Social networking websites like Facebook or twitter have become the most commonly adopted ‘time-pass’ for the masses. Whether you’re an entrepreneur or a commoner, updating status on Facebook or tweeting on Twitter is an essential part of life for most of us. Social networks are also getting extremely popular in every corner of world.
Have you ever thought that these sites are businesses, so how come most of them are free? Exactly how these websites make money to meet their expenses and to pay their employees. In case you are looking to launch a niche social network, following are some basic ways on how a seemingly free social network can make money.
Venture Capital – Raising Finance
Many of you must already be familiar with Facebook and how it made it big (thanks to the popular Hollywood flick). But before you can expect a social network to start making any money at all, you’ve got to have some finance to launch one and traditional sources like banks wouldn’t lend you money just because you seem to have a novel idea. But you can always turn towards investors to fund the project. These types of investors are known as Venture Capital. Most of the notable online businesses, if not all, were funded by venture capitalists who take the risk with a hope of a huge return at some point in the future. That is how Twitter and Facebook began too and this is how you can get started.
Have you ever visited a site that offered different kinds of membership deals? For instance, basic account and premium accounts. There are certain social networks which charge their members for premium accounts and special features (e.g. LinkedIn), which is one way of generating profit from their business. This premium account enables the site to earn money. Networking options are still free but to get special privileges, you need to sign up for a premium account. These premium accounts are source of money for social web portals.
Online advertising is the new face of marketing and it is also considered the best way to make some money for social networks. The truth is that these sites make money through the millions of eyeballs roaming which are glued to their screens. Millions and millions of pounds are spent on advertisement on these social networks because their huge number of visitors, which at some points and times, can rival the traffic generated by some of the biggest search engines themselves. Companies want themselves to get noticed so they advertise on these websites. There is a race between different companies to appear on the popular social networking sites, so they agree to pay handsome amount for an ad on any of the popular social sites.
Another best monetization method for social networking sites is the subscription of virtual gifts. It is a novel and creative way to earn revenue from these networks and the best example for this category is Facebook Gifts. All of these gifts are not real, but Facebook allows users to send these gifts to their friends.
Some of these virtual gifts are for free but you can practically personalize almost everything by paying a meager sum of £1. When the amount is that small, who can resist the charm, especially in a time when we all like to personalize everything? This is perhaps one of the most subtle yet clever ways used by the social networks to extort money out of your pockets. But they do it in style and nobody complaints.