How Do Social Media Platforms Make Money? 

Social media platforms are free to use, therefore how are their owners so wealthy? How do these platforms generate income and stay profitable?

Most social media networks make money by showing you adverts. There are other methods, such as raising finance through investment or premium membership payment systems as well. 

These are the ways social media platforms make money:

  1. The biggest way that social media platforms earn money is through ads. There’s a reason the sites hook us. The more you look, the more adverts you’re exposed to. Adverts are everywhere you login. Promoted ads bring in a lot of revenue for social media platforms. Consider that they have billions of active users. That is a successful path that generates a lot of income for their shareholders. 
  2. Venture capital, which is when a wealthy individual or investment bank supports a start-up that has potential. They then invest money, time and expertise in return for a share of the business. The larger their share in the business, the more influence they have over its decision-making. Websites such as YouTube and Twitter have both received hundreds of millions of dollars in venture capital and shareholders control both platforms. That’s probably the main reason smaller influencers are getting nearly no reach on those platforms. 
  3. LinkedIn premium subscription is another example of how social media platforms can profit from. LinkedIn lets you make a free account. However, there are some professional and learning additional features behind a payment system hoping you will pay for these premium memberships. This gives you access to learning materials, profile viewing insight and sends email to recruiters. 
  4. Another interesting method that social media platforms can profit from is via offering website services for users to raise money, donations and sell services and products on their platforms for a transaction cost that users pay for using their website’s services. 
  5. A controversial source of income for social media platforms is through collecting and selling user data. They sell aggregated and anonymised user’s behavioural patterns. For example, Twitter sells advanced access to its API, which companies can use to view historical tweets, sample, filter, and sort data. 
  6. Another example is Facebook (I don’t use it anymore), which has been under the spotlight for the Cambridge Analytica scandal. They monitor your usage, such as the pages you engage with, and use this to put you in a category so that only a selected advertiser can pay to target that group. 

All of us can make money on social media platforms. That is not a bad thing, but it’s important to be aware of how it may be challenging to break through on social media because those platforms are mainly owned by private investment firms that may have bad intentions while pretending to provide us with a share of the profit that they make. 

MJ @ Secret Advert