Magoosh GRE

How Organizations Monetize Their Presence On Social Networking Platforms

| August 25, 2016


The recent years has seen tremendous changes with the way people communicate and interact. These changes have been driven primarily by the development of social networking platforms such as Facebook, Twitter, Myspace and Linked In among many others. These Web-based “social networks” have revolutionized the way people network, communicate and interact. Twitter reached a Facebook currently boasts of more than 750 million active users and is predicted to grow twice as large over the coming years (Conroy & Narula 2010). Twitter has over 100 million active users. With the advent of technology, it is clear that the world is growing into one ‘global village’

Not only has social media had tremendous impact on the way people communicate and interact, but it has also revolutionized the business world with a vast majority of companies joining social media platforms (Argawal & Mital 2009). The proliferation of these media platforms have led to the rise of new business approaches that provide opportunities to organizations to connect and interact with their customers, thereby challenging the traditional approach of marketing. Companies are making the most out of the web 2.0 opportunities with majority of them seeking to enhance customer relationships through these media platforms (AT&T 2008). Others are using them for sales and marketing purposes (AT&T 2008). Participating in these web-based “social networks’ has clearly become a business imperative.

In this regard, this paper will explore the use of social media as a business tool. In particular, it will examine how organizations monetize their presence on social networking platforms while drawing reference to practical case studies. The paper will examine trends in social networking, applications and challenges of these powerful tools in business. This will include an analysis of the impact of social networks in business transactions. Additionally, the paper will recommend methods and approaches to building relationships with customers that could potentially increase revenues in organizations.

Social networking trends and application in business

People by nature are social and love to share and interact with others. The proliferation of social media platforms has radically shifted the way people interact and how business is conducted. The advent of technology has made it possible for people to easily communicate and interact across the globe. Social networking is now an important aspect of people’s lives (Gillin 2010). The business domain has not been left behind either.

From pure interaction tools to business tools, social media appears to have had a tremendous impact in the business world. Gone are the days when pure-bricks business model would thrive well in the market (Bashar et al 2012). With advances in technology, businesses have learnt to use them to their benefit.  Microsoft, Google, Amazon, and eBay are Prime examples of technology driven companies. Given the proliferation of social networking sites, such as Myspace, Linked In, Facebook and twitter, it has become almost impossible to design marketing strategies without taking into consideration these media platforms. Social media has gained prominence and is considered vital for today’s marketing mix.

Both the small and big businesses have flocked to these media platforms. Whilst Major brands, such as Virgin and Starbucks, appear to have established their presences in these media platforms, social media adoption seems to be increasing amongst small businesses as well. According to study conducted by the University of Maryland, the rate of adoption among the small enterprises doubled from 12% in 2009 to 24% in 2010 (Rao 2010).

The use of social media as a business tool is particularly evident in emerging markets of China, India and Brazil. According to a KPMG report, these countries are 20% more likely to expand their business frontiers into social media than their counterparts in UK, Germany, Australia and Canada (KPMG 2011). This can be attributed to their lower dependence on ‘legal systems’ compared to the developed economies which bind their organizations to their long-established channel strategies.

How organizations can monetize their presence in social networking platforms

Businesses are targeting social networking sites, such as Facebook and Twitter, as key market surveillance areas given their large user base. This becomes the key source for the businesses to innovate in congruence with the demands for their mutual benefit (Trottier, 2013). Given the popularity of these social networking platforms in various parts of the world, companies seeking to engage the vast and increasingly affluent online audience can use it as a marketing tool.

Marketers can use these social networks for customer acquisition, retention and even generating their revenue. Business units such as marketing, sales, and HR can use these powerful tools to stimulate innovation and monetize their presence. Starbucks is a good example of a company which has successfully established its online presence in social media platforms. Having amassed over 35 million Facebook likes, Starbucks is without doubt one of the largest company that has successfully established presence in social media platforms (Smith 2013). One strategy which Starbucks used to attract Facebook users was ‘through deals’. This retailer company offered to give free coffee to the first 30,000 Facebook users that checked in at UK Starbucks stores using their phones (Smith 2013). This went a long way towards increasing the number of followers and ultimately translated to greater returns. Further, Starbucks used these media platforms to communicate with its ever increasing customer base about their favourite products (Smith 2013). Besides just informing their customers about their products via Facebook, Starbucks has also done well by integrating social issues that people care about into their brand.

