How Facebook Make Money?
Vina Suroya - 202010100311135
More than 2 billion people use Facebook that’s more than a quarter of the world’s population.
And despite a rising number of privacy scandals and public backlash, Facebook is still
growing. Despite having over two billion users on its platform, Facebook doesn't actually
make any money on content or directly through its user base.
Instead, it makes billions via digital advertising, as Facebook has something that companies
really want - access to billions of people around the globe who might buy their products or
services. In fact, so many companies advertise on Facebook that in 2017, Facebook earned
$39.9 billion from advertising revenue. The company’s total revenue for 2018 was $55.8
billion, up 37 percent from 2017. All in all, the company earns about 85% of its money from
How Facebook Make
Facebook Earn Money From Ads
Facebook earns revenues by selling advertising space on its social media platforms, such as
Facebook and Instagram. The cost of advertising varies and is based on an ad auction
system. Marketers set a budget for advertising with how many impressions the company can
get for their proposed budget.
Facebook also makes money by selling virtual-reality hardware and software as well as social
media subscriptions. Although users can access Facebook and Instagram social media
platforms at no cost, some may subscribe to exclusive features for a fee.
Advertisers pay Facebook to make their ads visible to people. They can choose to "target" the
ads by only showing them to people who fit certain characteristics. These include age,
gender, country, interests, etc.
But the advertisers never get access to private user information, contrary to what some
people say. They choose the targeting options, and Facebook then shows the ads to the right
people based on automated computer algorithms.
In other words, Facebook does not "sell" data in any way. That is simply not how their
business model works.
How Ads Give Money to
Facebook holds a massive amount of personal data on its user base, including gender, age,
hobbies, career choices, political preferences, shopping preferences - even their favorite
baseball team. That allows Facebook to sell advertising space to companies and
organizations who want to hone in on a specific demographic, like video game players or
Range Rover owners. Or, more generically, advertisers can target ads to larger groups of
people based on political preferences, religion, or even age. Advertisers can use specific
tools like Facebook's Dynamic Ads to market their entire inventory of products to users at
different income levels, to up their chances of making a sale. Targeted ads are a significant
revenue generator for Facebook, and it's all due to the data the company collects on its user
What You Should Know About Facebook
Facebook users should know that company revenues are directly dependent on the 2.2 billion users who use
the site. But there's a few things Facebook users should know about their user experience on the site:
• No selling your data. Again, that's not to say Facebook makes money on selling your personal data - it
doesn't. Facebook doesn't want to get into the business of selling user's personal data.
• You can't share data with any business on Facebook without your permission. Companies can only
connect with your personal data on Facebook if you grant them permission, like when you allow a
company like Uber or Lyft access your data when you sign up for services on a mobile app.
• So, you want to see what data Facebook has on you? Facebook users can check on exactly what
personal data Facebook is holding. Go to the Facebook "Settings" page and locate the "General" tab. That
will direct you to "Download a copy of your Facebook data." Click on the tab and you'll see what
information Facebook is storing in your good name. You can also use the Facebook Settings page to click
on "Ads" to see what personal preferences Facebook is sharing about you with advertisers. You can use
that page to manage any data or personal interests you don't want advertisers to see on Facebook
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