How Social Media Platforms make money!

“Social media is free” is a much misunderstood  concept.  Just ask the companies providing the services. Have you ever wondered how these social media platforms make their money and how much it really costs.

LinkedIn

We all know that LinkedIn makes its money via premium solutions.  These solutions include Premium accounts, Talent Solutions and Advertizing. The Talent Solution packages include individual job postings, recruiter packages, career pages for companies and advertizing (Work with us).

• Premium Accounts come in 4 flavours (Business, Recruiter, Job Seeker and Sales Professional) with a variety of functionality .  Prices vary and summarized below:

• An individual job posting giving you 30 days of exposure will set you 139,95€ (ex VAT) back.
• The recruiter package will set you back between 5.000€ and 10.000€ annually
• The career pages on your company profile will cost you 8.000€ annually for a silver subscription and the 16.000€ annually for a gold subscription.
• Finally, there is advertizing.  You define what you want to spend on a daily basis.  There is a minimum startup cost of $3 and a daily minimum of $10 with a $2 per click or per 1000 views.

Twitter

In view of the functionality of Twitter, there are not that many ways Twitter can make money. Twitter uses a bidding system. But here what is available if you feel like paying:

• You can promote a tweet.  Here the cost is based on a Cost-Per-Engagement (RT, Reply, Fav).  Costs vary between $0.20 and $5.  It is rumoured that prices can sour to $100.000 for a single tweet.
• Next up is the Promoted Account. Same system as above except you pay per follower the same amount.
• Verified Accounts are available to anyone who spends $5000/month over a period of 3 months or in otherwords $15,000.
• Finally, if you are really ambitious, you create a Promoted Trends for one day.  This could set you back about $200,000/day!

Facebook

When it comes to Facebook, we can see 2 types of money streams: advertizing and sale of virtual goods and credits.

• The 2 advertizing options are CPC (Cost per click) or CPM (Cost per 1000 views).  The amount you are willing to spend is really up to you when you define you daily spend. For each ad you will have to place a bid on how much you are willing to pay for its appearance in either formula.  The minimum bid for is $0.01.  Keep in mind that click rates on Facebook are very low compared with Google.
• Facebook credits are a virtual currency that you can use to buy virtual goods in any game of app on Facebook.  Again, the user will define how many credits he/she wants to buy and payments are done through credit card or Paypal.  How does this benefit Facebook’s money stream?  They take their cut (it is rumoured about 30%).

Google

Google makes it really simple.  There is advertizing and subscriptions

• Subscribing to Google Apps will cost you as individual user at least $5/month and as a company $10/user/month.
• Google Search and Adwords are the main income for Google (96% according to Investopedia) and work on a bidding system.  The user is in control of the budget (no minimum) where She/he decides how much to spend on a daily basis.

Let’s now take a look at the other popular social media platforms that people and companies are using.

• Slideshare: The free version offers a public space for you presentations, but if you want to protect your presentations or do branding you will need to open your wallet.  The subscription starts begin with silver at $19/month, gold at $49/month to $249+/month for platinum.
• Foursquare: In order to claim your location you will need to dish out $10.  Foursquare also offers advertizing which starts with a ticket price of $50.000 and up.  Soon Foursquare will also allow “Post Check-in Ads” to be rolled out in the summer 2013.
• WordPress: WordPress offers a myriad of paid features starting with the hosting of you wordpress blog at a cost of $15.000+/year.  Here are some other features that will cost you:
  • Claim your domain: $13 – $25/year
  • Extra storage: $20 – $290/year
  • Custom design: $30/year
  • Video press: $60/year
  • Guided transfer: $129 one-time
  • Automatic backup (Vaultpress): $180/year
  • Ad free: $30/year
  • Support from WordPress: $2.500/year (for enterprises)
• Tumblr:  This microblog offers a number of paid components
  • Premium themes: $19+
  • Promoted posts: $5
  • Sponsorship (Radar): $25.000

And then there some social media platforms that do not seem to have a revenu model today, Instagram and Pinterest being amongst them.  However, soon I am certain they will come up with their own scheme.

So, the conclusion is that social media is more and more a Freemium model that can seriously rack up costs.  Now that the summer is in full swing, this might be a good time to start thinking about your 2014 Social Media budget and integrate some of the items listed above.

Of course, there are many other tools (monitoring, amplification, marketing, retargetting, account management,  statistical, etc.) where you can spend money on to professionalize your social media presence.  I will cover those platforms in another post.

So, as a conversation/marketing manager, what social media services are you budgetting for in 2014?

Tags: advertizing, belgium, blog, business, facebook, freemium, google, internet, linkedin, marketing, mic adam, premium account, promoted, revenue, slideshare, social media, tumblr, twitter