How does Facebook Make Money?
In today’s world of disruptive technology, we are seeing many new incidents that seemed strange a few years ago. Uber, a transportation service, does not own any car. Airbnb, a housing rental service, is not the owner of any accommodation.
And of course, we are one of the most famous, Facebook. Facebook is a social sharing platform, but it does not own any content.
So how does Facebook earn money?
Taken in its simplest form, the answer can be understood in one word: Advertising.
However, this answer can not satisfy many people because Facebook is currently capitalized for the tune of $ 543 billion. It’s a lot of money for a company that does not do anything but basically lets people share updates about their lives on their stage. In comparison, Microsoft, which makes both software and hardware for sale worldwide, is currently valued at estimated $ 680 billion.
Let’s look at Facebook finances immediately
Facebook CEO Mark Zuckerberg was once told,
Helping to add a billion people is amazing, humble and far away I am most proud of my life.
In a way, he was honest, but helping to connect those billions people helped him earn more for the company than many people. After all, he has mentioned beforehand that “Creating a mission and creating a business is in hand.”
If we look at the revenue streams of Facebook, then only two main points are listed:
How does Facebook Make Money
- Advertising and payment
- Other charges
It’s a big advertising advertisement, which almost completely accounts for the revenue of the company. In fact, advertising revenues for Facebook during the 2017 year was $ 39.9 billion.
Thanks for selling ads, since 2012 is earning money on Facebook Fist.
Since then, it has shown a combined annual growth rate of approximately 59% (CAGR). Thanks to such healthy development, the company holds a strong cash flow and uses that money to buy rivals from time to time, eventually raising its own value.
How does all this work together
Building a Mission and Building a Business Hand in Hand – Mark Zuckerberg
As mentioned earlier, the basic foundation of Facebook is to allow its users to share their content socially. It can be anything from photographs of their pets or even late night ramps because they feel that their neighbors are such stand-up partners and they should be awarded the Nobel Prize. Of course, because Facebook is such a stand-up company, it generously allows people to do this for free.
That’s right, the average consumer who uses Facebook does not do anything for the service. You just have to sign up for one account and you can share it in your heart’s content.
The problem with ‘free’ is that it is not often. Hold hold here; If you can not identify the product that Facebook is earning, then you are either a product, an information product that you have generated, or it is a combination of both.
You see, Facebook does not sell you anything because it is selling you to your advertisers.
In the last quarter of 2017, Facebook saw an average of 1.4 billion daily active users. As of 31st December 2017, statistics for monthly active users increased by 2.13 billion, which was an increase of 14% during the previous year.
These numbers mean a great deal for Facebook advertisers.
The size of the audience often determines how much money companies like Facebook can charge to advertisers. Certainly there are other factors like the type of advertising, and finally, this is ultimately a user base that is appealing.
Companies are always looking for ways to expand their potential market. They pay good money to reach as much a wider audience as possible in the hope of selling something. Since there are such a large number of people using Facebook, the potential market for these companies is huge. (If you run a business, you may also be interested in learning how to advertise on Facebook)
Even if Facebook was not promoted by advertising revenue, people would have to charge to use it. Studies have shown that this amount can be as much as $ 5 per user, which can result in losing as much as 90% of its users.
Who advertises on Facebook?
According to a Reuters report, more than 5 million businesses are advertising on Facebook every month. The big companies are those who spend billions in advertising. These are global, recognized brands, such as McDonalds, HSBC, sheltering, and Dell.
Apart from advertisements, these companies are also paying Facebook to help increase the popularity and distribution of posts from their business pages. In fact, they pay for promoting their posts with sidebar ads and even promoting sponsored stories;
- Sidebar Ads – These appear on the side of the site and the cost is approximately $ 1- $ 5
- Sponsored Stories – Approx. 50 cents per click
- Promoted post – Approximately $ 5 at entry level, actual cost depends on the number of people targeted
Since the number of active users on Facebook increases, the revenue from advertising also increases. The company has run a very streamlined operation so far, but still, it is not completely resting on its laurels.
Future potential revenue streams
Technology is always changing and even with a very successful business model, Facebook knows that it is not used to change. Buying some potential competitors and companies separately that they add value to their original operations, Facebook is also looking at new technologies for future evidences.
“We are working on new ways of bringing our hands into virtual and enhanced reality, wearing these gloves, you can attract, type on virtual keyboard, and even web like Spider-Man can shoot. “- Mark Zuckerberg (source)
Oculus crack – virtual reality has been described as ‘the next big thing’, but so far it has not really stopped. However, due to the fall in prices for new equipment, Facebook’s Oculus Rift VR gear is likely to add to its lower line. Some estimates are expected to be up to 2020% of Facebook’s revenue by Oculus 10.
Look at Facebook – obviously, the company that has emerged on user-generated content, is making its own video and going to produce content for itself. It also purchased the rights to broadcast certain sports games and could lead to ad revenue.
Growing on mobile – Mobile penetration rate is growing rapidly around the world and continues to do so. It is also possible to add companies across the world to Facebook’s advertising appeal.
China – Even this economic giant is competing globally with its big technical companies like Alibaba and Tenant, the appeal of a strong user base in the country has called Facebook and it is trying to enter the Chinese market. Has been doing.
If you are an investor, then is Facebook a good buy?
It is a bit late to jump on the share wagon that Facebook’s share price is high, but if you can afford it, then many analysts believe there is still a lot of space for the company’s development. Thanks to the company’s strong business model and clever strategic call, this remains an attractive proposition.
Facebook has primarily taken a strong focus on its South Asian business, India is by far the biggest thing for them. Due to its foot in this area, it is in a unique position to present a payment platform that the mobile banking and finance sector is now looking at many.
The company is a leader in social media space and thanks to its core business, it will continue to grow. It will also increase the number of widespread revenue potential described earlier and so far, it is very valuable.
Notes: It is not recommended to buy or sell stocks. Please consult your investment advisor before making an investment decision.
How does Facebook Make Money Conclusion
For the average person on the road, it can not come as a big shock that you are contributing the most in the lower line of Facebook. In black and white to determine that you are responsible for the billions of Mark Zuckerberg’s billions, but you are in neutrality, but the company is giving you good service at the financial cost.
Yet from the time you are watching the advertisement (or worse, seeing a post without any advertisement), there is something else to think about this free service. The ad is more than just throwing and hoping for the best.
To reassure your clients that they are advertising for the right people, Facebook is using the information you provide, such as your likes and dislikes, your personal information and your browsing habits. Nobody can help but feel that this is a little scary.
On the other hand, Facebook offers small businesses an opportunity to compete globally, and a scalable medium to do so. This is a real shot in hand for those companies which had no way in the past, in which it can be widely recognized.
The technique itself is never good or bad, but how it always uses it. Before using a free product, think about what you are offering in return for that product or service, even if no capital expenditure is there.
Nothing in life is truly free.
❤❤❤❤❤❤❤❤❤❤❤❤❤Article by Abdul Moeez❤❤❤❤❤❤❤❤❤❤❤❤❤❤