“Monetize” means turning a non-revenue-generating item into cash. Embedding ad revenues into social media video clips to pay content creators is a common monetization strategy. Privatization (commodification) turns a public asset into a profit center, like a tollway on a public road.
“Monetize” can also mean selling something for money.
Key takeaways
Monetize generates cash from non-revenue-generating activities.
New income sources often lead to monetization.
By selling advertising space, website owners make money from their content.
Social media platforms sell user data to the highest bidder to monetize.
The U.S. Federal Reserve buys Treasuries—notes, bills, and bonds—from the Treasury to monetize the nation’s debt and lower interest rates.
Knowing Monetization
“Monetize” has multiple meanings. Governments monetize debt to lower borrowing costs. While businesses monetize products and services to make money, they may do so to avoid a financial crisis.
Capitalism requires monetization. Monetizing is crucial to strategic planning and business growth. Today’s entrepreneurs and investors seek novel ways to turn neutral or costly business operations into profit centers.
“Monetization is old. Advertising has funded free TV and radio for decades. Newspapers have relied on print advertising and subscriptions for decades.”
Online Monetize
Web publishing and e-commerce have made monetization familiar to Americans. By selling advertising space, website owners make money from their content. Sales funnels from subscriber lists and e-books from previously published content are more advanced web monetization methods.
Website owners—individuals or large media companies—make money when visitors click on advertiser links. Advertisers may pay website owners for the number of times visitors see ads without clicking. Ad revenue can be substantial if a website gets enough visitors.
Companies may pay more to advertise on a popular website’s home page or other pages. Businesses also sell apps, subscriptions, and multimedia content like videos and podcasts.
An Example of Making Money Online
For “free” users, Spotify embedded visual and audio ads to monetize its streaming service. Paying a monthly subscription removes these ads. The company has monetized its customers’ services.
Social Media Revenue
Social media has expanded web-based strategies to monetize page views and clicks. Meta (formerly Facebook) and Instagram collect user data and embed ads to create targeted marketing campaigns. The highest bidder buys user data here.
Meta
Meta prioritizes data monetization. Meta collects demographic, click, and social network data from users. Meta’s SEC 10-K filing uses ARPU or average revenue per user. Meta’s year-end 2021 ARPU was $11.57 worldwide and $60.57 for the U.S. and Canada. Meta has a market cap of over $600 billion because of its 2.91 billion monthly average users.
YouTube
Meta, YouTube, and other Google-owned properties collect user data with multiple dimensions. The longer users use YouTube, G-Mail, Google Search, Google Maps, and Android OS, the more data Google collects. That data improves its marketing across all platforms. Google’s Adsense and Adwords platforms let companies bid for your attention while you watch YouTube videos.
TikTok
Strategic brand takeovers and branded hashtag challenges monetize TikTok videos. These ads appear immediately, target specific users, and engage users in challenges to create more monetized content.
Twitter makes most of its money from advertising and data licensing. Twitter sells API subscriptions to companies and developers to “access, search and analyze historical and real-time data” on the platform, in addition to targeted tweet ads. The “other sources” include Twitter’s MoPub service fees.
Monetizing the government’s debt
The Fed buys Treasuries—government-issued notes, bills, and bonds—to monetize the nation’s debt. The Fed buys these debt instruments with newly created credit money, which the government uses without printing more currency. Monetization puts the government’s debt on the Fed’s balance sheet and injects liquidity into the financial system.
Example of Monetizing Government Debt
For example, a government social program needs $5 million. It taxes $4 million but needs another million. The government can borrow, print, tax, or cut spending and budget for the program.
The government issues $1 million in low-risk Treasury bonds to borrow money. The Fed can buy $1 million in Treasuries, creating $1 million in bank reserves that banks can lend borrowers.
Frequently Asked Questions
What’s Monetization?
Monetization means turning something into money. This means monetizing things.
How to monetize stuff?
Monetization strategies can be tricky. Social media sites spent almost a decade monetizing user data. Today, online advertising revenues make up a large part of monetization efforts, but user data commodification may have new and different uses that someone will pay for.
How Do I Monetize YouTube Videos?
It would help if you had a large YouTube audience to make money from ads. YouTube’s YouTube Partner Program (YPP) requires 1,000+ subscribers and 4,000 watch hours in the past 12 months.
Popular YouTubers may make money from product placement or corporate sponsorship. YouTube allows mid-roll ads in videos 8 minutes or longer, increasing creator earnings.
How do I monetize Instagram?
Product placement on Instagram posts can earn you money from your engaged fanbase.
Posts can also sell your goods and services.
Why Does the Fed Finance Government Debt?
A central bank monetizes government debt by turning Treasuries into credit or cash. This manages the money supply and sometimes creates extra liquidity to boost a sluggish economy.
Bottom Line
Monetization involves monetizing a non-profitable product or service. Examples are ads in social media videos, paid versions of free services, and “premium” versions of the same service. The Federal Reserve buys Treasuries to monetize U.S. debt.
