07/05/2020
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How Facebook, Twitter, Social Media Make Money From You
Advertising is the key to how social media companies earn revenue
[Before we find out more, do you know you can make on social media? Here are six ways
1. Promote affiliate products.
2. Create and promote your own information products.
3. Promote products and services.
4. Use visual media to promote your crafts.
5. Promote your coaching or consulting services.
6. Join the YouTube Partner Program.]
Now, how social companies make money.
An astounding number of people use social media each day, so it's a fair question to ask, "How do social media companies make money while offering so many free services?" As of Dec. 2019, Facebook (FB) reports it has over 2.5 billion monthly active users, an increase of 8% year-over-year. Twitter (TWTR) reports it has 321 million monthly active users, while LinkedIn (MSFT) has about 260 million monthly active users. Such volume is the short answer to the question of how these companies are making money. But that doesn't tell the whole story. Here we explain exactly how the top powerhouse social media companies translate all that volume into cash.
KEY TAKEAWAYS
1. The primary way social media companies like Facebook and Twitter make money is through selling advertising.
2. The concept of selling advertising while offering a free service is not new; television, newspapers, and media companies have been doing this long before social media companies existed.
3. Facebook has over 2.5 billion monthly active users worldwide and estimates the average revenue per user (ARPU) in 2019 was $8.52.
4. Facebook's ARPU comes primarily through profits earned from advertisers who use the platform to reach customers.
Making Money Through Advertising
This isn’t a unique observation, but it’s a crucial one: If you’re not paying for the product, the product is you. The real transaction here isn’t you receiving enjoyment in the form of a free temporary distraction created by a media company at great expense, but rather, that media company renting your eyeballs to its advertisers.
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