Facebook Business Model
Facebook Business Model | How does Facebook Make Money?Rate this post
With around 1.13 billion daily active users and 27.63 billion in revenue in 2016, Facebook is the most loved social networking website all over the world. Not just this, world’s second most loved social media network, Instagram, is also a Facebook company. But how, despite so much competition, Facebook maintained to be at the top and that too with an increase in revenue each year.
With its biggest competitor, Google plus, not even being close to it, Facebook Business Model is worth a discussion. But before moving on to how does Facebook make money and its Revenue Model, let us first discuss a bit about the companies owned by Facebook and about its business strategy.
Facebook Business Model
Ever since it was started, Facebook has substantially changed its business model. It is now highly diversified and has a very ambitious business strategy. To gain more knowledge about the Facebook business model, it is important to know about the companies which are owned by it.
The Facebook Companies
Facebook business model constitute the following companies.
Facebook Payments Inc.: to let Facebook generate revenue through payment business.
Atlas: ad-serving and measurement platform, offering services to advertisers and agencies.
Instagram: Media Sharing Platform.
Onavo: Mobile utility application.
Parse: back end infrastructure provider for mobile applications.
Moves: Exercise (steps) tracking application.
Oculus: Virtual reality technology.
LiveRail: Publisher Monetization Platform.
WhatsApp: Instant Messaging Client.
Masquerade: Visual Filters mobile application.
Services Provided by Facebook
To sustain in the market, you must know everything about yourself and your competitors too.
While most of the services provided by Facebook aim at generating revenue, many of them are used to generate data. This data range from user account information to his behaviour over the internet and his phone. This strategy has helped Facebook in suppressing most of its competitors till now.
Some of the services included in the Facebook business model are –
Facebook.com
World’s most favourite social media network, Facebook lets you connect with your friends, family and others. It also launched its less data consumption version, Facebook Lite, in 2015. This is the biggest revenue generating source of the parent company.
Messenger
Facebook.com separated chat from its interface and launched Messenger as a mobile messaging app with which users can send private messages and stickers, chat with groups, and make free calls, even to people in other countries.
Facebook has also integrated payments in messenger for users residing in the United States.
Workplace
Workplace by Facebook is an in-house social network for companies to connect with everyone in their company. A workplace profile will be different from that of a Facebook personal profile and companies will be charged to register for a Workplace Profile for their employees.
Facebook has taken a step forward with the introduction marketplace. The working model of Facebook Marketplace will be same as that of Ebay but with an integration of messenger. Hence making it a social marketplace. Payments will not be made on Facebook’s platform though.
Moments
A competitor to Google photos, which lets you sync your photos to the cloud. Not just it, it is a cloud storage which will sync and form an album of all the photos you and your friends upload if they were taken on the same date & place and you were a part of it.
Instagram
The second most loved social media network after Facebook. It is an image sharing network which lets you share moments with everyone you’re connected to. Unlike Facebook, Instagram has a follower network which lets you share your photos with your followers.
Instagram stories have been introduced by Facebook to get an edge in its competition with Snapchat.
MSQRD
MSQRD is a mobile application which provides users with visual filters and face swipe technology which can be used while taking pictures.
Whatsapp
World’s leading instant messaging client. This messaging service is an end to end encrypted and fully digitised instant messaging service which uses the internet to send & receive messages and competes to the typical SMS services.
Audience Network
A new competitor to Google Adsense. Facebook already has millions of advertisers and now, according to its new strategy, it’ll share them with some mobile applications and website developers. FAN (Facebook audience network) is an advertising network powered by Facebook which appears on apps and mobile websites other than just Facebook family companies.
Business Strategy of Facebook
Facebook users help the company earn money and increasing the user-base is, hence, the topmost priority of the brand. But this is just the phase one of the strategy. Facebook as a social media platform is a big black hole of big data and has always made use of this data to generate revenue from its targeted advertisements. Ever since it started hitting a user saturation in its core markets like USA, UK, and Canada, Facebook spread its feathers to the rest of the world. But there were limitations like no access to smartphones, good internet, and some of the areas weren’t even connected to the internet. Hence, to overcome this limitation, Facebook launched the phase one of its plan.
Access to Facebook
Half of the world’s population doesn’t have an access to the internet.
The phase one of Facebook’s business strategy is making everyone get access to it. Facebook is addictive and all it takes is an access to it to increase its user-base. Most of you readers might be aware of the internet.org which is “a global partnership dedicated to making internet access available to the two-thirds of the world not yet connected.” This internet is provided at either very low cost or no cost at all. This, along with other capital investments in Aquila, solar planes which provide internet access to all, and Facebook Lite has been done to let people, who are not yet connected, connect to Facebook.
It has also bought many startups just to diversify its presence and make it easy for users to ‘connect to the world’ through Facebook.
Facebook bought Snaptu
Facebook wanted its application be compatible with every device. Hence it bought Snaptu in 2011 which was a free application platform that ran on virtually every type of Internet-enabled mobile phone.
Facebook bought Onavo
Onavo is a mobile analytics company. The app provides information for users on data consumption and helps them in its compression. It was bought by Facebook in 2013 to enhance internet.org and Facebook Lite experience.
Zuckerberg is a great businessman. He knows what to implement and how to implement it. Facebook believes in buying of an idea and hiring the person who had it.
Tapping the user-base
Once everyone has an access to Facebook, the next step is to tap it and generate revenue. Facebook has already tapped some of it by increasing the average revenue per user (ARPU) in the “Rest Of World” region to $1.13 in Q2’16, which is around 4 times to that in 2012.
