How does social media generate revenue?
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Thanks for posting this. That’s disgusting how much it’s gone up in a year.
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The amount of money Meta makes from ads is absurd! You would not believe how much companies are paying each day.
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In 2024, Meta (formerly Facebook Inc) generated over 160 billion U.S. dollars in ad revenues.
— Statista
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They sell your eyes and your mind.
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First the learn about who you are so they can provide accurate demographics to target with ads. Advertiser's pay heaps to be able to hyper specifically target ads.
Then they scape messages and information from their uses to build datasets which they sell.
Then there is premium subscriptions for business accounts.
In Asia they have in app shopping where the social media site gets a cut of every purchase.
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Q4 always has higher ad revenue because of Black Friday and Christmas.
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Advertisers don't see any of the data though. What the companies are really selling is your attention.
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If you're really curious about this you can look into Meta's shareholder statements. They're a publicly traded company so these documents are available for everyone to see. But, yeah, long story short, it's ads. Things like sponsored content (paying to push posts to people) is essentially just the platform itself doing it instead of using a third party.
For companies that aren't publicly traded it's trickier. A lot of privately traded companies are being propped up by VC funding. Many times they'll operate at a loss to gain more users then worry about how to become profitable later. Bluesky is definitely such an example right now. They don't run ads and don't get money from users.
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It's not a misconception, it's just how people say what's happening. They're basically selling their ability to make a profile of you based on your data. It's just colloquially said as "selling your data."
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Some people think the big tech companies literally sell your data though, so IMO it's important to clarify.
There are companies that do that though, like Acxiom, LiveRamp, CoreLogic, etc. With Acxiom at least, you can buy lists like "high net worth individuals who are likely to buy a new car in the next 6 months" and get a list of names, phone numbers, and email addresses, based on data they've collected from both public and private sources.
