Social Networking Sites Plan on Profits

Social networking sites like Facebook and Myspace have become a crucial element in online advertising. Businesses use social networking sites to reach wider audiences, at little to no cost. With the rising popularity of such sites, one is led to wonder: How are these companies making their money? While these sites rely heavily on advertisements, analysts speculate that a company cannot run on revenue developed from advertisements alone.

As more users spend their time on social networking sites. these companies will have to figure out how to capitalize on their audiences. One thing that Myspace has done is partner up with Google to produce HyperTargeting, which produces tailored ads based on users’ profiles. Myspace is also looking into launching a paid subscription service. Furthermore, both Facebook and Myspace announced that they would allow users to share profile information within several social networking sites. If the sites are partnered, then they all receive benefits–monetary benefits being key.