Social media has dramatically changed the way we communicate. It has also added a new dimension in business marketing. But how exactly does social sites such as Twitter and Facebook make money? Simple answer: advertising.
Twitter has long promoted their “sponsored tweets.” Sponsored tweets is an advertising platform that “connect advertisers with tweeters.” Many major brands paid Twitter to utilized this platform. From Coca-Cola to K-Mart, heck, even Charlie Sheen has unofficially helped internships.com increase traffic to their website. No wonder Facebook is looking to jump on board with similar sponsored ads.
Early this year, rumor has it that Facebook will be rolling out with similar sponsored ads in news feeds. Rumor no more. According to this TIME article, Facebook will gradually begin to show “sponsored stories” in news feeds starting in 2012. Facebook has already started prepping users by explaining how they make money:
In other words, Facebook is trying to reduce the potential backlash that users will have after seeing ads in their news feed. Although Facebook explains that users will have the option of “x” out of individual ads that does not interest them, users cannot block ads from showing up in their news feeds. This is pretty smart. With each “x” pressed, Facebook will have more and more detailed data available for marketers to target users based on their interests.
I see this as a huge win for advertisers, but for users, I expect another wave of protests. Facebook has weathered the storm in the past by letting the complaints die off by itself. This time around, it might be more difficult since this greatly affects the “main attraction” of Facebook, where users get most of their information from…the news feed.
Facebook is smart by informing users early how they maintain the service free by using advertisements. I doubt users will flee to other services (Google+ anyone?). However, this is just another indication on how marketers are continuing to look for ways to target advertisers. And with over 800 million users, Facebook is becoming…no, has become the Lady Gaga or Justin Bieber* of the advertising industry.
*Just trying to lighten the mood
Image courtesy of Flickr, Brice Reul.