December 17, 2015
How Facebook makes its money
There are a lot of free things out there - Facebook, Google, that sort of thing. When I was a kid, TV was free, as was radio. And I have to admit that it puzzled me. I wondered how all of this stuff was paid for? Then I studied Advertising, and it all made sense.
Advertising pays for free services like Facebook. So if you're concerned that Facebook is gonna suddenly ask for a subscription, for a few bucks, don't worry. They are making millions on advertising.
This is how it works: Wherever an audience is gathered, an opportunity is created for advertising. It could be people driving past an old barn advertising something, it could be people watching a football game, it could be people listening to music on the radio. Whenever there is a gathering of people, advertisers see an opportunity, and they pay for it.
Back when I studied Advertising, we learned that, without advertising, a daily newspaper would cost over ten bucks each. That would just cover the cost of printing, distributing, the reporters, editors, photographers, etc. But that's not where the money comes from, it comes from Advertising. Even nowadays most newspapers are over 75% advertising. So, most newspapers and magazines could actually be distributed for free, and still make a good profit. We're used to paying for newspapers and magazines, so we don't expect them to be free, like stuff on the internet. But really, your subscription price for a magazine or newspaper is minuscule compared to the money that advertising brings in.
No, this isn't a conspiracy, man. And it's not something that "they don't want you to know". It's part of Marketing. And since most people aren't fascinated by Marketing, and Advertising, it does seem like a mystery. But it's not.
And no, you don't have to click on ads, or even do anything. You just have to be part of the audience. Advertisers understand that a lot of people don't pay attention to ads, and even block them on the internet. But enough people do pay attention that it makes it worthwhile for advertisers to pay, and that supports sites like Facebook.
Posted by Brad Hall