How Does Facebook Make Money? This Secret is Surprisingly Simple!
How does Facebook make money? It's actually a much easier process than you might expect! Considering the huge size of it, you may be something very complex, but it's actually pretty simple.
Basically, Facebook brings in money with 3 main things:
- Advertising
- Gifts
- Applications
Let's look at each of these a bit more in detail.
Advertising
This is definitely that main way that Facebook makes money. Last year Facebook collected revenues in the hundreds of millions from advertisers!
Where are these advertisements? Most of them are on the right side of the screen when you are logged in. Companies and organizations promote just about everything on Facebook, from upcoming races or charity events to jewelry rings or car insurance.
Why are so many people willing to pay millions of dollars to Facebook for advertising? How does Facebook make money hand over fist from these companies? Because they can target the exact demographics they want!
For example, if a dentist office wants new customers, they can target people within the closest 10 miles of their city. Or if a life insurance company wants to target people 55 and older, they can easily do that.
By targeting just the right people, companies are easily able to reach the future customers they want the most. Many companies are making millions of dollars a year simply from their Facebook ads.
Gifts
This is another way that Facebook brings in money. Have you ever sent a gift to a Facebook friend for their birthday, Valentines Day, or anything else? These cost a very small amount each time you send one, but it adds up when you have 500 million people sending gifts!
Relatively, this is one of the smaller ways that Facebook makes money.
Applications
Have you ever heard of a little game called Farmville? I'm guessing you have, since it has tens of millions of players across the world. How does Facebook make money from applications?
Well the applications themselves are usually made by other companies. For example, Zynga is the company that created Farmville, Café World, Mafia Wars, and many other games. They basically rent space on Facebook to run the games, so they have to pay Facebook to do that.
This is another major way that Facebook collects money. With millions and millions of players on these games (and other applications), you know FB must be charging a lot of money for that "rental" space!
So that's pretty much it! Does that answer your question on "how does Facebook make money"?
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Justin is an affiliate marketer who has earned thousands of dollars online. That's why he knows the answer to how does Facebook make money.
Questions and Answers
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