Facebook for many of us has been the opening web site in our browser. It has developed into one of the most engaging on-line bulletin board and for social interaction. The best part of it is that its all free! So how does Facebook make money?
In 2009, Facebook revenue reached over $500 million and expected to reach $800 million by end of 2010.
Imagine the amount of data Facebook has collected over the years with its membership. Facebook is essentially providing different kinds of services in exchange for a bulk load of demographic and preference data from its users. Having subscribed to Facebook, I have personally given so much of information about myself.
That data can be extremely valuable to a business that is marketing their products, advertising agencies simply because it provides specific details of the audience drilling down to their personal interests.
Have you noticed the self-service ad that appears on the right side of your Facebook home page? Basically every time you click on this, Facebook gets paid. In fact, the self-service ads alone generate a whopping $250 million.
Facebook has opened up different avenues in which you can advertise your product or service on their site, one being self-service ads.
Another are engagement ads, in which user interaction such as feature endorsements have brought in around $100 million.
Most companies sign enterprise deals with Facebook to in which they invest in a bunch of advertisements throughout the years. Microsoft is one such company investing over $50 million on ads each year.
Besides the advertising, Facebook also provides the option of buying space within Facebook. Almost anyone can walk up and buy space on the site if they have the cash - and that includes other Facebook users, who try to direct you to their profiles, fan pages or elsewhere in order to get you to follow their cause or buy their product.
There are also the gifts and other virtual property that users can buy and give to each other. This still seems like a crazy idea to some people, but it can prove a highly profitable business in the right circumstances.
Virtual goods prop up all kinds of online games, and nobody ever thought ring-tones could be so profitable! This line of business has brought Facebook somewhere between $30 to $50 million worth of revenue in 2009.