How does Facebook make money?

From your mother to grandmother everybody has a Facebook account. Facebook has become part of every household. Be it young or old everybody has a Facebook account. That is how influential Facebook has become. So it is not an exaggeration to say that Facebook has an active part in shaping the generation Z.

What started as a social media platform that would help you in connecting with your old friends has now evolved to become the social media giant. People can clearly divide the 2000’s into before and after Facebook. But Have you ever been curious about how this social media giant makes money? If you have, then, you’re in the right place. By the end of this article, you will understand how this social media platform is making money.

But, before that let’s dive deep into the history of Facebook.

Have you ever given it a thought on why Facebook is so popular? Agreed it was the first social media platform that has improved the communication and interaction between people. Earlier, if you want to communicate with some abroad then you can either call or send a letter. But with Facebook, the thousands of miles were reduced with just a Facebook call. The world has become closer than ever. If you remember the Arab Spring of 2011, this revolution was triggered through twitter and Facebook. From memes to revolution facebook has come a long way. 

back to menu ↑

Story Behind Facebook

Facebook was launched back in 2004 by Mark Zuckerberg with his fellow Harvard roommates. Initially, it was limited to only Harvard students but it was later expanded to most of the universities in the United States and Canada. By September 2006, anyone who has an email address and is above 13 years old can have a Facebook account. Slowly but steadily Facebook has crept into everyday lives and people across the world wanted to have a Facebook account. No matter how many social media platforms have come, this platform has successfully maintained to stay no.1. 

Not only that over the years, but Facebook has also taken over many emerging social media platforms and helped them in growing such as Instagram and Whatsapp. 

Here are some interesting facts about Facebook

  • Around 1.62 billion users are using Facebook daily. 
  • More than 85% use this platform to stay in touch with their family and friends. 
  • 74% of people use this platform every day
  • An average person spends around 37 minutes daily on Facebook
back to menu ↑

The Secret of Money-Making 

The major source of revenue for Facebook is through advertisements. But if you think that is the only source then you’re wrong. With its new digital line-up, many sources are contributing to the companies profits such as 

But despite the revenue from these acquired units, the most important source of income is advertising. Advertising is the main source that brings money to Facebook. 

back to menu ↑

Advertising 

One of the reasons why all the major brands are concentrating on Facebook is because of its users. This social media giant has around 2 billion users. Be it small businesses or large, they can easily reach their targeted audience and help bring awareness about their product. The digital advertising of Facebook is what the companies were looking for. They can reach their targeted audience through different formats of ads, what more do they want.

The different formats of ads that Facebook offers are:

  • Self-servicing advertisements
  • Facebook Messenger Ads
  • Video Ads
  • Facebook Mobile
  • Targeted Advertisements
  • Data Generation

Self-servicing Advertisements 

This format is most commonly seen on Facebook. Through this format, anybody can create the advertisements and put them to use. Usually, these self-servicing advertisements are displayed on the sidebar of the Facebook pages. The advertisers can create ads using the manager page. Not only creating ads, but it also provides you with the necessary tools that will make sure that your advertisement reaches the right audience.

Facebook Messenger Ads

Facebook Messenger is a messaging tool that allows users to communicate with other users personally. So the advertisers are leveraging on this messaging tool to reach their target audience and spread the word about their audience. With 2 billion users, you can imagine the number of people they will reach.

Video Ads

Facebook live served as the tool that allowed the users to join the other users through video calls. No matter where you’re loved one is, you can check upon them and reconnect with them. So the advertisers have also found out this effective means to reach their targeted audience. Facebook is making money by running the ads on this platform.

Facebook Mobile 

Did you know that 83% of the Facebook ad revenue is generated by the Facebook mobile app? This digital tool is undoubtedly one of the most effective money-making tools. Mobile advertising is growing at a double-digit rate annually. One can say that most of the advertisers are more interested in running their ads on Facebook mobile.

Targeted Advertising 

Facebook has one of the largest user bases. This platform does hold the personal data of these users. From their gender to shopping preferences, facebook knows every single detail of its users. So Facebook sells the advertisement space to all these major companies. These companies can release ads to specific demographics. Not only this, but the companies also target these ads to users based on their religion, age, or political preferences. Facebook offers tools like Facebook’s Dynamic Ads that allow advertisers to sell their products to users at different demographics, preferences, or income levels. One can say that targeted advertising is an important revenue generator for this platform. 

Data Generation

If you think Facebook’s only source of income is advertising, then you’re wrong. Around 85% of the total revenues come from the advertising but that is not the sole source. Data generation definitely is one of the sources of income. Although because of the recent Scandal the data generation revenue has curbed. But still, Facebook is making quite the money with Data generation. 

Conclusion

Facebook is definitely one of the most used platforms. It competes with other giants in the market such as Google, Amazon, Apple, etc. As you know, Facebook sells ad spaces to corporations on social media and mobile platforms. If you want to know more about other business models, check out other articles on this website.

MYVU.com
Logo
Compare items
  • Total (0)
Compare
0