Why successful acquisition of social media platforms requires celebrity engagement

11 Jul 2019 | Technology
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* Facebook CEO Mark Zuckerberg at F8 conference

There's a growth in the number of marketing agencies that exclusively focus on connecting celebrities to their audiences. Social media helps celebrities utilise their fame to build their brand and the image they’d like everyone to see. Facebook, Twitter, YouTube and Instagram all have their celebrity users, and tech investors are continuously looking out for the next social platform to monetise. But which have proven the most successful acquisitions and why?

The chances are you are already following a celebrity

If you or your business has a Twitter account, the chances are fairly high that you’ll be following at least one celebrity. The more social accounts you have, the greater the chance of following someone famous. For instance, Justin Bieber, Barack Obama and Katy Perry all have more than 100 million followers, and Kylie Jenner had over 2 billion social media actions in 2018.

Tech companies know the value of celebrity endorsement, including the effect of social media influencers too. Many influencers have huge followings but are not as widely known as celebrities, like Huda Kattan, a makeup artist that found fame on Instagram with over 29 million people following her beauty tutorials.

Celebrities influencing the market

The number of social media influencer platforms have increased from 190 to over 700 in the last five years with a market size valued at $6.5 billion. New tech and apps are at the heart of this and so are the big tech companies.

Through using these apps, celebrities indirectly endorse each respective platform. Celebrity influence in this respect should certainly not be disregarded as it can seriously boost or damage a company's performance. For example, when Kylie Jenner commented on the lack of Snapchat users last February, this directly affected stock prices, which resulted in a $1.5 billion loss in value for Snap.

While this effect can clearly devastate the development of tech companies, it also has wider implications in business: chiefly, for tech acquisitions. If a company's value drops or rises significantly with the waxing and waning of celebrity influence, this can affect the decisions of larger companies like Facebook and Google who are looking to acquire entry points into new markets.

The success of tech acquisitions of such social media platforms relies largely on the number of people using them, so attracting and cultivating celebrity engagement can make all the difference. These tech acquisitions and the tech finance market as a whole have become niche areas for traders to follow, with the best CFD provider platforms offering markets in tech and social media companies. It's an active environment too; since 1991, the world's top 10 tech companies have spent over $410 billion in acquisitions, so following and investing in these developments has become an industry in its own right. >>

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* Source: IG [https://www.ig.com/uk/cfd-trading/research/acquisitive-tech]

Successful social platforms mean the right mix of celebrity and user engagement

In 2018, the four big online tech entities of Facebook, Google, Apple and Amazon earned a combined gross profit of over $300 billion. They have a lot of potential funding to make or break new social media. In terms of celebrity engagement, however, the biggest mover has been Instagram. Facebook bought Instagram for just $1 billionin 2012, just two years after its release. The social reach has far outperformed its expectations; over 4.2 billion posts are liked every day, and Cristiano Ronaldo alone has over 157 million followers.

Also purchased in 2014, but for a lot less, was Amazon's acquisition of Twitch for just $970 million. It has perhaps an even greater potential for growth. The live streaming tech company has the fastest rate of adopters of any social or streaming service. Gaming is by far the biggest contributor of content, and it has helped some gamers reach huge followings of over one million. The platform also includes celebrity gamers like Snoop Dogg, Felicia Day, T Pain, Deadmou5 and Drake.

The purchasing power of big tech companies is hugely influential in aiding social media platforms to grow and develop. Sometimes their purchases don’t work out as users prefer to adopt other social and tech platforms. However, while Instagram leads the way for allowing celebrity endorsements, it is no surprise to see the number of film, music and sports personalities using the Twitch live stream platform to generate views and audience numbers. The Twitch platform continues to grow faster than any other social service, streaming more content every day. Its popularity may prove to be the smartest acquisition made by any of the big four tech companies.