The viability of social networks has been in question since the beginning of their existence. How can they be monetized? Will they be self-sustaining? The largest social network, Facebook, is answering with positive cash-flow.
Social networks, especially the larger ones, have a unique set of problems. They offer services to users free-of-charge, which means they must provide the storage space and bandwidth for all the candid photos, “I love you” messages, and karaoke videos. In turn, these networks hope to generate revenues by selling highly contextualized ad space. But success has been limited simply because network membership has increased far more rapidly than these sites can sell ads.
Facebook, however, is finally getting results. “It’s certainly meaningful to show that this is absolutely the real deal. Facebook is executing. People are spending money on the site,” said Broadpoint Amtech analyst Ben Schachter.
Facebook founder and CEO, Mark Zuckerberg explained at his keynote presentation this week that this news will allow Facebook to be a “strong independent service for the long term.”
Just like every other business, Facebook depends on user and advertiser engagement. The services that Facebook now offers have become popular and unique enough for users to now spend more time on Facebook than any other social network, which has clearly been grabbing the attention of not just big budgeted marketers, but smaller ones who are also looking to connect.