Digital competition and user engagement: how do the user engagement strategies of social media platforms contribute to value creation?

Abstract

Competition among social media platforms underscores the need to find new sources of value and support differentiation strategies through service and features innovations. Traditional strategies, increasing switching costs, and generating value through versioning, have been standardized, and do not allow for differentiation among platforms. The backlash of penetration pricing and the artificial increase in switching costs for users are challenging established strategy tools. We have recently witnessed value generation from data of user interactions with the platform features, or from attracting user attention. These new sources of value build on user engagement with social media platforms. The emerging mechanisms generating value from user engagement intensify competition among social media platforms, and, at the same time, further differentiate platforms in the eyes of users. Each user engages with a variety of social media platforms, which is a strong indication that is used for different communication practices. This chapter describes how user engagement strategies contribute to competition among social media platforms by shaping new communications practices which offer new value creation opportunities.