How Facebook, Twitter, Social Media Make Money From You - http://www.investopedia.com/

There are 277 million users on LinkedIn (NYSE:LNKD), and a similar number for Twitter (NYSE:TWTR). There's 1.2 billion on Facebook (Nasdaq:FB), give or take. Then we have 540 million people on Google+ (mostly people who haven’t yet figured out how to delete their profiles while keeping their Gmail accounts intact).

Even MySpace manages to retain about 36 million users. Such volume is the short answer to the question “How can these companies make money?”, given that they more or less give away their products. But it still doesn’t explain where the revenue comes from: After all, 248 million Twitter users times zero is zero.

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When Facebook founder Mark Zuckerberg went looking for a chief operating officer in 2007, it’s no coincidence that he selected not an engineer nor a technologist but a vice president with a background in advertising sales. Sheryl Sandberg had spent 6.5 years selling advertising as a vice president at Google (Nasdaq:GOOG). Growing Facebook’s user base to the point where it reached critical mass was obviously important to the company’s operations, but only to the extent that it provided something to attract advertisers.

To an uninterested observer, committing the equivalent of the gross domestic product of Honduras to a texting application might sound like the height of dotcom era hubris and recklessness. But it isn’t. WhatsApp boasts 400 million users, which to Facebook management means an even greater stock of susceptible minds to sell as a unit to companies looking to, for instance, move a few more mobile phones this quarter. Every acquisition Facebook has made since, whether it was $1 billion for Instagram or $19 billion for WhatsApp, was conducted with the same goal in mind.

Advertising isn’t just a way for Facebook and its ilk to perhaps earn a little bit of revenue in between hosting family photos and personal musings. It’s the very purpose of the site’s existence, and the same goes for Twitter and LinkedIn (NYSE:LNKD). Twitter’s status as a place to find instant, unfiltered, democratized updates on everything from celebrity arrests to international civil unrest might make it important to the modern exchange of ideas, but again, that’s secondary to keeping the advertisers happy. Take Twitter’s word for it, directly from its own recent SEC filing. The company’s forward-looking statements concern:

"Our ability to attract advertisers to our platform and increase the amount that advertisers spend with us." And "Our ability to improve user monetization, including advertising revenue per timeline view."

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