Many people may wonder how Facebook makes its money especially when “we’re not been charged for using the app”. According to GOBankingRates, the net worth of Facebook is estimated at approximately $138.3 billion (£105.2 billion) while its market cap range is just about $346.4 billion to $468 billion (£263.6 billion to £356.2 billion). So how the hell does Facebook generate its revenue if it is not collecting a dime from its users? Regardless of the fact that Facebook has over 2.3 billion active users as at 2018, yet the revenue it generates do not come directly from the user base. So let me take you on a sort journey as we explore the major means by which this social media corporation generates its revenue.
With 85% of its revenues coming from advertisement, Facebook has deployed a number of means to earn its revenues from advertisement and some of these include self-serve ads, video ads, Facebook Messenger ads, and other forms of targeted ads. You could see these ads on the right side or side bar of your Facebook page while using the website. Most advertisers will love to use a platform that can reach millions of people that goes way beyond billboards and posters as used in the conventional era. Sometime in 2018, rumor has it that Facebook compromised part of its private policies by granting international conglomerate access to personal information of its users. Why this may be regarded as an obvious breach of the users guaranteed privacy, it gives the multinationals using the information the opportunity to sieve its content audience and advertise to them directly. Come to think of it, with over 2.3 billion active users, this is the best place to reach your audience through advertisement.
While it is estimated that most of Facebook’s revenue comes from advertisement, it is still difficult to estimate how much of its revenue comes from data generation. User data is a means of generating revenue on social media by showing users relevant ads while using their data in return. In North America which is one of Facebook’s largest audience, a guess of what Facebook makes per user on data generation is about 84 dollars while it makes 27 dollars per user in Europe. In Europe however where Facebook generates a significant amount of revenue from user data, that market may not be so lucrative anymore with the new General Data Production Regulation (GDPR) in Europe, requiring Facebook to user consent for data. Fortunately, with the discovery of new markets in Africa and Asia there is potential that its revenue base will continue to expand from user data.
The switch to an App-based platform has also helped Facebook earn serious money on the digital platform. With the Facebook Mobile, Facebook Lite and its Messengers, research has shown that in 2016 alone, the Facebook Mobile Apps generated almost 80% of its revenue that year. Don’t get it twisted, the revenue made from Facebook Mobile is not from downloading the apps but from the Facebook ad contents making it one of the biggest mobile advertising platform.
Facebook Video[/caption] No one active can deny not to have watched one or two motivational or funny videos on the Facebook platform. With a view to earn money from diverse quarters, Facebook also generates some cash from video contents with its users viewing videos and live broadcasts from the Facebook Live platform. With this development, Facebook is doing everything within its power to ensure that content creators help promote videos on its platform. Based on information provided by the corporation, the daily watch time for Facebook Live broadcasts has expanded over the last four years which has greatly impacted in the revenue base of the corporation.