Are American Social Media Companies Too Reliant on Ad Revenue?

Americans are seeing more ads than ever on a daily basis and there are signs that consumers may be getting feed up with the constant bombardment. Data privacy concerns are at an all-time high and ad-blocker services are now more popular than ever. As Ryan Hodge, CEO of Hootsuite suggests, this could portend trouble for social media companies such as Facebook and Twitter whose revenues are fully dependent on ad placement receiving 98% and 85% of their revenues from ads respectively.

It is not hard to imagine a future where American social media firms become more reliable on a freemium model as they mature and focus less on growth. This model could offer users a chance to pay for a premium ad-free user experience, similar to what has been tried by YouTube Premium. Other possible monetization approaches include value-added VIP perks, increased on-site transactions or paid membership to belong to certain groups.

If social media companies augment their revenue streams and decrease their reliance on ad revenues in the future, this will pose trouble for the bourgeoning digital media industry.