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How is Facebook making money?

by Ed Micah
26 replies
My question is not about how to make money with Facebook.

My question is that how is Facebook actually making money? According to - How much is Facebook really worth? - CNN - Facebook is worth about $50-$65 billion, probably worth more than $100 billion if Facebook's IPO succeeds (Facebook Looking to Go Public in 2012 With IPO | Moneyland | TIME.com).

Apart from Facebook ads - that they are charging money from the users - with about 750million users, how else could it worth so much money?

Stock? or?

Just curious.
#facebook #making #money
  • Profile picture of the author SteveBagasao
    I think Facebook ads are the main source of their revenue.

    I just recently read an article that of the $4 billion + in revenue they had last year, over $3 billion came from selling ads.

    I'm sure they have other revenue streams, but the ads are their main stream.
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    • Profile picture of the author Ed Micah
      Originally Posted by SteveBagasao View Post

      I think Facebook ads are the main source of their revenue.

      I just recently read an article that of the $4 billion + in revenue they had last year, over $3 billion came from selling ads.

      I'm sure they have other revenue streams, but the ads are their main stream.
      With only 3-4 ad blocks on the side, and $1-2/click, $3billion in revenue - that's very amazing & surprising.
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      • Profile picture of the author goosefrabah
        They also have deals with certain game developers like Zynga, which is a 70/30 cut so I am sure a pretty penny comes from the as well. I wonder if they have a deal with Bing as their results are shown in Facebook search as well!
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      • Profile picture of the author SteveBagasao
        Originally Posted by Ed Micah View Post

        With only 3-4 ad blocks on the side, and $1-2/click, $3billion in revenue - that's very amazing & surprising.
        It is amazing! I wish I had thought of it :rolleyes:

        You have to remember that every time you refresh your FB page, different ads show up. It's also based on the content of your feed, so the ads will change based on what you're talking about too.

        When you think about it, one FB user can be exposed to dozens of different ads per day, depending on how many times a day they view their FB page. Multiply that by the millions of daily FB users...it's mind boggling!
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  • Profile picture of the author Tobarja
    Valuation of worth is not tied to a single years revenue. It includes all its physical parts, a guess of what it's customer base is worth, future income opportunities, goodwill*, plussed and minussed by a more financial terms I can't think of or don't know.

    *I don't know if FB's net "goodwill" is positive or negative. ;-)
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  • Profile picture of the author Lisha5684
    Because of so many visitors to their site daily, they can actually make a ton of $$$ on ads...
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  • Profile picture of the author Gary Gomez
    If you have ever used Facebok advertising yourself then you will know how the figures stack up.

    I have personally spent 4 figures a day with only a couple of campaigns and know guys spending high 5 figures a day, multiply this by how many ad impressions there are per day worldwide and they have some sick income figures.
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  • Profile picture of the author ArwenTaylor
    Mostly advertising and deals with game developers. However, they've take a page from Twitter and are doing sponsored status updates etc...
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  • Profile picture of the author Online Bliss
    Do you honestly believe
    they do not make any money
    selling user information?

    Maybe not but imagine the temptation
    with all that info at their disposal.
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  • Profile picture of the author seovirtualassistance
    The major income or revenue for facebook is through ads.
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    • Profile picture of the author GMD
      Banned
      Facebook is making money with ads...BUT

      What most people don't know is Facebook is making most of their revenue via selling your personal information and browsing habits.

      With the advent of the internet, it has turned everybody into self-absorbed demigods who make it a point to list every bit of information about themselves onto their social networking pages. There's a reason why Facebook makes so much room for listing your age, cell phone number, favorite music groups, movies, friends list, etc.

      EXAMPLE: did you know Facebook used to have a cookie which tracked your browsing habits even after you logged out of Facebook? It was only after they were "outed" that they stopped this practice. What do you think they did with this data? Yup, they sold it...

      Did you know that there are actually "social network" credit-like bureaus out there that buy information from places like Facebook? Yup. All your comments, all your photos, all your activity is sold to these agencies who store that information just like other agencies that store your financial habits (like credit bureaus). Potential employers can then "buy" your social networking data and see if you've been making controversial statements online, maybe drinking with underage girls in one of your photos or whatever.

      It's not paranoia, but a fact. Facebook has been making big bucks off your personal data log before they even had an ad network.

      Just sayin'
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    • Profile picture of the author kevinzeo
      Originally Posted by seovirtualassistance View Post

      The major income or revenue for facebook is through ads.
      I think also include our personal data
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  • Profile picture of the author medosabry
    Google advertising system make about %97 of googles revenue and I don't see why facebook should be different as I don't think that they selling any product like a pro membership or something like that.
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  • Profile picture of the author Tracyyang
    you know, big website traffic is money,,,Facebook ranks top3 of the world largest traffic site.
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    • Profile picture of the author Ed Micah
      Originally Posted by Tracyyang View Post

      you know, big website traffic is money,,,Facebook ranks top3 of the world largest traffic site.
      Traffic doesn't = money, unless they do something to convert those traffic into money.

