How to Make Money with a Social Networking Site
I was wondering how to make money with a social networking site and I really had to think about how Facebook has matured into an effective money machine for their JV owners today. We’ve seen headlines as to how various venture capitalists have bought up chunks of the property for billions of dollars and now many people are awaiting the IPO. Many of us in the internet marketing field could learn alot from the Facebook story about how to make money with a social networking site.
How Facebook Makes Money as a Social Networking Site
I think the first lesson we can take from the gargantuan success that Facebook has become is that they did not start out as a money maker. They started out as a membership site for friends to gather to gossip and share photos. Membership was free and signup required nothing more than your name and a valid email address. It was simple to use. When you signed up and clicked the verification email and then signed in to the site again – your page was already for content and all the end user had to do was enter text and click enter. A person who had used a computer once or even a typewriter once could do it.
What’s the takeaway? To build a big social networking site you need to make it simple & free to sign up and easy to use. Does this mean you need to build a free social networking site? No. You do not. On the other hand what you DO need to do is make it simple to sign up and have your welcome page invite user generated content immediately. People LOVE to see their own work on display, so give them the opportunity right?
Where Does Facebook Make Its Money
This is short and to the point: advertising. They developed a targeted, paid advertising schema very similar (but vastly superior) to Google’s. As a result advertisers saw substantially better results from their promotions and were willing to commit larger and larger advertising budgets to social media – all the while Google was shunning the vast majority of its advertising clientele – internet marketers like you and I. Oh well!
Does this mean you need to develop an even better advertising schema? Yes and no. Odds are you are not going to build the next Facebook. But do you think you could build a membership / social networking site that was targeted to a group of people who like something you are interested in? I think you can. You have hobbies? Expertise? Interests? Someone out there shares your interests, odds are lots of people do. All you need to do is build a place for your like minded friends and associates to congregate. Think you can do that?
How to Make Money with a Social Networking Site: The Mechanics
Ok so what have we learned about how to make money with a social networking site from the Facebook example?
- We Need:
- A stable, easy to use platform
- A group of friends with similar interests
- A way to monetize your site through advertising
- Publicity to draw new members to the site
Should you keep your membership free or make it a pay site? That’s a little tougher question, but be honest with yourself: will the users get some sort of membership benefits (schwag? discounts? parties? special bonuses?) they won’t be able to get anywhere else? If the answer is no, then you probably need a free site.
Want more nuts and bolts info? Here’s a detailed plan to build a profitable membership site complete with tips and interviews from industry experts. Good luck!
Barry Livingstone is the author of The Social Networking Business Plan with Onefineham - Pick Up a Copy Today!