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Organic reach and the choice of social media platform

(This is work in progress.)

Introduction

It is a well-established fact that the organic reach in a dominant platform decreases over time, as the competition over users’ attention increases. There is thus an inverse relation:

The more competition (by users and firms) in a user’s news feed, the less organic visibility for a firm.

The problem

How would a firm willing to engage in a social media activity approach this matter?

In particular,

  • how should it divide its time and marketing efforts between alternative platforms?
  • when does it make sense for it to diversify?

The analysis

The formula behind the decision is u * o, in which

u = fan base
o = organic reach

  • all else equal, the larger the organic reach, the better
  • all else equal, the larger the fan base, the better

But, even in a drastically smaller platform a large o can offset the relative fan base advantage.

For example, consider a firm has presence in two platforms.

platform A
500M users, 5,000 fans

platform B
10,000 users, 100 fans

By first look, it would make sense to invest time and effort in platform A, given that both the overall user base as well as the fan base are significantly larger. However, now consider the inclusion of factor o.

platform A
500M users, 5,000 fans
organic reach 1% = 50 users

platform B
10,000 users, 100 fans
organic reach 90% = 90 users

It now makes sense to shift its social media activities to platform B, as it gives better return on investment in terms of gained reach.

(it is assumed here that post-click actions are directly proportional to the amount of website traffic, and thus do not interfere in the return calculation).

Conclusion

More generally,

as organic reach decreases in platform A, platform B with relatively better organic visibility becomes more feasible

Implications

Firms are advised to consider their social media investments in the light of organic reach, and not be fooled by vanity metrics such as the total user base of a platform. Relative metrics, such as share of organic visibility matter more.

Entrant platforms can encourage switching behavior by promising firms larger degree of organic reach. At early stages this does not compromise utility of the users, as their news feeds are not yet cluttered. However, as the entrant platform matures and gains popularity, it will have an incentive of decreasing organic reach.

This effect may partially explain why a dominant platform position is never secure; entrants can promise better reach for both friends’ and firms’ posts, thereby giving more feedback on initial posts and a better user experience which may increase multi-homing behavior and even deserting dominant platforms, as multi-homing behavior has its cost in time and effort.

I’m into digital marketing, startups, platforms. Download my dissertation on startup dilemmas: http://goo.gl/QRc11f

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