How Does Facebook Make Money
How Does Facebook Make Money?
Facebook was Mark Zuckerberg’s invention when he was a mere Sophomore at Harvard in 2004. That means that Facebook (that just hit 2 Billion users not so long ago) is 14 years old. With reported revenue of about a Billion a quarter and a 470 Billion dollars market capitalization, it is one of the most intriguing companies in the world.
For starters, let’s go over some history. In the beginning, Facebook allowed only people from Harvard to access the site and use it, then it opened to people from other colleges that same year. A year later they opened the site to include other colleges. Another year passed and Facebook began including high schools and finally, in 2006 it allowed everyone over 13 years old login and use the site.
Now about features. In 2004 it created the Wall which allowed people to post things onto it and allow their friends to see it. In 2007, Facebook launches the Platform which allowed outside programmers to create tools for improving the site such as sharing pictures, taking quizzes and playing games. In 2008 it introduced chat for the first time. A year later it introduces the Like feature, and another year goes by until it introduces location sharing. In 2011 Facebook introduces the Timeline feature, allowing people to see posts in a more organized way. The list grows every day with more features that make the full Facebook experience better.
With all that history and legal turmoil that surrounded the Beacon program and the Winklevoss twins settlement. One might wonder how does Facebook run that kind of infrastructure that allows users to upload as many pictures, videos, articles and to chat as much as they want. As well as to purchase Instagram for $1 Billion, and buy Oculus Rift for $3 Billion while improving their site daily.
In this article, we are going to look at the revenue streams that Facebook has. The first obvious revenue stream that Facebook has is Advertisement. The most prominent source of income for Facebook is advertising by far. In fact, it represents approximately 82% of it. The rest 18% comes from people making purchases on Facebook games where a portion of the revenue goes to the developer and the rest goes to Facebook themselves. Another place is from pages trying to promote themselves. If you ever had a Facebook page, you know that there are about 10 buttons for you to boost your page on Facebook for a price.
In conclusion, Facebook is a very successful company and by far the most popular social media site in the world. While also owning Whatsapp, Instagram, Oculus Rift, the Messenger app and even making an attempt to purchase SnapChat that decided to turn down the offer and go public themselves. Facebook had a $27.64 Billion in revenue in 2016 and has a significant growth in revenue every quarter.