Facebook, Twitter, and Digg are three of the most popular social networking websites on the internet. They also happen to be three of my favorite sites as they probably are for many of you as well. These now giant social networks have had millions of dollars poured into each of them by hungry investors who expect to make a large chunk of change back to say the least. This got me thinking the other day on my way home from work, and I found myself asking how do sites like Facebook, Twitter, and Digg make money online? After some research over the next few days I was able to find some interesting results that any internet entrepreneur might find useful!
Source of Profits: Virtual Goods & Advertising
Facebook has become an global sensation to say the least with billions in investments and over 300 million users as of 2009. The question of course is how does Facebook make money online, and how they plan to continue to make money in the future. After doing some research I was able to find the following answers to that question:
- Private Advertising – Facebook offers advertising space on it’s website at a cost for anyone.
- Virtual Goods Market – A new concept where people buy virtual gifts (i.e. a picture of a teddy bear) to send each other on the site with the money going to Facebook. This has become very popular!
While Facebook relies heavily on the existing advertising revenue stream that many other social media sites have come to depend on, they have also been able to branch out onto new ground. The virtual goods market is something that shows a lot of potential for Facebook and should be seen as a sign of things to come.
Digg
Source of Profits: Advertising
The popular social networking news site known as Digg has been around for a few years now and has acquired a number of multi-million dollar investment deals to keep the website moving forward. Careful observations of the Digg website reveals just how they make money online:
- Google adsense ads located throughout the site (main page, sub-pages, comments, side-bar)
- Private advertising provided by Digg to customers (main-page, side-bar)
Digg not only utilizes the ads revenue programs provided by companies such as Google and Microsoft, but also provides its own advertising service at a cost. Outside of advertising, Digg currently doesn’t offer any other service or product for sale that could be considered a true business model it would seem.
Source of Profits: TBD!
Twitter is not only one of the newest social networking services to hit the scene, but it is also one of the few widely popular social networking sites with no real business model currently in place. On top of that, Twitter doesn’t even use any type of advertising to generate income like a lot of other social sites. Twitter has said that a business model will soon be revealed, but nothing has been seen up until this point. Investors and social media enthusiasts alike await to see how Twitter will ultimately make money online. Some potential ideas discussed have included the following:
- Private advertising on the site – similar to Facebook and Digg
- Advertising within the user twitter feeds
- Some sort of subscription based service – i.e. $1 / month
It remains to be seen just how Twitter will turn a profit, but many eagerly await the coming decision as Twitter also have millions of dollars invested in it.
Final Thought
It quickly becomes clear just how large and important of a role advertising plays and will continue to play in these social networking websites we’ve all grown to love. Internet marketing is growing rapidly (much faster than many realize), which mean there is and will be a lot of potential for some serious money to me made. So if you’re looking to make money online, invest some time in studying up on your social media marketing skills. It could be your ticket to full time self employment, or at least help you launch your next big idea!