With around 1.13 billion daily active users and 27.63 billion in revenue in 2016, Facebook is the most loved social networking website all over the world. Not just this, world’s second most loved social media network, Instagram, is also a Facebook company. But how, despite so much competition, Facebook maintained to be at the top and that too with an increase in revenue each year.
With its biggest competitor, Google plus, not even being close to it, Facebook Business Model is worth a discussion. But before moving on to how does Facebook make money and its Revenue Model, let us first discuss a bit about the companies owned by Facebook and about its business strategy.
Facebook Business Model
Ever since it was started, Facebook has substantially changed its business model. It is now highly diversified and has a very ambitious business strategy. To gain more knowledge about the Facebook business model, it is important to know about the companies which are owned by it.
The Facebook Companies
Facebook business model constitute the following companies.
Facebook Payments Inc.: to let Facebook generate revenue through payment business.
Atlas: ad-serving and measurement platform, offering services to advertisers and agencies.
Instagram: Media Sharing Platform.
Onavo: Mobile utility application.
Parse: back end infrastructure provider for mobile applications.
Moves: Exercise (steps) tracking application.
Oculus: Virtual reality technology.
LiveRail: Publisher Monetization Platform.
WhatsApp: Instant Messaging Client.
Masquerade: Visual Filters mobile application.
Services Provided by Facebook
To sustain in the market, you must know everything about yourself and your competitors too.
While most of the services provided by Facebook aim at generating revenue, many of them are used to generate data. This data range from user account information to his behaviour over the internet and his phone. This strategy has helped Facebook in suppressing most of its competitors till now.
Some of the services included in the Facebook business model are –
Facebook.com
World’s most favourite social media network, Facebook lets you connect with your friends, family and others. It also launched its less data consumption version, Facebook Lite, in 2015. This is the biggest revenue generating source of the parent company.
Messenger
Facebook.com separated chat from its interface and launched Messenger as a mobile messaging app with which users can send private messages and stickers, chat with groups, and make free calls, even to people in other countries.
Facebook has also integrated payments in messenger for users residing in the United States.
Workplace
Workplace by Facebook is an in-house social network for companies to connect with everyone in their company. A workplace profile will be different from that of a Facebook personal profile and companies will be charged to register for a Workplace Profile for their employees.
Facebook has taken a step forward with the introduction marketplace. The working model of Facebook Marketplace will be same as that of Ebay but with an integration of messenger. Hence making it a social marketplace. Payments will not be made on Facebook’s platform though.
Moments
A competitor to Google photos, which lets you sync your photos to the cloud. Not just it, it is a cloud storage which will sync and form an album of all the photos you and your friends upload if they were taken on the same date & place and you were a part of it.
The second most loved social media network after Facebook. It is an image sharing network which lets you share moments with everyone you’re connected to. Unlike Facebook, Instagram has a follower network which lets you share your photos with your followers.
Instagram stories have been introduced by Facebook to get an edge in its competition with Snapchat.
MSQRD
MSQRD is a mobile application which provides users with visual filters and face swipe technology which can be used while taking pictures.
World’s leading instant messaging client. This messaging service is an end to end encrypted and fully digitised instant messaging service which uses the internet to send & receive messages and competes to the typical SMS services.
Audience Network
A new competitor to Google Adsense. Facebook already has millions of advertisers and now, according to its new strategy, it’ll share them with some mobile applications and website developers. FAN (Facebook audience network) is an advertising network powered by Facebook which appears on apps and mobile websites other than just Facebook family companies.
Business Strategy of Facebook
Facebook users help the company earn money and increasing the user-base is, hence, the topmost priority of the brand. But this is just the phase one of the strategy. Facebook as a social media platform is a big black hole of big data and has always made use of this data to generate revenue from its targeted advertisements. Ever since it started hitting a user saturation in its core markets like USA, UK, and Canada, Facebook spread its feathers to the rest of the world. But there were limitations like no access to smartphones, good internet, and some of the areas weren’t even connected to the internet. Hence, to overcome this limitation, Facebook launched the phase one of its plan.
Access to Facebook
Half of the world’s population doesn’t have an access to the internet.
The phase one of Facebook’s business strategy is making everyone get access to it. Facebook is addictive and all it takes is an access to it to increase its user-base. Most of you readers might be aware of the internet.org which is “a global partnership dedicated to making internet access available to the two-thirds of the world not yet connected.” This internet is provided at either very low cost or no cost at all. This, along with other capital investments in Aquila, solar planes which provide internet access to all, and Facebook Lite has been done to let people, who are not yet connected, connect to Facebook.
It has also bought many startups just to diversify its presence and make it easy for users to ‘connect to the world’ through Facebook.
Facebook bought Snaptu
Facebook wanted its application be compatible with every device. Hence it bought Snaptu in 2011 which was a free application platform that ran on virtually every type of Internet-enabled mobile phone.
Facebook bought Onavo
Onavo is a mobile analytics company. The app provides information for users on data consumption and helps them in its compression. It was bought by Facebook in 2013 to enhance internet.org and Facebook Lite experience.
Zuckerberg is a great businessman. He knows what to implement and how to implement it. Facebook believes in buying of an idea and hiring the person who had it.
Tapping the user-base
Once everyone has an access to Facebook, the next step is to tap it and generate revenue. Facebook has already tapped some of it by increasing the average revenue per user (ARPU) in the “Rest Of World” region to $1.13 in Q2’16, which is around 4 times to that in 2012.
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