M RahmanPESTEL 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 focus of this article is on the social networking sites.
Social media platforms have become powerful tools that facilitate communication, collaboration, and content sharing among users. They have also become important tools for businesses, governments, and non-profit organisations to engage with their target audience, promote their products or services, and build their brand.
Political factors explored in PESTEL analysis of 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.
In some cases, governments may block or ban certain social media platforms altogether, as seen in some countries where popular platforms such as Facebook and Twitter are not accessible.
Maheshwari and Holpuch (2023) report that lawmakers in some countries/regions such as the USA, Canada, and Europe have intensified efforts to restrict access to TikTok which is owned by the Chinese company ByteDance. They have cited security threats behind their decisions.
On the other hand, some governments may actively promote the use of social media in general, recognising its potential as a tool for economic growth, innovation, and social development. This is in fact seen in most of the countries around the world.
Economic factors explored in PESTEL analysis of 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.
The USA is the global market leader for social media advertising expenditure, with a total of around $56.68 billion US dollars followed by China and the UK, with $45.1 billion and $8.2 billion dollars, respectively (Dixon, 2022).
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 explored in PESTEL analysis of 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. Several social factors are playing a big role in this.
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.
Demographic factors play a significant role in shaping social media usage patterns and preferences. Age, gender, education, and income levels all contribute to the way people engage with social media platforms and the types of content they consume.
Younger generations, such as millennials and Generation Z, have grown up with technology and are more likely to embrace new platforms and features. They also tend to be more active on social media, using it for a variety of purposes, including entertainment, communication, and self-expression.
On the other hand, older generations may be less inclined to adopt new platforms and may have more limited use of social media, primarily focusing on communication and staying connected with friends and family.
Language barriers can be a significant factor in determining social media adoption, as users may prefer platforms that cater to their native language and offer localized content. This has led to the rise of regional social media platforms, such as WeChat in China and VKontakte in Russia, which cater specifically to the needs of their local audience.
However, privacy issues, fake news, and sponsored posts are some of the concerns that many users of social media raise frequently. Similarly, spending too much time on social media may cause users experiencing cyberbullying, and anxiety.
Barr (2022) has identified six different ways social media impact on users negatively. These are self-esteem, memory, sleep, attention span, mental health, and human connection (feeling of being left out even with many followers!).
Technological factors explored in PESTEL analysis of 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.
Mobile technology has been a key driver of growth in the social media industry, as smartphones and tablets have become increasingly affordable and accessible, making it easier for users to access social media platforms anytime, anywhere.
This has led to a surge in mobile app development and the rise of mobile-first social media platforms, such as Instagram and Snapchat, which cater specifically to the needs and preferences of mobile users.
Data analytics has emerged as a crucial aspect of the social media industry, helping businesses understand user behavior, preferences, and trends. By analysing this data, they can make data-driven decisions and optimise their strategies to better serve their users and achieve their goals.
The increasing importance of data analytics has also led to the rise of social media analytics tools and services, which offer valuable insights and help businesses make the most of their social media presence.
Environmental factors explored in PESTEL analysis of 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 explored in PESTEL analysis of 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.
Summary of PESTEL analysis of the social media industry
The global social media industry is highly competitive, with a myriad of platforms and applications vying for users’ attention and loyalty. As a result, understanding the factors that affect the industry is critical for stakeholders to make informed decisions and develop effective strategies.
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
Porter’s five forces analysis of the UK supermarket industry
Last update: 21 May 2023
References:
Barr, S. (2022) Six ways social media negatively impact on your health, https://www.independent.co.uk/life-style/health-and-families/social-media-mental-health-anxiety-b1996486.html (accessed 20 May 2023)
Dixon, S. (2022) Social media – Statistics & Facts, available at: https://www.statista.com/topics/1164/social-networks/#dossierSummary (accessed 21 May 2023)
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 2023)
Maheshwari, S. and Holpuch, A. (2023) Why Countries Are Trying to Ban TikTok, available at: https://www.nytimes.com/article/tiktok-ban.html (accessed 21 May 2023)
Author: M Rahman
M Rahman writes extensively online and offline 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.
