Do you realize that Facebook brought in over $130 billion in advertising revenue in 2023? Social networking sites are not only a platform for human connection, but also the most profitable business in the world. You don’t have to be the next Facebook to start making money. Using monetization strategies, or a combination of strategies, you can create a social networking site that works in a niche community and create a business that is durable and sustainable.
The good news is that there is more than one way to monetize your social networking platform. Business owners and community owners can choose to monetize their platform according to methods they can apply in the platform in less argued and disputed ways to more obscure and contested ways, including e-commerce integrations, creator economies, and potentially other methods.
Ways to generate revenue through advertising
One of the most popular ways to monetize any social networking platform is through advertising. Advertisements are an effective way to make a steady stream of revenue while keeping your social media platform free for most users, which increases community adoption. The challenge is to make sure you place display ads in a way that they do not ruin the user experience.
Types of Advertisement Models:
- Display Ads: Classic online advertisement formats that can only be banners, pop-ups, or sidebar placements. These are very straightforward advertisements to implement, and often work well once you have developed enough traffic to make them worthwhile.
- Sponsored and Native Advertising: Ads that are integrated within user-generated content and that appear to be organically part of your platform. The intent is to make these formats less disruptive and, in turn, more impactful because they fit into the natural flow of content your audience consumes.
- Video Ads and Stories: Short-form content has rapidly become the most engaging and advantageous video eye candy on the internet, and is a technique for presenting advertisements. For example, video ads would be positioned in between a view of a story, a reel, or in a manner to simply update their feed.
- Targeted advertising: Using the interest and data of the user to serve advertisements that matter to them while providing better returns to advertisers for happier user engagement.
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Subscription & Membership Packages
Another effective way for monetization of your social networking platform is through a subscription-style offering. This model allows you to offer subscription options instead of only ad models by providing users with the option to pay for premium features, new tools, or ad-free experiences. This will provide you with a recurring revenue stream and increased loyalty from your most engaged members.
Types of subscription models include:
- Free vs. Premium: Most users like freebies, and current members want to upgrade their membership for the additional benefits, such as access to advanced search filters, unlimited messaging, or access to increased media storage limits.
- Tiered membership levels: You can set up levels of membership so a user can sign up as Basic, Pro, and Enterprise. Users could initially only pay for Basic users’ features, but would eventually upgrade for different benefits. This is an effective subscription model for social networking platforms that caters to professional or business users.
- Ad-Free Experiences: Users of social platforms are often willing to pay a small amount on a monthly basis just to browse the site ad-free.
- Exclusive content/tools: Offer pay-gated content, special limited analytics, or invite-only VIP communities for members who are paying for membership.
For example, LinkedIn Premium permits users to unlock InMail messaging, see additional networking insights, and provides job-seeking tools. Included features could be comparison tools, gated features, events, or direct messages. Reddit has a Reddit Gold membership, and Discord is charging for Discord Nitro.
If you want to understand why people value upgrades inside communities, our post on Why Personal Profiles Matter in Social Networking Websites gives insight into how identity and personalization can fuel virtual purchases.
In-App Purchases & Virtual Goods
If your social networking platform includes some interactive features, then in-app purchases can be an engaging and fruitful monetization strategy. Instead of charging users directly for membership, you can allow users to spend money on virtual goods, upgrades, or digital tokens that improve their experience.
Common in-app purchase ideas include:
- Digital currencies & tokens: Give users access to buy “credits” or coins to spend on perks, upgrades, or gifts from the platform.
- Stickers, badges & emojis: Low purchase amounts that can help users personalize their chats or profiles.
- Gifts & boosts: Virtual gifts for friends or boosts that enhance visibility (e.g., promotional boosts for profiles and posts).
- Gamification upgrades: Reward systems where users can buy “premium” achievements, levels, or recognition internally in the community.
For example, TikTok allows users to buy coins to send gifts to their favorite creators, and Discord allows users to purchase server boosts to increase server performance and get additional benefits. These incremental payments can quickly add to significant sums even when there are lots of users.
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Marketplace & E-Commerce
Adding marketplace functionality to your social network can have a big impact on community engagement and revenue. Users can buy and sell products or services from within your community – right away, you add immediate value to their experience. Members can sell locally, buy niche services, or promote their own services or businesses, while remaining engaged in their community.
You can make money by charging transaction fees, listing fees, or promoted listings for sellers wanting more visibility. Facebook Marketplace and Etsy show the potential of community-based commerce. Motivating elements like niche engagement and trust are also usable by smaller sites that focus on a narrow niche (i.e., handmade goods, local service providers, or hobby-specific products). Ultimately, this allows you to build your site into more than a social networking hub, but a trusted place to connect and conduct business.
To see how large enterprises leverage community sponsorships, check out Top 5 Reasons Why Enterprise Businesses Choose SocialEngine to Support Workers’ Community.
Conclusion
Monetizing a social networking platform isn’t just about choosing one method. It’s about finding a formula that works with your community and the long-term vision for the platform. If you’re using advertising, premium subscriptions, in-app purchases, and marketplace monetization, leverage all of the methods of generating revenue from your users while creating value.
The most successful platforms find the sweet spot between a better user experience and their profitability model. If your community is engaged, supported, and rewarded, they are more likely to want to spend money on that platform and then take it step by step or one or two approaches and see how it works first. If you can figure that out, then you can have a sustainable business and a supportive community on your social networking platform.
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