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How does Facebook Make Money?

Update your status that you’re going jogging, you’ll start seeing Nike and other brands on your Optimization Free home page. So if Facebook does not make money from membership fees, where is all the money coming from? Obviously Facebook is making money, and lots of it at that. This also adds to the revenue that Facebook generates.

Other methods make less money for Facebook, but enough to fill the top. This is one of the best benchmarks for human culture; it signifies that the larger companies are set to make big money off the huge population of smartphone users around the world.

95% of American citizens own a Facebook account, whose personal information is basically a giant part of Facebook’s biggest source of revenue.

Facebook credits is virtual money that you can use to buy in app items, or just currency to use for their various applications. Another reason includes ad-blocking software.

Despite that, Facebook managed to garner a satisfactory 30% of their total income for the first quarter of 2013 from mobile ads. The use of smart advertising tactics is what is helping Facebook to rake in the moolah. Like drinking beer? Update a status related to that and you’ll find an ad by the closest microbrewery.

Here’s what actually happens:

Mobile Advertising

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. The rest 15% of Facebook’s income comes from various sources, which have been further explained below. Q1 2013 for Facebook revealed an income of $213 million, which is barely 15% of the total income. However, Facebook denied these rumors, and stated that they would always be a free site. Facebook earns quite a bit through their gift shop, and intends to continue as well as expand it.

Did You Know?Mark Zuckerberg, the chairman and chief executive of Facebook, Inc., is currently worth $13.3 billion.

Here’s a summary of some of the money they made for some part of the previous year, after which we will take a look at how Search Optimization they managed to do that. Nike can then refer to Facebook’s database through FBX and you will instantly get Search Engine Nike ads on your Facebook pages. Facebook does claim to keep a user’s personal information strictly protected. Of course, to keep making so much money, they will have to diversify, and they are in the process of doing that. Facebook takes a hefty cut from all revenue earned by Zynga through Facebook games.

Facebook earned $2.6 billion in 2012, of which $1.25 billion was earned from advertisements, of which almost 80% came from web ads.. Facebook will then deliver that item to them if it is material, or send it to their email immediately if it is virtual.

In the first quarter of 2013, 15% of Facebook’s income, or about $215 million, came from sources other than advertising.

If you take a look at the details, you’ll see that Mark Zuckerberg has been slipping down on the Forbes List. With all the three lock-up expiration dates already over (the third and final one was on May 18th 2013, also the smallest one), the company will have to do something fast to maintain their top rank, with the likes of Twitter and Pinterest close behind.

So for all those of you who were wondering where those billions came from, the answer is advertising. This indicates that they are slowly moving from dependency on advertising as the main part of their income.

Payments and Other Fees

Yet another source of income is from the Facebook Gift Shop, and Facebook credits. Facebook’s mobile version looks cleaner than the conventional desktop one for the same reason: smaller screen space to fit ads into. Like I already mentioned, Facebook has access to all the information that you post on the site. Other reasons include the expiration of lock-up agreements and Facebook reaching out to a record 1 billion users. Of that, around 30% comes from mobile advertising. You can buy small items like dolls, cards, or vouchers for anyone you want. The gift shop now serves as a more aggressive campaign to keep the stock afloat. 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. However, for the foreseeable future, you should know that most of the money that Facebook makes comes from advertising.

Here’s where all those billions come from

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