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Author: Julia Alberts
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How do social networks make money?

As the name indicates that the primary purpose of social networking is online socializing with people i.e. friends, family, school or business colleagues.

But when there are corporate companies, millions of people and marketing involved, there will always be imaginative people trying to figure out ways how to lay their hands on few extra doughs out of it.

In what way do social networks actually make money?

Many believe the answer is advertising. For example, movie 'Tropic Thunder' was advertised on social networking sites directly for the people who said they were fans of Ben Stiller, Dodgeball and Jack black.

Techlightenments' head of media, Richard Ireland who was in charge of this campaign says that social networks are adapting to this new technique of reaching a target audience.

Mostly, social networking companies get money from other companies which spports and sponsors them. A quite unknown 80-person social networking startup KickApps has created more than 20000 'mini-Facebooks' social sites. Spark Capital and Prism VentureWorks have backed this company in its beginning with 18 million dollars.

"We have 35 programmers working in this office," says Blum, CEO of this company, "and we only have two marketing people. We don't really have to sell our product".

Another company similar to KickApps is Ning, founded in the year 2004 by Marc Andreessen and Gina Bianchini. Variety of firms backed it up with $104 million.

"We've got 267,787 sites," said Gina, the founder of the company, "And we're adding 1,500 to 2,000 a day." The Ning domain has 3 million unique visitors a month.

Ning also recommends ways of making money through their site by running down your own advertisements (which they charge $19.95/month), charging membership fees, selling your products or selling direct advertising.

A social networking site might be very popular abroad, but not so much in the United States, Bebo, notes over 22 million visitors a month. It was sold to AOL for $850 million. But all of these sites are small players once compared to Facebook, Myspace and Twitter.

Facebook is the world's largest social network which was established in the year 2004 by Mark Zuckerberg, a former Harvard student. In its beginning, Facebook's main purpose was communication between Harvard students.

Today, this website has more than 500 million unique active users, and more than 14 million new photos are added every day.

Every 60 seconds on Facebook, users send 230,000 messages, update 95,000 statuses, write 80,000 wall posts, tag 65,000 photos and share 50,000 links.

Free to register and free to use, Facebook revenues reached $500 million in year 2009.

Where did that money came from? A part, $250-$300 million came from self- service advertisements that appear on the right side of the site.

Ads which seek user interaction brought about $100 million. Also, a big source of income is Facebook gifts.

It's an option of saying 'happy birthday' by sending a virtual gift –paid for online. Most of the money almost always goes to the company. Application performance also brings about the same as of Facebook gifts.

Considering Facebook is the main topic when talking about social networking, in the recent past when Myspace calmed down with its popularity, nobody seemed to talk about how much money does Myspace make and does it make any at all.

The answer is pretty much the same as for Facebook -advertising. Myspace reached the peak of its popularity in June 2006, and was overtaken in year 2008 by Facebook. Still, its estimated 2009 revenue was $385 million dollars.

This was all about these big social sites making money, but there are allegedly a lot of jobs offering money to some for social networking. For instance, there are applications which works by the system of eBay and other sell & buy sites.

When you list an item on this application, it is immediately visible for all Facebook users who have that application installed.

Creating a Facebook page is also for the purpose of advertising and selling. They spread quickly and carry the message you want to share with rest of the world.

When it comes to sales, a lot of famous companies sell their products through Facebook- and why not? Some clothing companies have more visited pages on Facebook than their official sites.

So they boost their sales by making an official 'Facebook Like' Page, uploading photos of new collections and send notifications about new offers and sales.

This can be a good example for ordinary people too. You can sell your possessions like clothes, shoes or jewelry on Facebook and maybe even become famous with your page.

In conclusion, social networking is full of opportunities for making online money but often only as an intermediary to your own company that you can advertise on these sites.

There is a lot of money for creators, programmers, but not much for ordinary users and with the expansion of these sites, maybe the main employment industry in a few years will be social networking.


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