Given Starbucks success in establishing presence in social media platforms, other retailers across all sectors have similarly followed suit, from clothing sellers such as GAP who have amassed 4.6 million likes to general good retailers such as Target, and even to telecom providers and video games stores such as Verizon wireless and GameStop respectively (Smith 2013).

Another company that has monetized its presence in Facebook is The New York Jets. In September 2010, the NFL team launched their ultimate Fan social game, the first application to generate revenue through Facebook (Carolyn 2011).  This application allowed Facebook users to predict game scores, root for their teams and to hold a virtual party with fans from different parts of the world.

Further, the Jets engage with their fans on a regular basis via twitter. For example, towards the 2011 AFC playoff championship, the Jets advertised a contest for winning tickets to the tournament. The contest was twitter-based and winners were guaranteed free tickets to the 2011 AFC championship game against Pittsburgh Steelers (Carolyn 2011). It is clear that these companies are leveraging social media platforms to generate sales and increase their revenues. Many more businesses have also begun to exploit social networking sites as business tools, offering various deals and discounts through the sites. Whereas the opportunities created by social networking sites are many, success depends on how best to deploy creative skills to achieve the business goals.

Creating traffic and brand awareness

As a first step to monetizing social media presence, marketers must build their brand awareness and create traffic. Unless the brand is widely recognized such as Apple, it is necessary to develop social media magnetism (Conroy & Narula 2010). Social media campaign can be done by word of mouth or advertising through TV commercials.

Audience engagement             

The second step is building audience engagement. Unless marketers successfully engage with the audiences, they will not be able to reap great returns. For the social media campaign to be a success, marketers must effectively engage with the audience through meaningful conversation and by creating great content that raises awareness and increase sales (Carolyn 2011).

Online Advertising

Once a consistent traffic has been built and the audience have been engaged, then it becomes easy to monetize. The most basic form of monetizing is putting ads on social media sites and adding affiliate advertising links. Marketers can also choose to offer special promotions such as offering discounts exclusively to followers. Dell computers is a good example of a company that offers discounts to its followers. Dell tweets 15% off for any of their computers with special coupon code entered at checkout (Carolyn 2011). Social media has enabled Dell to amaze over 1.6 million followers and generate more than 2 million incremental revenues.

Use of applications

Companies may also use apps to monetize social media. They can charge a certain fee for the apps or give it freely in order to strengthen customer relationship. “Gucci Connect” is a quintessential example of a mobile marketing app (McKinsey 2007). The app enables users to watch live runway and to chat live with Facebook and twitter guests via their mobile devises.

Setting up an online store on social media

Finally, marketers need to set up a shop on Facebook. Companies can list their products and put updates on social media sites. Whereas these strategies should enable the company to monetize themselves on media platforms, most of the benefit has been branding and not actual purchases. However, for products which are inherently social in nature such as DVDs, books, and event tickets, these have translated to greater returns on investments.

Challenges with the use of social media as a business tool

Social media has certainly impacted on business. While many companies have found significant benefits with these social platforms, some have encountered unexpected risks and challenges along the way. There have been some challenges such as loss of sensitive information, reputational, legal and operational risks, and reduced productivity as a result of time wastage. Whereas there are many remarkable upside to using social media as a business tool, the vast reach of these media platforms also offer a vast uncharted ‘sinkhole’ of risk (Merril et al 2011).

The benefits may be outweighed by reputational risks. For example, in 2009 an employee from a national pizza delivery chain was recorded in a video camera tainting a sandwich which was to be delivered to a customer (Merril et al 2011). When the video was posted on YouTube where it drew heavy reaction from millions of viewers across the world. Viewers tweeted the news and in a span of 48 hours, the chain had experienced a change in consumers’ perception from positive to negative. Such embarrassing moments can tarnish the image of the company.

Other risks of particular concern include risks pertaining to intellectual property and media risks, security risk and risk pertaining to employment privacy (Stelzner 2013). Company’s security may be breached by malwares downloaded onto their website. Intellectual property risks may arise if employees post other’s information without their permission. Claims can be made against the company under such situations and contractual breach claims may result where the intellectual property belongs to an existing client (Merril et al 2011).

Beyond these risks, some companies may face the challenge of integrating social media into their strategies. According to a Harvard Business review survey, 79% of the 2,100 organizations surveyed used social media platform as a business tool (Gullin 2010). The remaining 21% were in the process of launching social media initiatives. However, majority of these organizations pointed out to the challenge of integrating social media into their strategies. A vast majority of them seem to have no formalized social media strategy whereas others appear to struggle with how best to use the different channels.

