Revenue Analysis: How Facebook Makes Money
Here's where all those billions come from. Facebook makes an astonishing 85% of its revenue from advertising. Of that, around 30% comes from mobile advertising. The rest 15% of Facebook's income comes from various sources, which have been further explained below
The biggest reason for the success of Facebook lies in advertising. Like I already mentioned, Facebook has access to all the information that you post on the site. They then publish ads on your screen that are directly related to where you are, what you do, what you're interested in, and everything in between. Update your status that you're going jogging, you'll start seeing Nike and other brands on your home page. Like drinking beer? Update a status related to that and you'll find an ad by the closest microbrewery.
Here's what actually happens:
Facebook and a consumer brand, let's say Nike, enter an agreement called the Facebook Exchange or FBX.
Now, Facebook will sell its user information to Nike, who will use it to target a more specific Facebook database.
Let's say you made a purchase of a pair of new Nike shoes, and you gave them your email or contact number in the process. Nike can then refer to Facebook's database through FBX and you will instantly get Nike ads on your Facebook pages.
Facebook does claim to keep a user's personal information strictly protected. The importance of FBX is that any brand can use the information to target specific users, instead of a vague demographic, and pay Facebook to post their ads on that user's page.
If you take a look at the details, you'll see that Mark Zuckerberg has been slipping down on the Forbes List. Why? Because it's difficult to post advertisements on the mobile version of Facebook due to the small screen space, making it difficult to post ads without annoying the users. Considering the fact that mobile users have grown by more than 60% (total users: 1 billion, with more than 600 million mobile users), it is certainly a big concern for Facebook.
The biggest reason for the success of Facebook lies in advertising. Like I already mentioned, Facebook has access to all the information that you post on the site. They then publish ads on your screen that are directly related to where you are, what you do, what you're interested in, and everything in between. Update your status that you're going jogging, you'll start seeing Nike and other brands on your home page. Like drinking beer? Update a status related to that and you'll find an ad by the closest microbrewery.
Here's what actually happens:
Facebook and a consumer brand, let's say Nike, enter an agreement called the Facebook Exchange or FBX.
Now, Facebook will sell its user information to Nike, who will use it to target a more specific Facebook database.
Let's say you made a purchase of a pair of new Nike shoes, and you gave them your email or contact number in the process. Nike can then refer to Facebook's database through FBX and you will instantly get Nike ads on your Facebook pages.
Facebook does claim to keep a user's personal information strictly protected. The importance of FBX is that any brand can use the information to target specific users, instead of a vague demographic, and pay Facebook to post their ads on that user's page.
If you take a look at the details, you'll see that Mark Zuckerberg has been slipping down on the Forbes List. Why? Because it's difficult to post advertisements on the mobile version of Facebook due to the small screen space, making it difficult to post ads without annoying the users. Considering the fact that mobile users have grown by more than 60% (total users: 1 billion, with more than 600 million mobile users), it is certainly a big concern for Facebook.