Do Social Media Sites Have The Right Incentives?

What Are the Incentives for Social Media Sites?

Simply put, a social media company’s value is the number of monthly active users and the value (actual or estimated) per user.

We can also use standard company valuations like market cap and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Social media users doom scrolling on their phones while waiting for the train
Social media users doomscrolling on their phones. Photo by ROBIN WORRALL on Unsplash.

Nevertheless, more users translate to a higher value. So, the incentive is clearly to attract more users and encourage activities like comments, likes, follows, and shares as users interact with the site content.

Search engine algorithms favor sites with high engagement.

Sometimes people register multiple accounts to create unique personas with tools like Metrow. But, that’s not the same as scammers making thousands of fake users that will only use the platform to send artificial followers to social media accounts.

There’s always the temptation to inflate your followers and likes with services that send bots of fake users to your social media account.

Artificial users are a dangerous element of social media as they have been used to manipulate public opinion and behavior. We have seen interference in political elections worldwide and, more recently, incitement to protest and use violence.

Reputable companies have noted this and banned what they perceive as fake accounts, but this is often only after a controversy forces them to take action.

It’s challenging to solve as overzealous banning of accounts can irritate legitimate users whose data may be lost forever. More work needs to be done to differentiate between fake and legitimate users, and these techniques require continual refinement.

For now, users need a way to manage multiple social media accounts without being blocked, as there’s often a requirement to maintain separate accounts for various personas. Use a tool like for managing numerous social media accounts.

Incentives for Marketers Using Social Media Sites

Businesses find social media advertising relatively inexpensive. Social media presents a captive audience that is easy to profile with built-in and third-party tools.

Marketers love this, but there remains the problem of incentivizing those targeted users to share content so that the marketers get maximum exposure.

They can overcome this in many ways, the easiest and least likely to break the rules being points in a rewards program.

Social media sites are accessible from mobile devices and desktops, allowing people to use them nearly anywhere and at any time.

Marketers harness the power of social media to increase brand awareness and engagement, drive website traffic and sales, and even serve as a customer support channel.

Profiling and Data Privacy

Users create profiles with their preferred language, current location, interests, age, and other personal information such as marital status, gender/sex, and income group.

Unfortunately, sharing this sensitive information can lead to privacy leaks. Alarmingly, burglars and other criminals can use the data to profile and locate new victims.

It is easy to do, and several tools exist to make it even easier. Klout, Kred, Followerwonk, and Keyhole are a few examples. There is generally a different tool for each social media platform.

Profiling raises privacy concerns, as users are not always aware they’ve disclosed any compromising details. Data breaches are not confined to hacking incidents — they can occur when bad actors abuse these profiling tools.

For those reasons, it would make sense to include some measure of privacy and security in the valuation of social media sites. It should be in addition to any requirement to comply with data privacy regulations. Social networks should educate their users on data privacy issues and how to use their websites safely.

Incentives For Regular Users Of Social Media Sites

Social media sites and the marketers who use them could offer users incentives to engage with the platform by providing discount coupons or entries into prize draws.

However, sharing great content is their best strategy.

Unethical Use Of Social Media Sites

Unfortunately, as new technologies gain popularity, this creates opportunities for unethical use.

It’s a constant battle to prevent bad people from gaming the system.


While incentivizing social media sites by the number of active users is not inherently wrong, it doesn’t go far enough and isn’t very selective.

Such measures should include the number of connections per user, the frequency of communication (engagement), and how well the site protects users’ data.

Another measure could be the quality of educational material they provide for user safety. Social media sites with privacy-conscious users should be more valuable than not.

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