Bolder Thinking Blog

Is the future of social media, audio? Clubhouse thinks so

February 24th, 2021 | Jeannette Ornelas

Clubhouse, an invite-only audio chat app, launched in April 2020. In May 2020, it was valued at nearly $100 million. On January 21, 2021, the valuation reached $1 billion. From Berlin to Delhi, people are hosting live conversations that sound like a mix somewhere between a Zoom webinar, a live podcast, and happy hour gossip. 

Despite still being in beta, the app has already drawn in millions of users, including some famous names. There were over 2.5M online mentions of @joinclubhouse this month alone, per Mintel analysis of Infegy data. 

But what exactly is driving the app’s momentum and more importantly, is it sustainable? Can Clubhouse ride this wave of opportunity and create lasting value? While we could speculate on the app’s “success,” from a market perspective it’s more valuable to instead understand Clubhouse’s go-to-market strategy.   

The exclusivity effect 

Consider the evolution of Facebook, in its early years, admittance was privy to those with an ivy league education. By staying exclusive at first, it generated demand among tier-two schools who wanted Facebook on their campuses. For consumers, having a .edu email address was the barrier to entry. Today, 60% of US adult internet users use Facebook at least daily, per Mintel’s Social Media Tracker. 

Clubhouse is not only invite-only, it’s currently iOS only. From a market perspective, this makes sense; half of US smartphone owners have an Apple iPhone, according to Mintel research on smartphones. Apple’s ownership stake can also be seen in what devices marketers are most likely to advertise on. TikTok, for instance, spent over $1.4M on Facebook advertising in the US in 2020 (per Mintel analysis of Pathmatics data), 90% of that spend was allocated to iOS devices, despite operating on Android as well. A recent employee tweet did reveal a team is working on bringing Clubhouse to Android users. 

Exclusivity drives a higher demand value – and Clubhouse is betting on it

A user vetting process 

Launched in 2009, Pinterest had 11 million visits during one week in December of 2011. How did it scale so fast? Largely word-of-mouth, but also an intentional sign-up process. To sign-up, users had to request an invitation to join. This allowed Pinterest to control its scale while simultaneously driving demand. On February 21, 2021, in a Clubhouse room, the company announced it hit 10 million weekly active users this week. As the pace of scale accelerates, there is a greater need for controlled release. 

Clubhouse’s invite-only sign-up process not only generates demand but also offers a system of checks and balances. Clubhouse membership relies on user referrals. Upon joining you’re immediately granted five invites and those invites can only be sent to contacts in your phone book. While many social media apps display the day you joined the app, what is unique on Clubhouse is that every user bio lists who that user was “nominated by.” This makes the referral process more personal but also more thoughtful. If your name is attached to every person you refer, you will likely think twice about who you “nominate.” 

The referral process serves as a user vetting process of sorts

The rise of social audio

Perhaps what most differentiates Clubhouse is its infrastructure, likened somewhere between an audio streaming app and a social media platform. Clubhouse users can participate in different rooms with a wide range of topics and these rooms are ephemeral in nature, in that they disappear once the chat has finished, recordings are strictly prohibited. In each room, you’ll find speakers, listeners, and moderators. But the moderator is the gatekeeper, the user who started the chat and has the power to grant moderator rights to anyone else. Moderators are also the only ones who can invite those who enter as listeners to become speakers in the chat. This raises the question of the optimal audience split in passive vs. engaged users. Clubhouse understands the importance of retaining users, but more importantly, retaining content creators. In December 2020 The New York Times reported Clubhouse launched an invite-only “Creator Pilot Program.” 

Most notably, you can listen while doing other things, especially appealing if you’re in a room as a listener rather than a speaker. Mintel research on streaming audio reports advertising spend on podcasts is expected to eclipse $1 billion in 2021, and audiobook sales already exceeded $1 billion in 2020. There’s a strong contingent of audio streamers who are willing to listen to podcasts and audiobooks across different activities. From an “attention” standpoint, this means a user could listen to a Clubhouse chat while scrolling through their Twitter feed, or any app for that matter. Streaming audio is an increasingly popular format for consumers, and marketers are taking notice.

Just as Twitter and Instagram opened the door to connect with the most famous and influential users, Clubhouse offers that elusive “unfiltered access” 

An industry inflection point

Ultimately, the evolution of social media can be measured by a series of inflection points. Right now there are various factors at play. For one, it’s important to take into account how prolonged social distancing and quarantine orders impacted preferred modes of connection and communication. According to upcoming Mintel research on social media, 36% of US adults say they use social media more than they did a year ago. Clubhouse is poised to take a share of that increased attention and usage. 

Another critical factor is the rise of misinformation and hate speech. Mintel’s social media research shows 56% of US adults say social media companies censor users and 59% say it’s the platform’s responsibility to moderate content. The question of what role tech companies can and should play in creating a “safe” environment will continue to be top of mind. Clubhouse is not exempt from scrutiny, it has already been questioned for its ability to handle moderation in English, let alone other languages. The moderation war is extending beyond tech giants.

What is the opportunity for marketers? 

Given the volume, scale, and speed of social conversation, it’s already increasingly difficult for marketers to keep pace. Rather than determining whether an app (still in beta) may offer business value, marketers would be better served to view it as a source of social intelligence. There are thousands of conversations happening in real-time, in live-audio, all day, every day. That is a lot of qualitative insight into the psyche of potential target audiences. 

Ultimately, the question that should be top of mind for brands considering engaging on Clubhouse is “what value can I add?”.

Comperemedia’s 2021 Omnichannel Marketing Trend, ‘Fandom as Cultural Currency,’ predicts this will be an exciting year for creators and brands alike to experiment with newer platforms, further monetize their content, and use different tools to tell their stories. If the momentum behind Clubhouse is any indication, we’re likely to see plenty of content marketing innovation. 

Is the future of social media, audio? It may be a bit soon to say but there is a white space opportunity and we can expect to see innovation as tech companies race to own that space and Clubhouse won’t be the only player to watch. 

  • Twitter continues to evolve its audio social platform ‘Spaces’. Twitter Spaces is also in beta and initially rolling out to select iOS users only. The competitive edge for Twitter Spaces is its launching with a built-in Twitter audience.  
  • Mark Cuban announced he is co-founding Fireside, a “next-gen podcast platform” that facilitates live conversation, as reported by The Verge. In the race for monetization, Fireside is positioned as an app where creators will be able to broadcast, record, and monetize conversations while using Fireside’s built-in analytics tools to figure out what content performs best.
  • In June 2020, gaming chat app Discord announced a new slogan—“Your place to talk”—in an effort to make the service appear less gamer-centric. Discord spent $1.6M on digital advertising in Q4 2020, a 546% Q/Q increase (per Mintel analysis of Pathmatics data). Its marketing push seems to be working–Discord hit 140M monthly active users in December and raised another $100M in funding, as reported by VentureBeat.
Jeannette Ornelas

Jeannette Ornelas

Jeannette Ornelas is a Senior Digital Marketing Analyst for Comperemedia. Jeannette is responsible for producing syndicated and custom reports and providing marketing insights across a range of industry sectors and channels.