Have you ever considered how Facebook makes money without charging you a penny to use its services? Over the years, Facebook has built a global base of billions of users. It owns extensive data and puts that data to work. How? Continue reading to find out.
Key Takeaways
- Facebook makes most of its revenue from digital advertising.
- Meta, the company that owns Facebook, has spread its revenue streams through other platforms like Instagram, WhatsApp, and Metaverse.
- Facebook Marketplace is an additional source of revenue.
The Power of Advertising: Facebook’s Primary Revenue Stream
After looking at the shocking data behind Facebook in real-time, one of the first questions people ask is how Facebook makes money. Approximately 97% of Meta’s revenue comes from advertising. Last year alone, Meta’s ad revenue from Facebook reached $131.95 billion.
Here’s how it works:
- With over 2.9 billion monthly active users, Facebook provides a giant audience for advertisers.
- Advertisers pay Facebook to display ads to targeted audiences using its extensive user data, which includes information about user interests, behaviors, and demographics.
- The platform’s ability to target prospects with precision makes it a go-to source for advertisers and business owners.
Simply put, it is a platform that makes money through its users’ wants and needs.
How Does Meta Make Money From Other Platforms?
Just like Meta makes money through Facebook, it also uses Instagram. This year alone, Instagram has generated $70.9 billion from its 1.4 billion active monthly users.
The number of users is expected to grow to 1.44 billion in 2025. Of course, as the number of users increases, revenue will increase, too.
Other than Instagram, Meta makes money through the Facebook Marketplace. It charges a selling fee of 5% per shipment or a flat fee of $0.40 for shipments under $8.
Meta also owns Messenger and WhatsApp. Even though both services are free, the company charges a fee for Meta’s and WhatsApp Business APIs.
For example, WhatsApp charges businesses for messages sent using the WhatsApp business API.
Meta also posts ads on Messenger.
Meta’s Metaverse and Reality Labs
Meta is finding new ways to make money other than advertising. Right now, it is trying to impress its users and win them over with new and exciting features. One of the company’s latest innovations includes Reality Labs, a new division of Metaverse that focuses on creating virtual and augmented reality products like the Oculus headsets.
Meta’s new investment isn’t making money just yet. Since 2020, the company has lost $50 billion.
Unlike Alibaba company, Facebook makes most of its money through advertising by leveraging its giant user base for highly targeted ad placements. While advertising will likely always be its primary money-maker, Meta is looking for more ways to turn a buck. We are excited to see what they figure out next.
FAQ
Have more questions about how Facebook makes money? Here are answers to the most common questions.
How Do You Make Money on Facebook?
If you’re curious about how to make money on Facebook, you can start by creating content for brands, running in-stream advertisements, and selling things or services on Facebook Marketplace. If you have a large following and enjoy live streams, you could also profit from Facebook Stars, the platform’s tipping system for live streamers.
Does Facebook Sell My Information to Advertisers?
Facebook uses the information it has about you to show ads that are relevant to your interests. This way, advertisers can maximize their investments by making sure that they reach their target audience through Facebook advertising.
How Can Meta Make Money From the Metaverse?
The Metaverse allows users to hang out in virtual environments. It could use this new space to display ads, sell virtual goods, and offer subscription services. Think of this as the billboards of the future.