Facebook revenue model

You are well aware of Facebook, yet a brief introduction is given.

Facebook is a social networking company that innovates information technologies. Those technologies make it possible for people/users to connect with friends and family, find communities, and grow businesses.

Facebook, founded in 2004 by Mark Zuckerburg, is an American online social media and social networking service owned by the company Meta. Previously, the company was named Facebook Inc. It was founded in 2004.

The founder, Mark Zuckerburg, announced the name change on October 28, 2021.

The name change shows its aspiration to move beyond its social media platform to Metaverse

It is expected that the Metaverse will be a substitute for the internet in the future. Metaverse is a term that combines two giant words 'Meta' and 'Universe'.

Facebook users are not charged even a single penny for using the FB platform for sharing their posts, photos, activities, and the like.

Then, you might question,

How does Facebook make money?

What is the secret revenue model of Facebook?

Facebook is a social media and social networking platform that connects millions of people.

Suppose you are a businessman. When you see millions of people hanging out on a single platform, guess what comes to your mind?

Yes, your guess is right.

Advertising on Facebook.

Facebook earns from the information provided by you. Users, like you, are the most prosperous assets to Facebook.

Yet, the term asset does not meet the required definition of the Reporting Standards, and it is thus not recognizable in the balance sheet.

Facebook knows you better than anyone. Facebook knows you better than your Valentine. I am sorry if your feeling is hurt by this sentence. But this is the fact, and this has become possible through the technologies that Facebook or any online platform like Facebook is using.

Facebook retrieves the information which you have provided while registering. Facebook also saves information from your past activities, posts, shares, etc.

This is the hidden money-making formula for Facebook. All information is customized and targeted to specific advertisers for ads.

And, advertisers use this customized information to target specific users for their products and services through their ads.

When Facebook was in its infancy during 2004, over one million people had registered and, in the same year, companies such as MasterCard offered to pay for advertising on the website.

Since then advertising has become a fundamental revenue source for Facebook.

Recent statistics show that Facebook made $117 billion in revenue in 2021. Out of which, the advertising amounts to $115 billion which represents 98% of total Facebook revenue. The remaining 2% of the revenue came from non-advertising sources like payment fees from developers, through selling Oculus, and Portal devices. For more click the link below:

https://bizshala.blogspot.com/2022/02/How-does-Facebook-make-money-How-does-Facebook-accrue-revenue-from-Advertising.html

Umesh Kurmi is a Semi-Qualified Chartered Accountant from the Institute of Chartered Accountants of Nepal.