Social Media's Grand Entrance
Anyone logging on in the early days of the World Wide Web would have been disappointed if they expected a social experience. Aside from primitive chat apps and early multiplayer games, pleasurable interactions with others were few and far between. One could maneuver a polygonal avatar around a barren digital landscape for hours at 56 kbps without bumping into another soul.
How the world has changed. Mobile broadband was the catalyst that enabled the internet to fulfill its potential as a truly global network. Social media networks exploded onto the scene in the early 2000s, and 80% of Americans used them by 2017.1 Market penetration plateaued in the U.S., but every social network now has a vastly bigger stage on which to shine. More than half of the world’s population (approximately 4 billion people) now uses social media, and almost all of them (99%) access social platforms via mobile devices.2 There are now more than 14 billion mobile devices worldwide, twice the number as five years ago, assuring plenty of growth left in the social media space.
With Facebook ranking among the world’s most valuable companies, it is hardly a secret that social media is big business, but the numbers are still staggering. Already approaching $100 billion in 2020, global ad spending on social platforms is expected to grow strongly for the foreseeable future.3 In all likelihood, this vastly underestimates the size of the industry because it focuses on a relatively narrow definition. Many online games (comprising a massive industry themselves) are also social networks in disguise. Fortnite is played by 350 million people.4 Minecraft is played each month by 126 million people.5 There are 2 million people viewing Twitch at any given moment.6
Having been active for a decade, Twitter was already well established by the time we first addressed the concept of Twitterization in 2016’s The Upside of Disruption: Why the Future of Asset Management Depends On Innovation. We commented at the time on Twitter’s impact by noting that it had already “fomented political uprisings, broken national news, moved elections, aided diplomacy, fueled consumer movements, lifted brands, facilitated disaster response, and propelled careers.”7 On average, Twitter users generated some 350,000 tweets per minute on every topic under the sun.
It may surprise some to learn that Twitter has not grown at all since then. Even as social networks continue to proliferate in a dazzling array of formats, we are still seeing the same number of tweets— 350,000 per minute, or 200 billion per year.8
Based on metrics alone, Twitter may not be the obvious proxy for all social media circa 2020. Not that it is failing: The number of active users may be slipping, but that’s in part because people don’t need to be logged in to read tweets. Visitor traffic continues to increase.9 It is also clear that there is plenty of life left in the microblogging medium: China’s Sina Weibo now has more than 500 million users.10 Most importantly, Twitter itself has become inescapable, thanks in part to certain political leaders who favor communicating 280 characters at a time.
Upstarts like TikTok may have eclipsed it in popularity, but there is no denying the fact that Twitter now plays a pivotal role in facilitating global discourse. There is no shortage of playful memes, but Twitter exemplifies social media’s more serious function as the world’s largest venue for the battle of ideas, where opposing points of view clash in full view of millions.11
Everyone is welcome to this arena, but some have a head start. President Donald Trump can boast of more than 84 million followers. Besting even the likes of Justin Bieber and Rihanna, his less garrulous predecessor, Barack Obama, takes the top spot with 121 million followers.12 Outside of a few celebrities, few boast anything like these numbers. The bottom 90% of tweeters has a median of 19 followers.13
For rank amateurs and the already famous alike, social media metrics are the new gauge of success. No one exemplifies this better than the much-envied influencers, whose raison d’être is accumulating and monetizing followers. Just another word when we first wrote about Twitterization, “influencer” is now a heavily searched term on Google. The power of pictures mean glamorous Instagram influencers attract much of the attention, but influencers command advertising dollars even on more buttoned-down platforms such as LinkedIn.14 Even Twitter offers uniquely attractive characteristics to marketers: Twitter users spend 26% more time viewing ads than users on other platforms, and 90% of people on Twitter read the copy, which is higher than any other social platform.15
Influencers are sometimes critiqued as superficial opportunists, but they represent a significant development in the evolution of these parallel online worlds. They are the perfect embodiment of the tensions at the heart of social media. Their ability to monetize exposure highlights the power of information networks, even as their carefully curated images and polished insights may veer uncomfortably close to misinformation.
As Americans navigate their way through a deadly pandemic and shifting political landscape, post-the bitter 2020 Presidential election, social media’s significance is being amplified. Its impact is unquestionable, but widespread enthusiasm is being joined by hesitation and even revulsion as concerns multiply.
At their best, social platforms are like clubs or pubs: Places to brag, joke, gossip, or discuss pressing issues in the best Socratic tradition. Most reasonable people would agree that such discourse is enjoyable and useful, but bite-sized nuggets of thought can leave a lot unsaid. Long-form journalism and editorializing hasn’t gone away (and may even be enjoying a renaissance), but the global conversation is increasingly dominated by Twitter. Many (if not most) news stories reference tweets as a matter of course, using them as primary sources or supplemental commentary.
