How Does Facebook Make Money?

How Does Facebook Make Money?


how does facebook make money?

Facebook is one of the best social media platform that the world has ever witnessed. After Google, Facebook is most visited website in the world. It’s not secret that Facebook makes a big money. When compared to the revenue of Google, Facebook’s case make it a very questionable. Even Mark Zuckerberg was clueless about the effective way to make from Facebook, as he was not happy to using advertisements on the website.

The Search Agency conducted a survey on American Internet users. Of those surveyed users, only 54% could actually say how Facebook earn money. This indicates that, Facebook is not clear over its revenue models with its users. Every successful business has an proper business plan, that clearly reflects on revenue models.

It is clear that many of us, including Facebook users are pretty much clueless as to how Facebook makes money. After a Billion of users, photos and videos, how does Facebook make money? If you are curious and eager to dive into hidden secrets of Facebook’s revenue models, let’s get started.

How Does Facebook Make Money?

You have to agree on fact that, Facebook is not a free service, because users provide Facebook with data every day in exchange to use the platform. Facebook translate your likes, photos and other online activity into hard cash.

facebook revenue graph
Facebook Revenue Graph

Just take look at the revenue graph of Facebook, it clearly indicate that revenue from advertisement is more. Facebook has consistently increased its revenues, with addition of billions of users with each year passing buy.

What is the earning source of any website or blog? First thing that will pop up into your mind is Advertisements. Advertising has become one of best revenue source for almost all online businesses. Facebook makes 85 percent of money through advertising. So, let’s take a look into what types of Advertisements Facebook implements.

1. Self Serving Advertisements:

Facebook earns more revenue from their self-serving advertisements. Self-serving Facebook Advertisements can be created by anyone and these advertisements are displayed on the side of almost every page. Big companies or any user spend money on Facebook to advertise/promote their products or services, this is how Facebook earn money from advertising.

facebook ads

These self-serving ads can be targeted to users according to age, sex, location, interest, etc. That gives a perfect coverage for advertisers to who they want to show ads, that’s what advertising is all about. Zynga is one of the major purchaser of Facebook’s self-serve ads, now you know why you are shown more Farmville ads! In year 2010, out of the $650 million, $450 million made from these self-serving ads, this is power of advertisement.

2. Engagement Advertisements:

In addition to self-serving ads, Facebook implemented engagement ads. These advertisements are targeted to large brand advertisers. These ads are shown to users on the homepage and right-side of all pages. In year 2010 Facebook made over $200 million through engagement ads and it is on rise. The advertising budgets and the requirements of large brands are sky high and Facebook created engagement ads specially to target them.

engagement ads

  3. Mobile Advertisements:

Mobile advertisements are an important and core part of Facebook’s revenue source. Today everyone is accessing Facebook from their smartphones, so Facebook has also worked out its mobile advertisements to comply with demand. One third of revenue comes from mobile advertisements. Facebook is in partnership with big ad agencies to deliver their mobile ads.

4. Other Sources:

85% of Facebook’s revenue comes from advertisements, the rest 15% revenue comes from other sources. Out of this 15%, 12 percent revenue comes from Zynga alone. Zynga is top biggest purchaser of Facebook advertisements.

Facebook Games/Zynga :

You must have heard about games like Farmville, Cityville, etc. You might have receive many invitations to play such games on Facebook. There is much going in the background that you might not know. There is real money on bet over here. Yes, real money. All these online games are made by Zynga and Facebook gets 30 percent of its revenue from it. So it is clear that Facebook earns over 12 percent revenue from Zynga.

facebook games

Facebook is working hard on different new monetization techniques to earn more and more. It’s going better and better. This is how Facebook is making big money and I’m damn sure that you did not knew these things. There are many things behind the scenes.

Now you know everything about Facebook and its revenue sources. If you have any query regarding article or anything, please feel free to ask in the comment section.

shubham sawant

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