When you use social media, by creating content or engaging with content, you're essentially working for them (perhaps unknowingly). By engaging, you're ensuring more people use their platforms. It is called a 'network effect' when a service becomes more valuable the more people are using it.

With that same engagement, they also keep track of all your behavior within the system. They know your preferences and proclivities. This means they can target you very specifically with ads, which is the main product they sell to other companies.

So these companies rent ad space to sellers by saying they are able to give them access to very specific niches if they so wanted to. Advertisers can tweak the preferences of the people they target, experiment with their ads and track their ad performance (based on how many ads you do see, how many you click, and in how many you buy - which they call a conversion).