How to Earn Money with Social Networks

Is it possible to Make Money With Social Networks ?

Social Networks gather people with common interests and many people enjoy being part of a large network of friends and future friends. Social networks actively promote people to join so that they can increase their clout with online advertisers. These Social Networks make large amounts of money from the advertisers that want to get their products and services in front of all of these people.

To increase the time period that people spend logged on to a social network, and thus increase the advertising revenue that advertisers are willing to pay, operators of these social networks provide a variety of high tech features such as special interest groups, video capability, online social games, photo albums, email, and contests to increase the "Stickiness" of the website which causes people to spend more time there.

But there are other good reasons for people to use social networks as well. Networking is a way for business people to meet prospective clients, partners, and customers in a friendly social way and this has always proven to be lucrative. This is similar to the reason why many companies provide tee times for their employees who are entertaining clients - it is a way to personalize a meeting during a friendly round of golf.

These attributes of social networking have been very successful in recent times for increasing the number of people gathering on these social network sites. However, competition in this 'niche' is growing and will continue to grow. A new niche is needed.

An online social network is actually just like any advertising company in that it must spend money to start up, grow, and maintain its business to make money. This is commonly done by employing advertising companies who will develop ways to promote the business. However, several successful companies have used other means to promote their businesses in the past by paying commissions to independent distributors who create more business for them. A combination of these tactics would create a hybrid marketing method and this is being used with greater frequency on the Internet with much success.

Enter the "monetized" social network. Since most businesses in the world are very happy if they can make a 30% profit, why not pass 70% of the advertising revenue back to the members of the social network? Base the amount of revenue each member receives on the amount of members they bring into the membership and you have a viral team of social net-workers who are being paid to increase the number of people in the network. Instead of paying for advertisements to get people to come to their website, the members become the advertisers and are compensated for their efforts. Also, since the advertisers who would pay this social networking site for hosting their ads is willing to pay the going rate for internet advertising, both the 70% share being passed back to the members and the 30% profit for the social networking site owners grows proportionally with the growth of the membership. If you can find a social network like this, wouldn't you rather be a member there instead of Facebook, Twitter, or Myspace who keep all the profits for themselves and take advantage of the very lucrative services their members provide them?

A monetized Internet social networking site's business model could be developed to financially reward the members based on their ability to bring new members to the website. A method which is quite easy to do with Internet technology would track each new member and link them to the existing member that invited them to the website. This would create the database used for compensation of members who develop other members to do the same thing. Tracking the use of the social networking website by the members would also be included in the compensation plan which also provides valuable metrics for companies wishing to advertise on that social network. This provides the basis of how money can be made by members of Internet social networks.

A form of multi level marketing can be implemented whereby the actual product marketed is basically a free membership at the social networking website with the benefit of the new member also sharing in the compensation plan. Most multi level marketing models have been successful in the past by actually charging a fee for new members to join and then continue to pay for the services themselves while they develop their downline. But the key is that an Internet Social Networking site does not own any actual products to sell. Its main source of income is that of an advertising portal which charges the advertisers for the ads they place so there is no need to charge the membership any fee's for the use of the site. The application of MLM in this case is one of a free product. Sam, who is a member of the social network, invites 5 of his friends who join under him and they start receiving compensation on their own use of the site. This progression continues and the labor of creating this ever growing network is divided among the membership. Naturally, Sam's commission increases as each of his downline members grow in numbers. Using multiples of 5, we can see that by the time Sam's network has reached 6 levels deep, he is receiving compensation for 78,125 downline members. If he received $1 for each of those members per month, this represents a substantial income which is paid entirely by the 70% revenue allocated by the website owners. Although this is a simplified calculation and actual results are usually not linear, Sam and his downline are free to add as many members as they want. Considering that there are over 1.7 Billion Internet users and those numbers are increasing exponentially, there will be no shortage of people to involve in this type of social network.

In this monetized social network model, each member is compensated by two streams of income. One based on the amount of time they spend using the portal for the things they always do on the internet like window shopping ads, purchasing products, doing their email, playing online games, taking surveys, and interacting with their friends. Since this website has a large volume of captive customers for the advertisers, bulk discounts on products are provided and compensated to the members that purchase the products advertised. The members are also compensated for bringing in new members by receiving a percentage of the revenue generated by these "downline" members..

The compensation model could be quite simple and easy to implement. Consider a compensation model which pays Sam 5% of the revenue generated by the people he directly invites to the website. Subsequently, he makes 2% of the revenue created by the members brought in under his directly sponsored people down to a level of 6 below him. This provides a substantial income which is fair and equitable for all member and it would be funded by the 70% revenue return of the total revenue generated by the site. Naturally, this total revenue increases as new members join.

This level is to encourage more leadership type people to be involved in the compensation structure who will provide management skills and training to the MLM network. To filter those who are not yet fully committed to the business model, this premium membership would require individuals to pay a fee of say, $200 dollars. But the compensation plan would be adjusted to 20% instead of 5% for directly sponsored downline and 6% instead of 2% for downline levels down to 6 levels below. Since this is a high commission level, the social networking website would need to limit the number of these premium member and thus the premium membership opportunity would only be offered until a sufficient number of individuals were acquired. Possibly 5000 in the beginning. One important aspect of limiting this premium membership is that it increases the value of it and will easily fill the positions with people who are leadership quality because they have the business knowledge to recognize the opportunity.

This plan in its entirety will expand the social network quickly and probably dominate the niche in just a short time.

Thus the answer to the question of "Can you make money with social networks?" is answered with a resounding "Yes." The above plan outlines this clearly for just the monetized social networking website compensation plan. But also there is the side of social networking that provides value for promoting other businesses. If the members of the social network have businesses of their own, the uniqueness of this network provides them with business contacts for promoting their other business. But for those who are not otherwise involved in online internet businesses, it still provides a money making opportunity on the internet.

So where can a person find an online social network that is structured like this. Happily, one such network does exist and it is growing rapidly. So rapidly that it is nearing the point where it must close its premium membership opportunity. The MLM model explained is much different in that it does not require the membership to pay any fee's as the product is free. But all the benefits of an MLM are present with the enhanced viability of offering a place to join with your friends and make new ones. No limitations are place on your ability to increase your income beside those you may place on yourself.

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