With more than $1 billion per quarter in advertising revenue and 1.2 billion monthly active users, few realize that Facebook is more than just a social networking platform. It is a deceptively run corporation, worth more than $100 billion.
We should start by saying that you could assume that Facebook is not indeed a free service because users provide Facebook with data every day in exchange for the ability to use the site. In turn, Facebook can translate your likes, photos, locations, and other online activities into hard, cold cash.
Like, $40 billion in revenue in 2017, to be more specific. This how does it:
Ads, Ads, Ads
This is what the most of Facebook’s wealth comes from. This social network uses a lot of information; it knows about you to show you ads, it believes you might like, and brands pay Facebook to display their products to the potential customers.
It’s called targeted ads, and it’s nearly the entire way that the company keeps the lights on; almost all of its $40 billion revenue comes particularly from targeted ads. Facebook doesn’t technically sell your data to strangers; it sells access to you based on your data.
Games and Other In-App Payments
In 2017, Facebook got $711 million off of different paid services, like purchases of desktop games offered in-app purchasing. This revenue stream has slowed down over the past several years.
“This decline is likely a reflection of the general shift away from desktop to mobile and mobile games,” Kristina Varshavskaya, a former Product Designer at Facebook.
Gift shop and virtual goods
Facebook currently makes a large amount of money from the Facebook Gift shop. Gift shop enables people to send virtual gifts to their friends. With $1 per gift, Facebook gifts have become a hugely profitable business, causing upwards of $100 million last year.
Facebook is opening up the gift shop to third-party developers to extend the quality of products traded through the shop.
Oculus Rift (maybe someday)
That $711 million value above included the sales of Oculus stocks and products, Facebook’s VR headset and additional gear. Although an expensive purchase at $2 billion back in 2014, Oculus hasn’t been a big supporter so far. With Oculus Go, a new, cheap version of the Oculus product now accessible, Mark Zuckerberg might get closer to his dream of combining VR into the Facebook user experience — using his products, of course.
Facebook watch (also someday)
The Proceeding to grow Facebook’s video experiment is something that the social network behemoth has its eye one.
Expecting to partner with content creators to showcase episodic series, long-form, Facebook Watch is a savvy strategy for keeping users on the site for longer, as well as a new possibility for advertisers, who can run advertisements and commercials during shows.
At an income call in April, Zuckerberg echoed the sentiments that Facebook Watch is an exciting and interesting venture, tempering this by saying it’s a little early to tell how well the Watch is doing.
“We are trying to make it a different experience from what you can get on YouTube… A bunch of the content that has come onto Watch is good and is working,” he said.