- Meta, the parent company of Facebook, makes money from serving advertisements.
- Small business advertisement make up more than 95% of Facebook’s generated revenue.
- How else do they generate revenue?
Facebook has revolutionized the internet; it has completely changed the way people interact with each other and the way things are conducted. Facebook (Meta), which started off as a simple social network that allowed people to connect, has become a social media juggernaut, which now owns three of the biggest social media platforms; Instagram, WhatsApp, and Facebook.
Most of the income generated by Facebook is through advertisements; these advertisements are posted by small businesses mostly and make up more than 95% of Facebook’s generated revenue. Although there are some other revenue streams, the majority of Facebook’s revenue is generated through advertisements.
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What does Facebook do?
Facebook is a social network; it began as a simple website that allowed people to connect via friend requests, post photos of themselves, and post comments. Gradually, Facebook expanded its functions; it allowed users to create groups, post stories, and do a bunch of other things that could not be done anywhere else.
Facebook also owns Instagram and WhatsApp, further expanding the functions performed by the company as a whole. Billions of people use Facebook and its subsidiaries, making it the largest social network in the world.
How does Facebook work?
When it was first introduced, Facebook, or TheFacebook, as it was known back in the day, was intended to be a platform that allowed college students to connect and interact. However, today, anyone, anywhere around the globe can use Facebook and connect with anyone, anywhere.
Its working is simple, you create a profile, put up a profile photo, and start connecting with people. You can link your Facebook profile to Instagram and create a new Instagram profile without much hassle. The reason Facebook has become so popular is its simplicity and user-friendly interface; it is easy to understand even for those who do not know much about technology.
How does Facebook make money?
Facebook makes money by charging creators for advertisements on both Facebook and Instagram; it also generates a fraction of its revenue through the sale of hardware, Facebook Pay, and other applications.
Charging for ads on Facebook
Facebook charges a specific amount of money depending on the type of advertisement you intend to circulate. The charging fee can depend on numerous factors, the type of advertisement, the time period for which you want it displayed, the area where you want it to be displayed. Meta uses a state-of-the-art algorithm to find targeted audiences most relevant to the advertisement and display the advertisement to them, making Facebook ads the most effective type of marketing.
Charging for ads on Instagram
Meta also charges for ads on Instagram in a similar way to Facebook; you are charged based on certain criteria. It also uses the same algorithm, which finds an audience specific to your requirements and ensures a much better reach.
Meta acquired Oculus in 2014, and ever since then, the sale of Oculus hardware has also made a percentage of the revenue generated by the corporation.
Facebook Pay allows you to send money to others; it works in a similar way to Venmo; it is another stream of income for the company.
Jibbigo and Onavo are two other apps that allow Meta to make money.
Future Growth Engine
Recently, Meta CEO Mark Zuckerberg changed the name of the parent company that owns Facebook, Instagram, WhatsApp, and Oculus to Meta.
This is the first step towards a Metaverse, which will take social networking to the next level; holograms, physical projections, and even more realistic online interactions might become a reality in the near future.
Metaverse is an ambitious step in the right direction; if it materializes, it might be unlike anything ever seen before. Nevertheless, the privacy of users is of the utmost importance if Facebook wants metaverse to become a success. The data of the users needs to be safeguarded, and the company should make sure it does not end up in the wrong hands.
Facebook has competitors in nearly all the services it provides. In the advertisement domain, it has competitors like Google and Amazon, two tech giants.
As a social media platform, Facebook has seen its fair share of competition; it has various competitors like Snapchat, Twitter, Reddit, Pinterest, and numerous other platforms. However, Facebook remains at the top because of the diversity of services it provides. One of its fastest-growing competitors is Discord, the chat platform popular with YouTubers, gamers, streamers, and influencers.
As a video-sharing platform, Facebook also faces competition from YouTube.