Recently, I have been to Quora and there I saw this question re-asked by the group of people which was unanswered. After searching and research on the internet for an hour or more, I found these few techniques followed by Facebook to make money and keep them running.
How does Facebook earn its revenue?
Let’s take a simple example for this; Alex has recently signed up Facebook and added his friends & family into his profile as they already have FB account. As Alex is totally new to Facebook he started following Facebook Pages and Popular celebrity profiles. With this, his news feed has started to update with latest status updates. Now Alex has become a regular Facebook user.
Now it time for Facebook to work to make money from Alex profile page and news feeds. The first attack, Advertisement.
Ads are the major source of income for Facebook which are displayed in news feeds of every account. Ads are placed in the middle of news feeds and in the sidebar of some page.
In above screenshot, Simplilearn sponsor ad is displayed in feeds and in the right sidebar “WEB HOSTING CRAFTED WITH CARE” is placed as floating ad.
Facebook Ads can be used for promoting Business Page for getting likes and follow, increase visitors to website URL, Promote online business. They offer two kinds of package, PPC and PPM.
2. Facebook Apps Credit:
Alex started playing games using Facebook Apps. He started loving it and play continuously, his favorite Game is FarmVille. After playing few games, he ran out the credit and FarmVille is requesting to buyout credits for continuing game. Alex opts to buy out the Facebook Apps credit to continue playing FarmVille.
This way Farmville makes few dollar and particular (undisclosed) percentage of Apps credit goes into Facebook’s pocket.
3. Shopping and deals:
Online shopping and coupon site promote their offers using this facility. If Alex avails this deal from Facebook, e-commerce shopping site will pay Facebook as charges decided.
4. Apps Install:
Facebook also charge for promoting mobile apps and get leads for every installation. Now suppose Alex is accessing Facebook from a smartphone, and suddenly he found an app in his feed that interests him. On successful installation of App, Facebook will get paid from promoting advertiser.
5. Event Promotion:
Alex lives in Chicago and there is a paid event which will be organised very soon in the nearby location. The organiser agreed to pay Facebook to promote the event and get as much as the possible audience for the people living in Chicago. Alex got the promotional event on his feeds and accept the event as it interests him. Hence, Facebook is now get paid for Alex invitation.
But, How much revenue does Facebook make per day ?
(2,940,000,000 X 0.17) + 2.94 Billions = 3.44 Billions for year 2015.
3.44 Billion / 365 days = 9.42 Millions per day on average.
Hence, based on facts and figures Facebook might be earning net income of 10 Millions per day approx. And that is pretty good income.
Being one of the strongest competitor for all social networking site today, Facebook is growing faster and faster. They are now also getting into virtual reality and gaming category as its the future of growing technology.
There are several more monetization techniques used by Facebook and they are continuously experimenting to get more out of it.