Social networking websites have exceeded the imagination of every venture capitalist. Although they were the ones who initially funded websites like Facebook and Twitter, most venture capitalists could not have dreamed of the immense popularity that these websites would gain across the world.
All companies have to deal with operational cost. Without constant financial support, Twitter would have ended years ago. However, some capitalists believed in Twitter’s business plan and decided to stick with the company.Everybody knows what happened next – the company’s story is pretty similar to that of Facebook.
Even so, people wonder how these websites make money now. With Facebook stepping onto Wall Street, they obviously have to look after their shareholders too.
Direct Advertising :
This is absolutely a no-brainer. Social networking sites design some really clever ideas to help market products, services, businesses and individuals. This is exactly like marketing on television or radio.
How do you think TV channels earn money? They charge a certain amount for allocated time slots. On social networking websites, you receive a space for a limited amount of time. It is simply a give and take relationship.
These websites need money to operate, manage, develop and research to make their services and experience better.
Premium Options :
Adding the ‘premium’ tag is a common practice in the service industry, and social networking websites like LinkedIn and Google+ have used it wisely. They offer you the option to upgrade your account which will then allow you to market your product with premium services that are not available with the basic account.
There are different levels of services with the top level being the most functional. It offers you tools to optimize marketing techniques and reach your target audience. Added options such as profile visit details, demographic segmentation and unlimited contact options are made available to individuals and businesses.
Believe it or not, there are reports that companies like Facebook are trading your data for money. The question here is who would buy your data? Well, large corporate fishes actually need data to contact different businesses and individuals.
For example, if you own a business page on Facebook for a hair styling salon, L’Oreal or Schwarzkopf will readily pay for your data. They can contact you to sell salon products or they can optimize their ads to increase visibility.
Although Facebook maintains that their co-operation with data mining companies is just to improve the advertising experience, experts suspect otherwise.
E-commerce and Affiliate Marketing
Selling products and services also earn a large amount of money for social networking websites. For instance, if a link on a certain social networking site leads directly to a purchase, the company will have to pay a certain amount to the social networking website that helped them make a sale.
It is quite different from advertising, but just imagine the profit you could make from aiding just 1000 sales of a product in one day. Now think of the thousands of products sold all over the world. E-commerce is therefore a huge source of revenue for social networking sites.
As mentioned, social media marketing and advertising help social networking websites profit financially. There are also many other ways by which these websites can earn money. One of these unique ways is social gaming.
We have all heard about games like Angry Birds, Farmville, Sims, Cafeville, Poker and so on. Although these games are usually free to play, you also have the option to purchase credits. These credits give gamers special features, power ups etc.
Additionally, users who use astrology, shopping and job apps can purchase and then access premium features. Social networking websites receive a certain amount of capital from these sources too.
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