Business model

Few social networks currently charge money for membership. In part, this may be because social networking is a relatively new service, and the value of using them has not been firmly established in customers' minds.[citation needed] Companies such as MySpace and Facebook sell online advertising on their site. Their business model is based upon large membership count, and charging for membership would be counterproductive.[60] Some believe that the deeper information that the sites have on each user will allow much better targeted advertising than any other site can currently provide.[61] Social networks operate under an autonomous business model, in which a social network's members serve dual roles as both the suppliers and the consumers of content. This is in contrast to a traditional business model, where the suppliers and consumers are distinct agents. Revenue is typically gained in the autonomous business model via advertisements, but subscription-based revenue is possible when membership and content levels are sufficiently high. Online marketing, also known as online advertisement, internet marketing, online marketing or e-marketing, is the marketing and promotion of products or services over the Internet. Online advertising is a form of promotion that uses the Internet and World Wide Web to deliver marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, blogs, rich media Ads, social ne work advertising, interstitial ads, online classified advertising, advertising networks, dynamic banner ads, cross-platform ads and e-mail marketing, including e-mail spam. Many of these types of ads are delivered by an ad server. Online advertising is a form of promotion that uses the Internet and World Wide Web to deliver marketing messages to attract customers. Online advertising began in 1994 when HotWire sold the first banner ads to several advertisers.Revenue in the United States grew to an estimated $7.1 billion in 2001 or about 3.1 percent of overall advertising spending. The dot-com bust destroyed or weakened many of the early online advertising industry players and reduced the demand for online advertising and related services. The industry regained momentum by 2004 as the business model for “Web 2.0” came together.A number of businesses emerged that facilitated the buying and selling of advertising space on web pages. Entities that operated web portals settled on the traditional “free-tv” model: generate traffic by giving away the content and sell that traffic to advertisers. Most web sites, with the exception of transaction ones such as eBay, generate the preponderance of their revenues from the sale of advertising inventory—the eyeballs that view space allocated for promotions—to advertisers. In the first half of 2007 alone, advertisers in the US spent more than $10 billion advertising on websites.That was about 14 percent of all advertising spending.