Facebook - the American online social networking giant, founded by Mark Zuckerberg in 2004 enables its users to connect with friends, family, and business associates. With more than two billion active users, it is the largest social network in the world.
Just a year into the launch of Facebook, yet another online giant came into being. It was YouTube - the American online video-sharing platform. Apart from being the world’s largest video-sharing website, it is also the second-largest search engine. Google took over the company in 2006. It allows users to upload a wide variety of user-generated and business videos. Globally, around five billion YouTube videos are watched every day.
You must be aware that these two services are free. But the owners of these companies are billionaires. So, how do they make their money? Let’s explore.
How Facebook makes money?
Facebook earns 99% of its income from advertising on its website and its mobile platform. Its business model is based on its ability to persuade its users to make their private life as public as possible. The company uses this huge database of users to allow advertisers like Amazon to target their messages to specific audiences.
Marketers pay for ads based on the number of actions, like clicks generated by users, or on the number of impressions delivered.
Other areas that contribute to Facebook’s revenues are:
Facebook uses this language translation app that it acquired to translate chats and posts into multiple languages. Many companies advertise their products in native languages through this platform.
Facebook uses this messaging platform that it had bought to earn income by charging businesses for sending messages to customers. Whatsapp Business provides a lot of services to companies like measuring metrics and giving access to business insights.
3. Facebook Payments
This service generates money through payments, buying and selling, etc. It enables users to purchase from select businesses and pages from Facebook Marketplaces.
4. Atlas Solutions
Facebook had purchased it from Microsoft. This program enables advertisers to effectively track the effectiveness of their social media marketing programs.
5. Facebook Business
Facebook business is where all of Facebook’s business tools are available, and is meant for companies, entrepreneurs, and small businesses that wish to reach out to the maximum number of people. It enables clients to manage all their Facebook advertising and marketing activities from one place.
How YouTube makes money?
Like Facebook, YouTube also earns most of its revenues from advertising. It promotes featured content and embeds advertising directly into the videos, which the users watch.
The bulk of YouTube’s income comes from the following two avenues:
The bulk of Google’s (the parent company of YouTube) revenues comes from its proprietary advertising service Google AdWords. When you log into any of Google’s products like YouTube, Gmail, or GoogleMaps, you get to see several recommended websites.
YouTube has over 1.8 billion visitors every month. Google compiles a database of these users on YouTube or other websites and records their activities, preferences, etc. This information Google shares with other advertisers and they send out targeted advertisements on YouTube, by embedding it directly on the video clips.
To gain the top spot, advertisers have to make the highest bid to Google. Those who pay the highest, find their ads on the top of the list, while low paying ads are shown at the bottom.
2. YouTube Premium
YouTube also makes money from a subscription-based model called YouTube Premium. The service gives access to exclusive programming and original content as well as an ad-free viewing experience. For these benefits, it charges a nominal amount from subscribers.
How can you make money on Facebook?
Most people use Facebook to share news and photos with family and friends, but did you know that you can use it to earn some income as well? Facebook has built some monetisation tools to help you earn through the content that you post. These include using link-type advertising programs, create a fan page to promote a brand, and selling your posts.
Given below are some ways that you can monetise your content on Facebook:
1. The content is king!
Your first step should be to create great posts with engaging content. On Facebook, that means you have to insert lots of images and links, and also update it regularly. You should select a niche area which no one has explored before.
If you want to market a product, you have to link it with your content. Affiliate programs pay you a commission based on how much business you generate. You will be provided with marketing materials and a unique ID.
2. Fan Subscriptions
In this method, you add a paid subscription to your pages to allow your loyal followers to directly fund the posts through monthly or recurring payments. In return, you may offer them exclusive content and discounts.
3. In-Stream Ads
You can use Facebook to advertise and sell your products and including in-stream ads will help you to earn money. Facebook automatically detects breaks in your content to place the ads, or, you can choose the placements yourselves. Your earnings are determined by the budget of the advertisers, and the number of hours your videos is watched.
Earning Through YouTube
There is a huge potential to make money on youtube by uploading your videos and monetising them.
1. Affiliate Marketing
Here, what happens is that the YouTube content creator sends links at the end of the videos of certain products or services which he thinks will be of use to the viewer. If the subscriber likes the product, he will click on the link and make a purchase. So, the company benefits by having a customer. And, you, the content creator will get a commission from the company. Affiliate marketing, if done properly, is hugely profitable.
2. Cost Per Mille (CPM)
Cost Per Mille (CPM) or, Cost per 1000 Impressions decides what content creators on youtube are paid through Google’s Partner Program. It is a metric that allows sponsors to decide how much an ad is worth to place on your channel, based on your viewership. Advertisers pay different rates based on a variety of factors like geography, topic, etc. Typically content that is business-oriented and informative is paid higher than those with personal material, like travel experiences.
This is what companies will pay you every month for promoting their products on your videos. This can be their logos or brand names.
4. Content Partner
Here, a business can approach you to produce content for them, and pay you accordingly. But remember, that this approach only works when your own content is so great that people start to notice you.
5. Merchandise Sales
YouTubers can make more money off merchandise sales than they do from ads. A creator can sell T-shirts, coffee mugs, bags, or any other items to their loyal audience.
You can also earn your way through Vlogging, a short form for video blogging. You can choose any subject with which you are comfortable, like cooking or fishing, and make a short video. If it is popular, you can have subscription figures running to lakhs.
A vlogger can apply for monetisation to YouTube after getting at least one thousand subscribers or, 4000 watching hours. If the videos garner one million views per month, an Indian vlogger can expect to earn Rs 12,000 to Rs 15,000 per month.
The battle for online video content: YouTube vs Facebook
Video advertising accounts for over 40 percent of the total desktop-related spending and is a critical element for successful digital marketing strategies. Digital marketing specialists are keen to find out what is the return on investment while advertising on each of the platforms. Lets’ find out by comparing some data:
1. Live Streaming
In the Facebook vs youtube live-streaming battle, which is the best platform for your content? Advertisers often compare Facebook Live and YouTube Live to help focus their branding activities.
The number of active users on Facebook is 2.45 billion, making it the world’s largest social media platform. youtube currently has 2 billion monthly active users, slightly lesser than Facebook. 100 million hours of video are watched on Facebook daily, compared to over a billion hours on Youtube.
So, based on the total number of hours watched, Youtube gives advertisers more bang for the buck!
If you consider this metric, the average Facebook advertising costs $ 7.19 per 1000 impressions. Youtube ranks close behind at $ 7.
Who is the winner?
There are no clear answers. If you want to put your videos in front of a larger number of audiences, you may opt for Facebook. But if quality watched time, ie, the total hours your videos might be watched is the deciding factor, YouTube may be the better option.
Facebook and Youtube - the two online giants of our era have opened up multiple avenues to earn handsomely. You can also benefit from this; why don’t you give it a try?
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