How do social networks make money?

Open your favorite social network app. Let’s say Instagram. Start scrolling down. How much does all that entertainment in the form of cat photographs cost you? Nothing. So, maybe you paid to get the account. Nope, you didn’t pay either. So, how do social networks make money?

Everyone knows that it is free to have an account on the most popular social networks. It doesn’t matter how much time you spend there. How is that possible? Because, it is precisely with your time, and your data that you are paying for the platform.

The average person spends more than 6 hours a day connected to the Internet on their device, often in social networking applications. He thinks he is only getting the entertainment he is looking for. But many of us know that you are also receiving advertising messages on each screen scroll. It is their data, their life and their peers, that manage to keep people hooked and consuming advertisements.

Advertising, main source of income of social networks

When a social network emerges, its main goal is to gain users. They still do not have a profitable business model, but if they are lucky they grow thanks to the investments. Then, when you add a few ceros to the total number of people, the main concern becomes how to monetize them.

It is almost subtle, it’s not like finding a bus with a banner or a fence painted on the street. But it comes to be almost the same: as you retrace your way through virtual content … uppps, what looked like a post like your child’s nursery is a diaper ad.

Diaper ad on Facebook
Facebook ads must have a tag that identifies them as advertising

According to the We Are Social annual report, the total sales earnings through e-commerce were 1786 trillion dollars in 2018. Yes, you read well, trillions. And that comes from only 37% of world’s population, an identified sector with access to that buying methods. The source of much of those purchases is advertising.

In which applications do we find advertising?

In most of them. Think of the big ones: Facebook, Twitter, Instagram, YouTube, LinkedIn, Snapchat. They all have ads, each adapted to their type of content: on Facebook and Instagram they come in the form of sponsored posts and stories, on Twitter it is a tweet, on YouTube a commercial that precedes or interrupts the video you chose (which also happens in Facebook Watch, for example).

That´s how social networks make money in the real world. But not only social applications live on ads.

Music players like Spotify and Pandora bombard you with them unless you pay them the subscription. If you download free games from Google Play or Apple Store, you have probably had to watch an advertising video to get some gems or level up. But who says no to an ad when you are hooked on Candy Crush?

With Fortnite, one of the most popular games of the past year, advertising has moved to another level. A popular resource in film and television is the so-called product placement: intentionally putting a brand or service on a scene to provide visibility to those who buy it. Casually, shortly before the release of an Avengers movie, Thanos arrived in Fortnite with his famous gem glove. Or a portal to another dimension from the Netflix Stranger Things series, appears casually in a shopping center. Or they make it available to the player, to obtain the appearance of an NFL or Super Bowl player.

Coincidence you may think? Nothing is a coincidence in the world of advertising.

The ad speaks directly… to you!

The first goal of any publicist, from decades ago, is to be able to convince each person directly of buying their product. To know the maximum of your interests, fears, network of contacts, emotions and aspirations … that is the ideal preamble of any sale.

Advertising had never had so many ways to personalize its messages as in the Internet era. I already commented that free or semi-free services on the network charged you their price on advertising consumption. But why does online advertising generate millions of dollars and has become the inevitable strategy of many brands?

Social networks make money from your data. But…

Where do platforms get that data from?

Many times the user willingly donates it: network of contacts, profile information, interests, marital status, favorite movies, sport he practices.

But on other occasions the process is not so transparent. For example, if you have the location of your cell phone active and allow applications to access it, you may notice how they begin to recommend you places to eat or hotels in the city you are visiting right now.

Sometimes you don’t have to leave home: just by looking for the price of a flight on Google or a backpack on Amazon, you ensure an entertaining month of announcements about “Travel cheap to London” or “The laptop backpack of your dreams”.

And for some, you wouldn’t even need to write your wishes. It would be enough to say them out loud near your cell phone. That is at least what they arguing about since in 2018 they began to mention the possibility that Facebook and other large platforms are “eavesdropping”** on their users (taking advantage of the microphone permission we have active for the audio messages and calls of the app). Facebook has not been proven to have carried it out, but it served to resume the debate of how far these apps can go regarding the privacy invasion.

As we are not sure, I suggest that you do an exercise. Comment near your cell phone “I feel like eating pizza”. If the theory is true, it will not take long for a Domino´s or Pizza Hut promotion. Leave us the result in your comments.

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Gabriela M. Fernández

Journalist with a vocation, doesn't lose hope of learning how to program. Hardcore cinephile, TV-show and technology addict... we could say a full-fledged millennial.

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