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How do social media sites make their money?

Find out how sites like Facebook, Twitter and Foursquare make their money.

Facebook has an Alexa traffic ranking of 2. Not a very big number is it? If you have never heard of Alexa before, you may think that that isn’t very good, but what it actually means is that it is the second most visited site on the net – the first being Google.com.


Twitter has and Alexa rank of 9, LinkedIn has a rank of 16, Flickr 32 – the list goes on.

This means that these sites need some serious server power to handle the millions upon millions of visitors they get each day. The problem is servers are extremely expensive to buy and run, due to them needing to be kept cool and have a super fast internet connection, both download and upload.

So how do social media sites run if it is so costly? Where do they make their money? How does Facebook make it’s money? How does Twitter make money? How do LinkedIn, Foursquare, Twitter, Bebo, Flickr, Myspace etc. all make their owners billions?

It’s complicated…

Unfortunately I cannot provide you with a hard and fast answer which applies to each social media site, as they all use different methods, but what I can do is tell you how individual sites like Facebook and Twitter make their money.

How does Facebook make money?

On Facebook there are adverts, you may have noticed them at the side of some of the pages. Often they are very well designed to blend in with the theme of the site, so that you almost think that they are just more recommended pages.

Facebook's LogoThese adverts will be potentially get hundreds of millions of views each day. This probably means that they cost a fair bit to buy, so ‘the Facebook Team’ will be cashing in big time on them.

So Facebook make their money through advertising, right? Well actually only some of Facebook’s revenue comes from advertising. The exact figures are only known by a select few, but I would estimate that less than half of Facebooks revenue comes from it’s adverts. So where does the rest come from?

Facebook credits.

Since Facebook introduced it’s credit scheme last year, a whole host of new applications and offers have sprung up, all giving you the option of using Facebook credits to provide a service (e.g. watch movies on the site) or improve an experience (e.g. level up faster in a Zynga game).

Facebook currently takes 30% of the money spent on credits for itself, and at just over £2 for a movie or 25 ‘farm cash’ that doesn’t really seem that much.

However, with over half a billion registered users, if each user buys just 50 credits (around the price of one movie – £2 ish) a year, assuming the 30% cut Facebook gets, it could be turning over almost £1 and a half billion each year, on credits alone!

With over 400 games and apps where users can go and spend their money, Facebook are sure to be gaining a lot of cash via their credit scheme!

Facebook has recently been valued at a figure of somewhere around £30 billion ($50 billion) but in the future, who knows how high this figure could climb!

How does Twitter make money?

Twitter has no ads, so how does it make it’s money? Twitter is a microblogging platform which many users use from their mobile phones. Twitter charges users who update their feed via mobile, and it generates an awful lot of money through this.


Twitter's Logo

Despite it costing mere pence per transaction, often users will update their feed mutiple times each day. Millions of users posting millions of updates, many from mobile devices, every day is why Twitter is now valued at almost £5 billion.

Twitter is still a multibillion pound firm in the making, as I am sure it has may more money making schemes and pans up it’s sleeve ready to launch in the near future.

Other sites

How do Foursquare make their money? Well a lot of it comes from their recent deal with American Express, in which I believe it is making around the same amount as Facebook per transaction, although it doesn’t have the same sized member base that Facebook has.

Many other sites like Flickr and Bebo currently don’t appear to be making any money, as their founders set out with a goal of improving the web, not making money. However in years to come no doubt these sites too will become as successful and profitable as Facebook and Twitter, that is of course if we don’t all just switch to using the two giants: Facebook and Twitter!

0 replies on “How do social media sites make their money?”

I think that via commenting mobile could be the next step for bloggers to make money in light of Twitter’s money making method… just a thought 🙂

Ira if you had read the whole article you may have found:
How does Twitter make money?

Twitter has no ads, so how does it make it’s money? Twitter is a microblogging platform which many users use from their mobile phones. Twitter charges users who update their feed via mobile, and it generates an awful lot of money through this.

Twitter’s LogoDespite it costing mere pence per transaction, often users will update their feed mutiple times each day. Millions of users posting millions of updates, many from mobile devices, every day is why Twitter is now valued at almost £5 billion.

Twitter is still a multibillion pound firm in the making, as I am sure it has may more money making schemes and pans up it’s sleeve ready to launch in the near future.”

If Facebook takes 30% of the money games make, they cash in a lot of dollars! Half of my friends are addicted to one or more games and half of those invested in them at least once at one point in time. Even i was tempted, but i don’t have the time to make it big in there, o i just gave up one day. Like i gave up smoking.

I think for some people it can take a lot of will power to quit! Well done to you, and even more congratulations are in order for giving up smoking, well done!!!!! 🙂

I always thought they make their money from ads, but then a friend of mine told me that facebook didn’t have any ads in the beginning, and that zuckerberg didn’t want to go that way (was this in the movie? i haven’t seen it yet). I’m thinking this was a good marketing strategy when we’re bombarded with ads on every site we visit.

Hi Chris,

I notice more and more newspapers going under these days because they’re not able to adapt to the online from the written paper.
And look how businesses that normally don’t offer anything useful and don’t need to put money into hiring workers to produce, make millions with methods nobody knew could be used that way.
I guess you can’t expect from a publication to offer games on their website, but a little thinking out of the box could still make wonders.

I do feel sorry for some newspapers (the ethical ones!) as they are an important part of our culture that is slowly fading away 🙁

Thanks for the comment Amit, and please note, my name is Christopher not Chris! 😛
Christopher – Admin Team

Ok, Christopher, sorry about that, it wasn’t my intention to offend you by shortening your name.
I’l be more careful next time.

That’s okay. Many people do it online and offline. Whilst it bugs me (as I think it rude not to ask) I sometimes just have to put up with it. Here however, I like to be called Christopher 🙂

Hi Chris,

I notice more and more newspapers going under these days because they’re not able to adapt to the online from the written paper.
And look how businesses that normally don’t offer anything useful and don’t need to put money into hiring workers to produce, make millions with methods nobody knew could be used that way.
I guess you can’t expect from a publication to offer games on their website, but a little thinking out of the box could still make wonders.

A very interesting blog post in my opinion! For a while i’ve been wondering how Twitter makes money and just couldn’t think of anything. Thankfully, you shed some light on this question. As someone said in an earlier post – Zuckenberg’s strategy to make Facebook ad-free in the beginning was definitely one of the main reasons for the huge success of Facebook.

True, if Facebook had been like many sites of its day – spammy popups and tonnes of advertisements – then it probably wouldn’t have made it so big – as you said.

Thanks for the comment Maria, good to see you again 🙂
Christopher – Admin Team

I really admire the way Facebook and Twitter had accomplish their stature. These two companies started without even thinking about money. And now they’re the two of the most profitable businesses in the world. Amazing, isn’t it? We can learn something from this. These two companies really focused their attention first on making the best product possible. They just kept the faith that if they’re creation is that valuable, money will be automatic. A lot of us start our companies the other way around, profit first before product quality.

You seem to speak words of wisdom Jarrod!

Thanks for your insightful comment, welcome to the Technology Bloggers community 🙂
Christopher – Admin Team

Hate to correct you but “And now they’re the two of the most profitable businesses in the world” is complete rubbish, twitter has never made a single dollar in profit and facebook has only just reached a positive cash flow.

Also not sure but in the article it said about twitter charging to update by mobile, I have been using twitter for years on mobile (through their app) and have never paid a single cent to do so.

That is true Andrew, Facebook is very profitable, but Twitter does not seem t be going down the same path.

Thanks for the comment Andrew, welcome to Technology Bloggers 🙂
Christopher – Admin Team

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