How Facebook earns money?

Answer:

Facebook made $40,653,000,000 in sales in 2017. A big part of Facebook revenue comes from digital advertising, which brought in $39,942,000,000 in 2017. Together with alphabet Inc. (Similar) a subsidiary of Google, Facebook has become one half of the dominant Duo of digital advertising. Unlike its competitor, which allows advertisers to serve ads based on the keyword search, the value of Facebook is the targeted advertising.

Targeted Advertising

Advertisers can use the wealth of personal data about users of the Facebook product ecosystem for advertising. For its part, Menlo Park, California.-the company claims that this makes the data anonymous and prepare information for advertisers in a custom demographic segments. Advertisers can additionally chopper buckets on the basis of their branding purposes. They can serve custom ads to users Facebook from certain populations or regions. They can also target users based on other categories such as sexual orientation, religion or political affiliation. Facebook has developed a wide range of promotional products at different stages of the life cycle of the brand.

For example, dynamic product ads Facebook allows advertisers to upload entire catalog of merchandise and the target audience on certain levels of income. Similarly, leading ads, offering advertisers the assistance of lead generation. These products have strengthened the position of Facebook in digital advertising. While new companies such as retaining ink. (Snap) needs to gain a significant market share in the future market of digital advertising, Facebook’s earnings suggest that it will remain a dominant player for years to come.

Video Messaging

The company is preparing for the future by expanding the canvas company. She emphasized, videos and live broadcast your video on the Facebook platform in its growth in recent quarters. According to the company, daily look time for live broadcasts of Facebook rose more than four times last year. The social media giant has also signed deals with content creators to further promote the video. (See. also: Facebook signs content deals with VOX, buzzfeed writes.).

Another new area of growth for Facebook is a messaging service that has recently started showing ads. According to CEO of Facebook Mark Zuckerberg, direct chat, which allows customers to communicate directly with the advertising business for more than 2 billion Messages exchanged by the users in the fourth quarter of 2017. Expanding its influence in the sphere of instant messaging and chat, in 2014, Facebook bought the popular messaging app whatsapp for $21.8 billion.

Facebook invests in emerging technology trends for future growth. “Over the next 10 years, we develop consumer use of various technologies, which are a big part of our future, but will not be a big part of our business for a long time,” said Zuckerberg in the social network’s first quarter earnings call, 2017. Among these cases, the use of virtual reality and bring the network in parts of the world without connection. Again, these initiatives embody the future sources of revenue for Facebook, as more of the Internet connection translate to greater use and sales. (See. also: Facebook is all grown up.)

Data Sale: The Fallout From Cambridge Analytics Scandal

How Facebook make from selling user data? Hard to be sure because the advertising revenue target, which, in turn, means that it is based on user data.

But some suspect that Facebook sells the information in a more direct way than previously thought.

The scandal in Cambridge the analyst who have been critical of some 87 million users, hackers, became widely known in March 2018. This should have far-reaching consequences for revenues and cost of Facebook business.

Regulation and problems users are likely to lead to increased costs of capital Facebook. In his testimony prior to his April. 11, the hearings in the Senate in 2018, General Director of Facebook mark Zuckerberg said that the company is currently building new technologies and “significantly” increases its investment in security. “I have instructed our team to put so much security on top of the other investments we make is that it greatly affects our profitability in the future,” he said.

Revenue from Facebook’s two largest markets – North America and Europe are expected to be affected by the consequences of the scandal of the Cambridge analyst. Both are extremely lucrative markets for Facebook. In 2017 Facebook earned an average of $84.41 from each North American members and $27.26 per user in Europe. In contrast, each user in Asia was worth 7.61$.

But the scandal is expected to have a negative impact on the profit of Facebook in the two largest markets in two directions. First, the problems of the advertiser, may lead them to pull ads from Facebook and will lead to a General decline in revenue per user. Second, incomes of social networks may take a hit in Europe due to new regulations. General data Production Regulation (GDPR), which requires Facebook to obtain users consent to their data in Europe will lead to a decrease of 7% in revenue, according to “Goldman Sachs”.

Good news for Facebook investors is that the company is making significant progress in new markets such as Africa and Asia. While he is not making a significant contribution to total revenue, whatsapp became a hit with consumers in Asia and South America. Other services such as instagram, is also entering new markets.

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