• Victor van der Meer
  • March 23, 2018

How does mainstream social networks like facebook make money?

How does mainstream social networks like facebook make money?

With more than $1 billion per quarter in advertising revenue and 1.2 billion monthly active users, few realize that Facebook is more than just a social networking site – it’s a shrewdly run corporation, worth more than $100 billion.


Most people still don’t understand how Facebook makes money. You see, Facebook doesn’t sell you anything because it is selling you to its advertisers.


Did you know?

In 2016, Facebook recorded a net income of 15.9 billion US dollars [1].


You would think they would offer to share some of this profit with us, considering they make their profit off our information and data anyway. One thing that companies like facebook, twitter, google etc. have in common is they don’t actually sell any products or tangible services directly to consumers. I know what you’re thinking. So, how do they make so much money?


The bulk of Facebook’s revenue comes from digital advertisements, which brought in $7.9 billion last quarter. Along with Alphabet Inc. (GOOG) subsidiary Google, Facebook has emerged as one-half of a dominant duo in digital advertising. Unlike its rival, which enables advertisers to serve up ads based on keyword searches, Facebook’s value proposition is targeted advertising. Companies, marketing firms, and businesses alike don’t have to spend thousands or even millions of dollars on market research anymore to find out what you like and don’t like. We are sharing this stuff for free with our friends, family, and peers every day.


You see, the problem with ‘free’ is it often isn’t. The real cost is the loss of the users right to privacy, security and data protection laws. Why I felt the need to speak out about this subject!


Companies like Facebook and Google want you to share as much data with them as possible. Because, they take this information/data and sell it to other companies, who want to design, tailor and advertise products and services towards their target audience. So, consumers are more likely to buy products and services from them in the future.


They know a lot about our online behavior after all these years, they know that most millennials won’t have the patience or interest in reading pages of texts about privacy policies, terms, and conditions. I hope that after you are finished reading this article and viewed the infograph below, you will have a complete understanding of how companies like Facebook, Twitter, and Google make money off you.


Anyone can tap into personal information and data if they wanted to. Anyone can register for a free developer account on these billion-dollar mainstream social networks, which allows anyone designing and website or app to integrate their own platform with them.


Unfortunately, these days websites and apps are simpler to sign up to. All we need to do is enter our login details of your social account to use their platform. This will give the company who owns the platform permission to access personal information and data about you and your friends, family, and acquaintances on your social network – without your peer’s permission. The biggest concern is that, unless you can read (which not everyone can) you would still be none the wiser.


It’s obvious that the terms and conditions set out in their policies speaks louder than a consumer right to full-disclosure, protection, dignity and ethical trading practices. Ironically, with all this information being shared so freely, it is hard to track what it is being used for.


If companies like Facebook, Twitter and Google etc. really cared about these breaches of our privacy and data – they would consider giving users some type of compensation. Especially when you factor in the type of profits these companies have made off our personal information and data in the first place.

Below is a full breakdown of Facebook’s various revenue streams.


Source: Business-Management-Degree.net

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