How does Facebook make money?

Sam An Teng

Facebook is a social networking website launched in 2004. It belongs to and is run by Facebook.inc. Facebook has been created by five persons: Mark Zuckerberg, Eduardo Saverin, Dustin Moscovit, and Chris Hughes.

It serves users in more than 70 languages. Wikipedia reported that it has over one billions active users as of October 2012. It recorded the revenue of $3.71 billions in 2011.

$3,710,000,000! Amazing, isn't it? Facebook allows users for free, but it manages to earn billions of dollars. So how does it make money?

The first answer is advertising.

Advertising represented up to 82% of Facebook's revenue in 2011. Have you ever clicked LIKE on advertisement on the right side of Facebook screen? Perhaps, yes. Whenever you click, you help Facebook to earn money. It does not charges from you, but from advertisers. The advertisers place ads on Facebook and pay on pay per click basis. Only when users click that Facebook charges. The cost may be as high as $0.02 per click. Facebook owns special techniques and tools to locate the ads to unique users at diffetent locations of the world.

Second, it is selling fees

It was accounted for 18% of total revenue in 2011. Game and application developers use Facebook platform to sell game and application credits. Facebook, hence, charges from those developers. To be an example, it charges 30% of Zynga's revenue. If you play games like Farmville, Cityville, or Angry bird, you may have to buy credits to facilitate your games. That is the money.

References

1. En.wikipedia.org/wiki/Facebook
2. Readwrite.com.2012/05/22/how-does-facebook-make-money www.theverge.com