Reliance on social media as a news source is a dubious proposition. The ability to disseminate information instantaneously is revolutionary and incredibly helpful in certain situations, but it is also prone to misuse. Whatever their motivation, there is little standing in the way of someone wishing to spread lies or half-truths. The lack of any editorial oversight or journalistic ethics essentially means anyone can say anything. Even information from reputable sources can be subtly spun away from its original meaning in the span of a single retweet. Making matters worse, this state of affairs may be self-perpetuating. Pew Research found that people relying on social media as their primary source of news are “less engaged and less knowledgeable” about world events like COVID-19 and the 2020 U.S. Presidential election.16
Social media giants such as Facebook and Twitter have started to act more forcefully against misleading claims and hate speech, deleting posts and suspending accounts for violating terms of service. While intended to make their platforms more genial and less harmful, actions that pit free speech against concern for the greater good are inevitably contentious. This is doubly true in a bitter election cycle where even the president of the United States and his advisors have had their tweets deleted, sparking cries of favoritism.
None of this takes away from the basic fact that individuals have been awarded the almost magical ability to broadcast their opinions far and wide. Everyone has the potential to be as loud as anyone else. This is revolutionary and, in some ways, wonderful, but it also has the side effect of devaluing or even demonizing expertise. Having sifted through a flood of information online for appealing ideas, it is not difficult to feel informed—oblivious to small sample sizes and bias. This dynamic presents a potential minefield to financial firms, whose very existence hinges on the credibility of their expertise.
It is nice to think that the free exchange of ideas would result in the cream rising to the top, but recent experience has illustrated how unlikely this is in a world full of bad actors. Greater privacy might tamp down the viral spread of questionable information to some extent. Mark Zuckerberg declared in 2019 that “the future is private.”17 Setting aside Facebook’s inconsistent reputation for privacy in the past, it is fair to say that he is onto something in pointing out that online social interactions will almost certainly be more cloistered going forward. We are already seeing more evidence of this on apps like Instagram, where one now needs to log in to view other users’ posts.
In all likelihood, individuals and corporations alike will need to adapt to navigating a social media landscape full of walls erected by users, regulators, and platforms alike. It may make it more challenging to reach audiences en masse, but this new reality could also enable more targeted connections, resulting in deeper levels of engagement.
The growing emphasis on privacy could aggravate the phenomena of echo chambers, or environments where people only encounter “opinions and beliefs similar to their own, and (do) not have to consider alternatives.”18 It is natural for many people to seek the company of others with whom they share common ground, but the tendency to exclude outsiders can be exacerbated by technology.
Eli Pariser, author, activist, and entrepreneur working to democratize technology and media, used the term “filter bubble” to describe “a state of intellectual isolation that allegedly can result from personalized searches when a website algorithm selectively guesses what information a user would like to see based on information about the user, such as location, past click-behavior and search history. As a result, users become separated from information that disagrees with their viewpoints, effectively isolating them in their own cultural or ideological bubbles. The choices made by these algorithms are not transparent.”19
This high-tech balkanization gets a lot of attention for complicating politics and potentially undermining elections, but it is also infecting other aspects of daily life. Friendships and familial relationships are now fraught, and expressing controversial opinions in any professional setting can be perilous. Bill Gates lamented that social media “lets you go off with like-minded people, so you’re not mixing and sharing and understanding other points of view... It’s turned out to be more of a problem than I, or many others, would have expected.”20 Navigating such a polarized environment as a business is not straightforward, as it becomes increasingly difficult to establish a clear identity in an environment where opinions are easy to offer but potentially dangerous.
CENSORSHIP AND SHAMING
Social media platforms find themselves under growing pressure to make difficult choices. Even as they take steps to rein in certain types of behavior, ultimately they may not be too concerned about policing the border of freedom and hate. This is in part because their users seem to be as good at shutting down discussion as initiating it. When sufficient momentum is established, online shaming can take on a life of its own, with individuals as well as corporate entities boycotted for expressing opinions that some find disagreeable. The mere threat of adverse reactions has a chilling effect on those sincerely interested in dialogue. It has gone far beyond a phenomenon primarily concerning celebrities who are afraid that an errant tweet might torpedo their star power. Bad online reviews of commercial establishments are a powerful weapon that unhappy consumers are only too happy to wield as individuals or groups.
What is sometimes derided as “cancel culture” is unlikely to completely stifle online debate, but it may contribute to social media’s transformation. As unfiltered opinions are shifted to increasingly obscure corners of the internet, we may need to get used to social networks acting unapologetically as popularity contests rather than clearinghouses of sometimes radical ideas and opinions. The freedom to say whatever you want is empowering, but that power doesn’t always accrue to the most deserving. This isn’t a judgment so much as a statement of fact. Any company wishing to effectively leverage social media needs to tread carefully and accept the fact that building a strong and trustworthy presence requires dedication, authenticity, and savvy— tempered with a healthy dose of caution.Read the next section
The Investment Manager Services division is an internal business unit of SEI Investments Company. This information is provided for education purposes only and is not intended to provide legal or investment advice. SEI does not claim responsibility for the accuracy or reliability of the data provided. Information provided by SEI Global Services, Inc.