      I guess, ads + selling personal info privately, maybe.
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      • Profile picture of the author THK
        Originally Posted by GMD View Post

        Facebook is making money with ads...BUT

        What most people don't know is Facebook is making most of their revenue via selling your personal information and browsing habits.

        With the advent of the internet, it has turned everybody into self-absorbed demigods who make it a point to list every bit of information about themselves onto their social networking pages. There's a reason why Facebook makes so much room for listing your age, cell phone number, favorite music groups, movies, friends list, etc.

        EXAMPLE: did you know Facebook used to have a cookie which tracked your browsing habits even after you logged out of Facebook? It was only after they were "outed" that they stopped this practice. What do you think they did with this data? Yup, they sold it...

        Did you know that there are actually "social network" credit-like bureaus out there that buy information from places like Facebook? Yup. All your comments, all your photos, all your activity is sold to these agencies who store that information just like other agencies that store your financial habits (like credit bureaus). Potential employers can then "buy" your social networking data and see if you've been making controversial statements online, maybe drinking with underage girls in one of your photos or whatever.

        It's not paranoia, but a fact. Facebook has been making big bucks off your personal data log before they even had an ad network.

        Just sayin'
        Lots of accusations, based on any credible sources? Not that I don't want to trust you, but you mentioned yourself how everyone on the internet acts like "self-absorbed demigod" and what not, so it is only fair that you give us some sources where all these "facts" are coming from .

        Originally Posted by Ed Micah View Post

        Traffic doesn't = money, unless they do something to convert those traffic into money.

        I guess, ads + selling personal info privately, maybe.
        I like to believe that Facebook has more than one source of income, but not convinced (yet) that selling personal information is one of them. 750+ million is not a number to sniff at. Especially if most of those people spend a reasonable amount of time on the site.

        I don't know why FB has to get involved in direct sales to make the site profitable. There are millions of vendors out there they can collect money from.

        Tanvir
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  • Profile picture of the author tanmaysasvadkar
    Facebook is mainly an advertising platform. It sells ad space on its site, and it helps its advertisers aim their ads at specific groups of Facebook users, based on elements of its members’ profile data. Facebook also takes in a small amount of money through revenue-sharing agreements with developers who offer apps on Facebook: Facebook hands over a certain amount of “public” profile data to the app makers, enabling them to personalize the experience of the app's end users
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  • Profile picture of the author tanmaysasvadkar
    Facebook is mainly an advertising platform. It sells ad space on its site, and it helps its advertisers aim their ads at specific groups of Facebook users, based on elements of its members' profile data. Facebook also takes in a small amount of money through revenue-sharing agreements with developers who offer apps on Facebook: Facebook hands over a certain amount of "public" profile data to the app makers, enabling them to personalize the experience of the app's end users
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  • Profile picture of the author SoCalMarketing
    I think GMD make some very solid arguments on how FB makes money and things we should kinda keep in mind when we are FBing.. thanks for the post GMD
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  • Profile picture of the author BlackRob
    I really do think that the ads Facebook run, are their main source of income, however I have been known to be wrong before.
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  • Profile picture of the author Marx Vergel Melencio
    Hi Ed Micah,

    In the movie, it's mainly finding investors willing to buy stock shares. Those with controling power could affect stock value, so stock trading with new and existing investors would be good money. Internal deals with other corporations, companies, businesses and even standalone software and Web development groups would also be a good way to profit. They've changed ad placement several times in a span of two to three years, so I believe they're further optimizing this because they don't get their projections right or even close, in terms of profit margins they can gain from their onsite advertising services...
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  • Profile picture of the author paul_1
    I read this article online about how Facebook makes Money. Below are the answers:

    1. Ads

    2. Facebook's Gifts - the 'send a gift tab' on your friend's wall encourages others to send a virtual gift - paid for online. All the money almost always goes to the company, but if the gift is provided by an outsider, then a portion of it goes there. But much of it is still retained by the website.

    3. Application Performance - Let us take the example of Farmville, which is doing reasonably well on Facebook. Now the application is provided free for use for the users of Facebook and the parent company (Zynga) is getting a lot of traffic because of the game's popularity on Facebook. So isn't Facebook entitled to take a slice of that pie? After all, they are providing a platform for gaming companies like Zynga to their burgeoning user base. So Facebook makes a bit of money there too, as a 'rental' for using their users.

    Also, when the website users use virtual money from Facebook Credits, to buy or sell anything from gifts to game items, Facebookk gets a portion of it. Although the amount of revenue generated by ads is highest, facebook credits is supposed to cross that in the coming years.
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  • Profile picture of the author AllyChurch
    Banned
    Hey!

    Yes the main source of making money is adds because it is in top 3 ranking of world. They must have deals with companies of games like zynga, mindjolt etc and they must charge them for advertising them and the companies get money for selling credits for games. Also people also make much more money by advertising on facebook like me

    Cheers
    Ally
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