PESTEL analysis of the social media industry

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PESTEL analysis of the social media industry

This is a detailed PESTEL analysis of the social media industry. It aims to examine several important factors that impact on this industry in a number of countries, particularly the USA, the UK, the EU, China, and India. Social media come in many forms from traditional blogs to modern day social networking sites. However, the main focus of this article will be on the social networking sites.

Political factors that impact on the social media industry

Political environment often influences and is influenced by social media. For instance, some of the top social networking sites are banned in countries such as China and North Korea. On the contrary, they are free to operate virtually in the rest of the world without any or little political influence.

Social media have been used for political purposes globally. Political parties use them in election campaigns and other political activities. Viral videos, ads, and other digital campaigns have been proven efficient in many instances to sway people’s views and opinions. People can also openly express their views, joys, and frustrations without going to the traditional press.

However, some social networking sites have been accused of not controlling the spread of fake news serving vicious political purposes in their platforms. Therefore, the social networking sites need to do more to ensure their bases are not for political hatred and bigotry.

Economic factors that impact on the social media industry

Many people work in the social media industry thereby addressing their economic needs. Similarly, many people run different types of business on them as well. Therefore, it can be argued that social media have empowered people and boosted the global economy.

Personal use of social media is usually free, and therefore, subscription is high as well. This helps networking platforms grow fairly quickly. However, businesses need to pay to run their advertising campaigns. In fact, advertising is the main source of income for many social networking sites. However, some sites may restrict some features and offer to paid and premium users only.

Whether the economy is in turmoil or not does not much impact on the personal use of social media. In fact, the more time people have due to economic inactivity, the more time they may spend on the Internet. However, economic turmoil forces organisations to reduce their digital marketing budgets, hence reduced income for social media companies.

Social factors that impact on the social media industry

Exploring social factors is the next stage in the PESTEL analysis of the social media industry. Use of social media is increasing everyday globally. By 2023, the number of active monthly users will be around 3.43 billion (Tankovska, 2021). Interestingly, around 800 million of those users will come from China and 450 million from India.

Sharing is caring! No wonder why many people around the world would like to share things with others. No doubt that sharing has been made easy by social media. Similarly, connecting with new friends has been made easy as well.

However, privacy issues, fake news, and sponsored posts are some of the concerns that many users raise. Similarly, spending too much time on social media may cause users experiencing cyberbullying, and anxiety.

Technological factors that impact on the social media industry

Technology is key in social media development. Consumers always look for something better and new. Their demands are the driving force behind new technological trends.  Therefore, social media companies are in constant pursuit of innovation and development. No wonder, why Facebook took over WhatsApp!

Social messaging, gaming, and videos are becoming increasingly popular. Many social networking sites have already incorporated these in their systems. Likewise, they also sometimes impact on which software programs get developed in the first place.

Environmental factors that impact on the social media industry

How do social media impact on the environment? Well, to get an answer to the question, two things need to be considered i.e. manufacturing and background infrastructure. Computers, smartphones, laptops, and tablets are some of the devices to get access to social media. Similarly, infrastructure such as data centres and the Internet routers are also necessary. Certainly, all these affect the planet.

Legal factors that impact on the social media industry

Social networking sites contain a lot of personal information of their users. Therefore, they must follow certain rules and regulations. For instance, GDPR (General Data Protection Regulation) is an EU regulation for strengthening data protection which social media companies and others must follow.

In the USA, the Section 230 protects the owner/s of any ‘interactive computer service’ from liability for anything posted on their platforms by third parties. The online safety bill was introduced to the UK parliament recently with a view to giving Ofcom the power to penalize social networking sites if they fail to remove ‘lawful but harmful’ content (Herm, 2021). Many campaigners have welcomed it; however, some have seen it as a tool to stifle free speech.

We hope the article ‘PESTEL analysis of the social media industry’ has been helpful. You may also like reading PESTEL analysis of the UK. Other relevant articles for you are:

SWOT analysis of the USA’s Information Technology (IT) industry

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Last update: 20 May 2021

References:

Hern, A. (2021) Online safety bill ‘a recipe for censorship’, say campaigners, available at: https://www.theguardian.com/media/2021/may/12/uk-to-require-social-media-to-protect-democratically-important-content (accessed 18 May 2021)

Tankovska, H. (2021) Social media – Statistics & Facts, available at: https://www.statista.com/topics/1164/social-networks/#dossierSummary (accessed 18 May 2021)

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.