Social media monetization is a debate that has now existed forever. With increasing number of people getting on the social networking bandwagon, it becomes extremely important for the companies in social media such as Facebook, Orkut, Twitter and the rest to devise means to monetize this traffic when the time is right.
Monetizing through advertisements is not the solution. This is because, with increasing number of page views reported, more and more social media companies taking to advertising is going to skew the supply-demand ratio there by affecting the revenues publishers make on a CPM basis. So, what’s the way forward?
Twitter has shown an intent to solve half of this puzzle when it has categorically said that the company shall not look at advertisements as part of revenues. Instead, they shall be offering advanced tools to businesses to get additional mileage out of their Twitter accounts. That’s a fair strategy and we will see how effective that shall be moving on.
In the case of LinkedIn, the situation looks better with paid subscription services. But will the same model fit for Facebook as well? The CEO of WPP, Sir Martin Sorrel thinks so. According to him, social media should charge for content. “You can’t say I will build traffic and hope to build advertising revenues. Twitter and Facebook are all generating lots of traffic now… but what revenues are they generating? What profitability are they generating? The valuation of Facebook will suffer if this continues to be the situation. Ultimately, the revenues and profitability are what that will turn them successful”, he says.
Facebook has been recently tinkering with creating virtual currencies in so many different ways. But it is yet to find that one way that will solve all its monetization problem – something that Google discovered through its Adwords program.
Advice is free and exciting. Put in your thoughts in the comments below on how Facebook can be monetized. If it works for Facebook, then it should work for the several hundred social network clones present out there.
Facebook is, in many ways, monetising content. For instance, for certain games available on Facebook, gamers have to shell out a certain amount to gain an extra level or buy new tools/gifts etc in the game. Though it is not yet known, how successful this has been for facebook so far. I think facebook’s funda is simple – get people addicted and then make them pay for their addiction!!