Saturday, December 9, 2023

The social media economy

There is no doubt that with the appearance of social networks the world changed, and this change manifests itself in different ways and in different directions.

One of the first manifestations of the impact of these networks is in consumption habits, since the majority of consumers are induced to buy things that, perhaps, are not an economic necessity for them. Another important element here is the demonstration effect that social networks currently constitute, where individuals need to show what they acquire and have, seeking to become models in their process of seeking approval as a social entity.

Thus, social networks have become a vital tool for electronic commerce, achieving an unprecedented economic and financial impact, according to a study carried out by Otero, J. (2021).

This economic impact of social networks can be confirmed in the volume of money that each network moves. For example, Facebook (now Meta) had worldwide revenue of approximately $118 billion in 2021, while the Instagram network, one of the fastest growing networks in recent years, generated revenue of more than $22 billion. On its side, the social network Tik Tok entered close to US$9.4 billion in 2022, almost double what it moved the previous year, while Twitter raised more than US$5 billion.

But here two more figures come into play that become automatic income generators or, at least, motivators that increase company sales from their exposure on social networks. One of these is the investment in advertising on social networks, estimated that, by 2020, it will be around 110,000 million euros, an astronomical sum but which, nevertheless, is constantly growing.

Another important figure is the so-called e-commerce, or electronic commerce, which mobilized, according to figures from Statista Digital Market Otulook, US$3.3 billion during 2021, also projecting that, by 2025, this figure could increase to US$4.2 billion. In this type of trade, the item that generates the most income is fashion, with some US$900,000 million.

According to the Global Report 2022, “users of social networks grew by 277 million throughout 2022, reaching a total of 4.7 billion in July of last year. The global user base of social networks has increased more than 5% in the last twelve months, and currently represents 59% of the total world population.

As can be derived, social networks have already become an instrument for doing business, one more market than those that inhabit the world economy. In fact, a significant percentage of small and medium-sized companies have turned to social networks, mainly Instagram, using it as a platform to promote their products and business advertising.

Furthermore, new entrepreneurs are known and have expanded due to the existence of social networks. But also, and this is one of the dangers for the world economy and, in particular, for the Dominican economy, is that many of the businesses that operate through social networks are informal, do not pay taxes and are not registered with the social security, with all that this implies for the owners and their workers. And the worst thing is that there is no way for you to identify them, since they can be anywhere in the world and sell from anywhere on the globe.


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