Methods and approaches to building relationships with customers that could potentially increase revenues in organizations

A key important aspect that marketers should take into consideration is knowing how to communicate the right message with customers over media (Smith 2013). Most companies often post their updates through social media platforms which enables existing customers to interact with their favourite brand and get updates of their products. Whereas this approach enhances brand visibility and sometimes lead to new-customer acquisition, it often does not convert social media follows to direct sales and hence ends up hurting the bottom line (Smith 2013).

A vast majority of online audience are eager to interact with their brands through these media platforms, but for them to engage in a financially meaningful way, marketers must know how best to reach them. Increasing traffic in the corporate page may seem somewhat beneficial, but it does not result in significant return on investment. As opposed to just focusing on increasing traffic, companies should focus on engaging more with the customers, both at the local and personal level. This would enable them to identify customer needs and tailor services and products to meeting those needs. Not only would this increase sales revenue, but it will also build and enhance customer relationship.


Business today has transformed from the previous pure brick business models to new approaches that utilize social media as business tools. Social media platforms such as Facebook, Twitter, LinkedIn, Myspace and YouTube among many others have become an important gradient in today’s marketing mix. Customers’ buying experience has gone beyond the traditional transactional base to a contemporary conversational tone by connecting with the clients through the various socializing networks like Twitter or Facebook.

In response to the changing consumer behaviors, it has become a business imperative to integrate with the social networking sites. These tools offer business with many benefits including customer acquisition, retention and generation of sales revenue. Further, business units such as marketing, sales, and HR can use these powerful tools to stimulate innovation and monetize their presence.

Whereas there are many remarkable upside to using social media as a business tool, there are some unexpected risks and challenges as well. These include the loss of sensitive information, reputational, legal and operational risks, and reduced productivity as a result of time wasted. Beyond these risks, some companies may face the challenge of integrating social media into their strategies.

In spite of these risks, social media platforms appear to have had tremendous impacts on the business world, given its ubiquity and remarkable ability to attract and retain new customers which ultimately translates to more returns on investment. There is however need for companies to establish a strategy and associated policies that seek to address the pertinent issues. Although these risks and challenges may seem significant, they can be easily managed with forethought and planning.


Agarwal, S., and Mital, M. (2009) “Focus on Business Practices: An Exploratory Study of Indian University Students’ Use of Social Networking Web Sites: Implications for the Workplace”, Business Communication Quarterly.

AT&T, (2008). The business impact of social networking. AT& T

Bashar, A., Ahmad, I. and Wasiq, M., (2012). Effectiveness of social media as a marketing tool: an empirical study. International Journal of Marketing, Financial Services & Management Research, vol. 1 (11)

Boyd, D. M., & Ellison, N. B. (2007). Social Network Sites: Definition, History and Scholarship. Journal of Computer-Mediated Communication, 13(1), 210 – 230.

Carolyn, B., (2013). How to monetize social media. Inc.

Conroy, P., & Narula, A. (2010). A new breed of brand advocates – Social networking redefines consumer engagement. Delloite.

Curtis, A. (2011). The brief history of social media. Retrieved from

Gillin, P., (2010). The new conversation: taking social media from talk to action. Harvard Business Review. Harvard Business publishing

Hutley, R., (2009). Social networking as a business tool. Cisco IBSG Inc.

ISACA, (2010). Social media: business benefits and security, governance and assurance perspectives. ISACA

KPMG, (2011). Going social: how businesses are making the most of social media. KPMG International

Li, C. & Bernoff, J. (2008) Groundswell: Winning in a world transformed by social technologies. Boston: Harvard Business Press.

McKinsey. (2007). How companies are marketing Online: A McKinsey Global Survey. McKinsey

Merrill, T., Latham, K., Santalesa, R. and Navetta, D., (2011). Social media: the business benefits may be enormous, but can the risks-reputational, legal, operational-be mitigated? Information Law Group. ACE publishers

Oracle, (2012). Is social media transforming your business? Oracle Corporation.

Smith, B., (2013). Shortsighted social media strategy misses huge revenue opportunity. [Viewed on 27th November 2013] available from

Stelzner, M.A., (2013). Social media marketing industry report: how marketers are using social media to grow their businesses. Social Media Examiner

Trottier, D. (2013) “The business of Conversations: Market Social Media and Surveillance and Visibility”, First Monday. Vol. 18, pp. 2-4.

Tags: ,

Category: Business, Business & Management, Essay & Dissertation Samples