Social media marketing is big business. According to statistics aggregator Statista, social media advertising revenue in 2018 is set to be US$67,971m and is expected to show an annual growth rate of 28.4% in the next four years.
As a result of this shift from more traditional forms of advertising, a new industry has grown as developers create innovative social media tools to help marketers grow followers, find and share content, schedule posts, measure and analyse the effectiveness of campaigns, and use insights to drive campaign improvements.
There is no doubt that social media management apps and tools can be lucrative. With a strong team of developers and industry knowledge, these apps can be built relatively quickly, popularity can expand rapidly and, due to their intangible nature (typically IP heavy businesses with few personnel and little or no fixed infrastructure), they are ripe acquisition targets. However, their success is often inextricably tied to social media platforms such as Facebook, Twitter, Instagram and Pinterest, which can lead to difficulties.
As a result of tying their applications to third-party platforms, developers of social media management tools expose the success of their products to the actions of those third-party platforms. If there is a problem with a tied platform then the app will suffer and, more concerning, the platform owner can block access to their APIs or modify their terms of use, effectively shutting down or crippling the tool after launch. By tying social media management apps to third-party platforms, developers can also face unexpected and costly redesigns, often at very short notice, in order to react to changes implemented by the third-party platforms.
A prime example of how changes to third-party platforms can impact social media management tools was seen earlier this year when Facebook, in the wake of the Cambridge Analytica scandal, removed the “Partner Categories” ad targeting options that relied on consumer data from third-party data providers such as Acxiom, Oracle Data Cloud and Experian. As well as having a significant impact on the third-party data providers (Acxiom’s share price fell by a third overnight following Facebook’s announcement), this move was particularly painful for social media management tools which track and optimise targeted Facebook advertising.
It isn’t just businesses relying on Facebook which have been impacted by dramatic API changes. Back in March, Instagram slashed the rate limit on its platform API from 5,000 calls per hour to 200 with no advance warning for developers. As a result of the lower rate limit, developers were able to pull far less data than they were prior to the change, forcing some to make tough choices about where to allocate their calls and resulting in the functionality of many sentiment-analysis tools being severely curtailed.
Another risk in tying an app to a third-party platform is that the app’s functionality may simply be co-opted by the platform owner for its own services. Launched in 2008, the StockTwits service used the Twitter API to enable investors and traders to search for details of listed companies using the “$” symbol (“cashtags”) and the company’s stock market ticker (e.g. $GOOG, $AAPL). This feature was then introduced by Twitter into its own platform (or “hijacked”, as StockTwits preferred to say) in July 2012.
Thankfully for StockTwits, its brand was sufficiently established that it was able to survive Twitter’s copying and it has subsequently created its own technology platform independent from Twitter (although still heavily linked) and has gone on to become the largest social network for investors and traders, with over one million registered community members and millions of monthly visitors.
So what can developers and users of social media management tools do to protect their businesses and to mitigate the impact of any sudden API changes?
Advice for developers:
- Implement technology to proactively monitor APIs for changes in order to catch errors arising from unexpected API behaviour.
- Although unexpected changes can occur, the major social media platforms each publish roadmaps of upcoming API changes. Ensure that you have sight of these roadmaps so you can plan in advance for any changes.
- Factor error handling costs into your business plan and ensure that you have skilled developer resources on hand to immediately implement changes necessary to respond to API changes and keep your social media management tool operational.
- Keep abreast of changes to regulations and social attitudes which may impact the way social media platforms structure their operations in the future. Many of the recent changes to Facebook and Instagram have arisen as a result of the tightening of data protection rules by GDPR and increased public awareness of privacy and data sharing issues.
Advice for users of social media management tools:
- Review your contracts with providers of social media management tools and seek to include obligations on them to proactively monitor roadmaps and API functionality to enable them to respond swiftly to any changes.
- Seek to negotiate Service Level Agreements with tool providers giving you guaranteed response times and target fix times for correcting errors.
- Don’t place too many eggs in one API basket. Adopting a diversified approach with marketing spend spread across a range of social media platforms and managed via a selection of apps and management tools will help to mitigate the impact of any unexpected API changes.
With the market for social media management tools and apps only likely to grow, there are huge opportunities for both developers and users of such tools, but, it is important to be aware of the risks. Taking a step back at the outset and thinking through how your product works with other platforms may save you money and stress later!
Kathryn Rogers is a Partner at Cripps, with a particular focus on technology and IP related matters.
