How Facebook Makes Money | Full Details

Facebook one of the most popular social online platform in todays world, have been able to generate revenue from diverse ways, which is actually mind blowing to many when unveiled.

mark zukerberg, insight, Gist, Featured, Facebook gist

The idea “Facebook”, well thought by its founder, Mark Zukerberg has been able to deliver more cash. Owing to the fact that such an idea was well worked on and housed properly over years.
This online platform is been engaged with millions of users daily worldwide. Thus, making a base for the flurich of other businesses.

This article reviews the ways which Facebook generates revenue. More especially to clarify the majority who think there is no legit way of making cash online.

A Rundown Of The Ways Facebook Earns

1.Advertising Business

Facebook’s single most important revenue channel is advertising. The company has always been ad supported and most likely will always be ad supported. While some have claimed that Facebook will one day charge for access to the site, those rumors are completely false. Facebook generates over half a billion in revenue each year, the vast majority of which comes from advertising. So who is paying for advertising?

a. Self-Serve Facebook Advertising

The largest chunk of Facebook’s advertising revenue is the company’s self-serve advertising platform. By visiting the following page you can set up your own advertising campaign on Facebook. These advertisements are displayed in the sidebar of most pages of the site. That includes user profiles, events, groups, Facebook Pages, and third-party applications. The primary advantage of Facebook’s self-serve advertising platform is the granular targeting features.

Over the past few years Facebook has increased their targeting capabilities, including the ability to limit advertising to metropolitan areas as well as the following target variables: gender, age, network (workplace, school, etc), profile keywords, relationship status, and more. Facebook recently released the Facebook Ads API which provides large ad buyers with the ability to build robust ad managers on top of the Facebook advertising platform.

To boil it down, the Facebook Ads API enables Facebook to reduce the amount of friction large advertisers (those who spend more than $10,000 a day) have in posting new advertisements and modify existing ones. According to numerous sources, Zynga, the developer behind the largest games on Facebook (FarmVille, Café World, etc), is the largest purchaser of Facebook’s self-serve ads.
Small businesses like doctors, lawyers, restaurants, and others are also responsible for a large amount of Facebook’s revenue generated by the self-serve advertising platform.

b. Engagement Ads

In addition to Facebook’s self-serve advertising product, Facebook also generates a substantial percentage of their revenue through their “Engagement Ads” product. Engagement Ads are Facebook’s solutions for large brand advertisers. Facebook places all engagement ads on the site’s homepage. Once a user logs in, they can interact with advertisements (like to one pictured to the right) which are placed on the right-hand side of the homepage.
Facebook has been ramping up their efforts to recruit brand advertisers in a number of ways but last September Facebook stepped up their efforts with the launch of Brand Lift. Brand Lift is essentially a product which enables large brand to test the effectiveness of their advertising campaigns almost immediately after their campaign is run. Facebook believes this increased level of measurement will encourage brand advertisers to spend more on Facebook Engagement Ads.

2. Virtual Goods And The Gift Shop

Facebook currently generates a large amount of revenue from the Facebook Gift shop. For those less familiar with the gift shop, it’s a product which enables users to send virtual gifts to one another. At an average cost of $1 per gift, Facebook gifts have become an extremely lucrative business, generating upwards of $100 million last year. Facebook has been slowly opening up the gift shop to third-party developers in order to increase the variety of products sold through the shop.

3. Facebook Credits

That last way Facebook generates revenue is through their Facebook Credits program. Initially used as a way for Facebook users to purchase virtual goods through the Facebook gift shop, Facebook is slowly opening up Credits to third-party developers. The purpose is for developers of applications, like FarmVille and other large social games, to integrate Facebook’s Credits product directly into their applications. Facebook will in turn take a large percentage of all virtual goods sold through applications.

Conclusion

Facebook makes money a number of ways however advertising is the company’s revenue channel. With self-serve ads becoming a booming business for Facebook and with the growth of Engagement Ads, Facebook could be on track to generating much more revenue.

While many users still wrongly think that Facebook will charge users because they aren’t able to pay for the site, the reality is that advertising is proving to be a very big business for Facebook.

And, contrary to what some people think, Facebook does not make a dime from the subscription or data bundle you use to browse it.

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About the Author

Imaeruaka Joseph .N

Imaeruaka Joseph .N

I believe in sharing wisdom with others. Utilizing life to its maximum and blogging is a call for me .

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