HOW DOES FACEBOOK MAKE MONEY?

Founded in 2004 from Mark Zuckerberg’s college dorm room as a Harvard student, the website is now worth billions of dollars and is one of the world’s most recognizable brands.

It’s even gotten the Hollywood treatment, with The Social Network, a film about the site’s origins, released to critical acclaim in 2011.

But, as a parent or teacher, you’re probably curious on how Facebook makes money

What is Facebook?

What is Facebook?

Facebook is a website that allows users to create free profiles and connect with friends, coworkers, and strangers online. It enables users to share images, music, videos, and articles, as well as their own thoughts and opinions, with as many people as they want.

Users send “friend requests” to individuals they may or may not know.

Facebook has more than two billion users.
Once accepted, the two profiles are linked, and both users can see whatever the other user posts. “Facebookers” can post almost anything to their “timeline,” which is a snapshot of what is going on in their social circle at any given time, and can also engage in private chat with other online friends.

Profiles contain information about the person. Many users post a lot of information that is easily accessible to their friends and others,

whether it is what they work at, where they study, their ages, or other personal details. Users can also “like” other pages that interest them. A Liverpool FC fan, for example, can follow the club by connecting with its Facebook page. The user can post comments and receive club updates, pictures, and so on.

So how does facebook make money?

It’s no secret that Facebook makes money by providing companies and small businesses with targeted advertising opportunities.

Looking at more recent data, its reports show that $55.1 billion of the $56.7 billion in revenue it has made so far in 2022 came from advertising. This accounts for 97.2% of total revenue. The remaining 2.8% is made up of payments (in-app purchases of Facebook games), sales of Oculus Rift (Facebook’s VR headset), and other items.

1. Facebook ads

Facebook makes billions of dollars from digital advertising because it has something that businesses desperately want: access to billions of people around the world who might buy their products or services. In fact, many businesses advertise on Facebook.

What types of advertising does Facebook use to generate revenue? Here’s examples:

. Self-Serve Advertising

This type of advertising is popular on Facebook; self-serve advertising allows anyone to create and post an ad on Facebook. Self-serve advertisements appear on Facebook pages for individuals, groups, user profiles, events, and third-party pages on the right side (or “sidebar”). The Ad Manager page on Facebook assists advertisers in creating their own ads by providing granular targeting tools to ensure the ad reaches the intended audience.

. Targeted Advertising

Facebook sells advertising space to businesses and organizations that want to target a specific demographic, such as video game players. Advertisers can also target ads to larger groups of people based on political preferences, religion, or even age. Advertisers can use tools like Facebook’s Dynamic Ads to market their entire product inventory to users with varying income levels. Targeted ads are a significant revenue generator for Facebook, and it’s all thanks to the data the company collects on its user base.

. Video advertising

Facebook Live has traditionally thrived as a digital tool that allows Facebook users to connect via video.

it is increasingly seeing video as an effective way to connect advertisers with Facebook users via Facebook Live. Facebook Live broadcasts are on the rise, and Facebook is capitalizing by making video ads on its signature video platform commonplace.

2. In-app purchases of Facebook games

Any additional purchase made within an app, such as extra lives in a game, an upgrade to remove ads from an app, more storage, and an upgrade to unlock premium app features is considered an in-app purchase.

In-app purchases from once-popular games like FarmVille. According to estimates, Facebook made $711 million from this in 2017.

3. Virtual reality sales (Oculus Rift)

Oculus Rift is a virtual reality (VR) headset that connects to a powerful PC to enable advanced computations and graphics rendering.

virtual reality  headset

Virtual reality is another technology that is widely regarded as an excellent consumer outreach tool in marketing circles. With Facebook’s $2 billion acquisition of Oculus VR in 2014, the company now has a foot in the door to VR technology and the market, where companies can reach consumers (the video game market is a great example) in ways that marketers could never have imagined even 20 years ago.

4. Family of Apps

Facebook family of apps include users of the core Facebook app as well as Instagram, Messenger and WhatsApp.

Instagram: This photo-sharing app, purchased for $1 billion in 2012, has 400 million users and is expected to be a huge linchpin for Facebook in the burgeoning photo app digital marketplace.

In 2014, Facebook paid $19 billion for WhatsApp, making it the company’s largest acquisition in recent years. WhatsApp is a hugely popular instant messaging platform that advertisers would love to break into, given its worldwide popularity.

there are many ways that Facebook make money like those we explained above and some more like:

jibbigo, atlas solution and Onavo as well as enterprise software and hardware products

Conclusion

Facebook deriver most of it’s revenue in advertising. Their platform allows for extensive user segmentation based on a variety of metrics. Although Facebook does not charge you, it does profit from your data.

Please share this post with a friend who is curious about how Facebook makes money!

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