this, they get to make their own money directly by driving sales to affiliate partners like Amazon.
Related: 4 Top Advantages of a Successful Kickstarter Campaign
Others go a step further and make their own product listings on sites like Amazon. Those that do often hire optimization experts like Danny Carlson, whose Amazon listing optimization agency (Kenji ROI) makes over $70,000 per month.
According to Danny, "[for online sales], the highest-ROI investment you can make is in your Amazon listing… [your] photos, copy, & videos." Being able to control these elements directly is one of the major reasons social content producers forego affiliate marketing.
Regardless of the monetization strategy, making social content and using it to generate sales is a booming alternative business model. Thousands of creators are applying it to their business right now - and many more are sure to follow.
2. Self-published books and audiobooks
Self-publishing on websites like Amazon has been a little-known, highly-profitable business niche for several years. Writers and entrepreneurs have been using this model to generate six and seven-figure incomes as early as 2015.
But right now, a newer version of this model is emerging. Shaping it are two trends: booming audiobook sales and the rise of social media. The essence of the model is to self-publish audiobooks in addition to ebooks and use social media to market both.
As a result of this trend, self-publishing experts and educators are doing two things. First, Kindle publishing veterans are pivoting to use and teach social media.
Second, a new class of audiobook self-publishers is emerging. One example is the Mikkelsen Twins, who make over $500,000 per month self-publishing on Audible. The two credit much of their success to social media, "The reason why we got so much attention is because we shared everything we knew for free in our YouTube videos."
Now, Rasmus and Christian Mikkelsen are launching PublishingLife.com to help others succeed with the same business model.
Some entrepreneurs take a separate route and choose to publish free, unmonetized content via their social channels. They turn a profit using the following model.
3. Freemium social channels
Traditionally, social media channels are monetized through merchandise, sponsorship deals, and eCommerce sales. Monetizing content directly - i.e. getting people to pay for your videos, images, and write-ups - has always been desirable, but out of reach.
This is now changing. Platforms like Patreon let creators offer simple, convenient paid subscription options. Users who opt-in are usually rewarded with exclusive, early-access content, fun freebies, and a variety of other perks.
4. Decentralized businesses
Crypto tech has brought us many valuable applications, from Bitcoin to decentralized finance and logistics blockchains. Together with social media, entrepreneurs can now create decentralized crypto businesses.
One example is Fundabit: a decentralized crowdfunding platform that lets users invest crypto into exciting new projects. Another example is the Market Peak project, where users can create a passive income by leveraging online communities.
Related: 5 Ways to Help Your Small Business Survive During the Pandemic
Market Peak's founder, Sergej Heck, initially discovered the power of social media by building and scaling large sales teams using social. Now, he uses those same strategies to serve his growing user base. He explains:
"There's one thing your customers have in common: they're all looking for a solution. [You can] host a group or forum where people can share their best tips… so they can network and help one another."
This is the youngest alternative business model on our list. While it's had less time to grow compared to the previous three, it appears to have a bright future.
