Posted & filed under misc, money, reports.

There are a lot of social media web sites in the world, a lot!

 

Many of us have a Facebook account, a Twitter account, may be on Linkedin, or Google+, and we may have multiple accounts with these sites, or have accounts with more than one site.

 

It can get to be a bit of work just keeping on top of them all.

 

My partner, and some other friends I have, are constantly on either Facebook or Twitter, tweeting about this or the other.  Sending “friend’s requests”, liking this, disliking another.  They lose hours of the day, of their lives on these sites.

 

I am only on one social media site, and that is really only for work, and to post my blogs and writings.  I have no friends on the site, and don’t try to make any friends.

 

Don’t feel bad for me, and no I am not a loner.

 

However, daily I get requests from total strangers asking me make them a part of my “inner circle”.  I ignore these requests.

 

Again, I am not trying to be rude, I just don’t know who they are.  I have never heard of them or seen them in my life, they are strangers.  And I remember what me mum told me about strangers.

 

With so many social media sites out there, one has to wonder how they keep going, how they succeed, how do they make money??

 

The majority of these sites are free to join and use, where does the profits come from?  How did Facebook become the largest social media network, with over a billion users daily??

 

Advertising

 

One way these social media giants can earn money is through advertising.  That and targeting you the user for specific products and services.

 

By knowing your details and monitoring where you visit and your contacts, you can be targeted for products others like yourself may have purchased.

 

This is a powerful marketing tool, and businesses know this.  The business will have a better chance of making a sale by aiming their ads directly to someone who is more likely to purchase that item.

 

Facebook in the past had had films streaming through their site for a small fee.  The film supply got paid, and Facebook took a small percentage of the fee and earned some money.

 

Paul Lee from Deloitte Research stated, “Because you’re creating the content and you’re making up the content for free, all that social networking has to do is put the ads next to it.”

 

“There aren’t the costs that say a newspaper would have in paying for the journalists to create the content and then serve the advertising next to it.” 

 

The then Managing Director of Facebook UK, Stephen Haines says in response to targeted advertising, “You can target me as someone that’s 38 years old in Wandsworth that likes football or you can target all the men in the UK that like football.”

 

“You can go very broad or very narrow with your advertising.”

 

Regarding it all sounding a little scary, he adds,  “I can sort of understand it[but] I think if we’re giving the user relevant advertising that’s targeted towards them, they actually respond better to it [rather than] to the traditional sort of pushing advertising in their faces.”

 

Haines added at the time, “When ads have social context in them, when you can see what your friends have already done with that brand or if I’ve liked Nike, that ad performs much better.”

 

“We would never give brands like Nike [details of] an individual person. What we would say is there’s 10 million 18-24 year olds that have football in their interest.”

 

Regarding the fact the service and use of social media sites are free, Deloitte’s Paul Lee added, “I think people are prepared to give up some of their data without too much effort and, in exchange for that, get a free service.”

 

“There are some who think that the amount of information giving out is far too much, but they are in the minority.”

 

“There’s is certainly legislation being proposed at the moment – at an EU level and also in the US and Canada – to make sure that there is the right balance between the amount of information given out and the extent to which it is made very obvious what information we are giving out”.

 

Jeffery Mann from research company Gartner states that Twitter, which is worth over £5 billion, uses what they call the “firehose” to earn money.

 

He states, “Twitter licenses its complete feed – what they call the firehose,”

 

“Every message that gets sent out can be used by companies like Microsoft and Google to analyse trending topics and what people are talking about right now.”

 

Regarding the future and social media’s earnings, Paul Lee adds, “Probably the next phase of social commerce is about extracting commissions from products which are sold directly as a result of recommendations made.”

 

“So rather than selling advertising, what you’re doing is taking a commission against a product sold.”

 

“What we can be sure about in terms of social networks of all types, is that there will never only be one model which works for everyone.”

 

 

How Much Are You Worth to Facebook

 

If you ask someone if they are on Facebook, the odds are that they are, they have a profile on the social network site.

 

And why not, it’s free!

 

You can stay in contact with friend and family, post your like and dislikes, upload photos, and in general share your life with others.  Again, for free.

 

When Facebook had their IPO/initial public offering a few years ago, it was one of the largest IPO’s in history, generating millions.

 

As the web site has 65% “of worldwide social media advertising spending”, it is expected to earn £10.6 billion in 2015.  That’s a lot of likes.  And the site has increased revenue by 40% as for 2014 the revenues were £7.5 billion.

 

Part of this increase is due to Facebook acquiring Instagram, which has recently overtook Twitter in the number of “active monthly users”.

 

So how much are you worth to Facebook, according to the marketing firm eMarketer, £32 per person, per year.

 

eMarketer says that Twitter users are worth £16.04 per person per year.

 

Facebook is still growing and getting new patents.

 

The social networking giant recently received a patent that could affect you being approved for a loan.  The patent in question was one intended to prevent spam, however it did have this paragraph included:

 

“In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”

 

You may need to rethink your friends and who you like.

 

If your friends have defaulted on a loan, or have weak or poor credit, you could be judged by this and denied a loan.

 

 

So just a few ways social media web sites can earn a living, and more than just a living, millions and millions.

 

 

 

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