In this article, we will discuss the in-depth business model of Facebook. According to Statista Facebook have 1.73 billion active users during the first quarter of 2020.
Facebook was started in 2004 by Harvard student Mark Zuckerberg.
Today, Facebook is the most popular social network platform worldwide and Facebook business model is also popular to learn for other business.
As we know Facebook is the world’s most popular and lovable social media networking platform.
There is more than 66 million business using Facebook pages to promote their business and more than 7 million advertisers actively promoting their business on Facebook.
Business Model Of Facebook
Facebook has substantially changed its business model according to time and technology evolution.
Business Model Of Facebook is very ambitious and highly diversified.
To know more about the business model of Facebook we should know about Facebook other companies that help it to become the world’s number one social networking platform.
Some Facebook Owned Companies
Facebook has acquired 82 companies till now let’s know some big subsidiary company of Facebook:
1. Facebook Payment Inc:
With the help of Facebook pay they generate revenue and they say this service aimed to make payments easier across Facebook and it’s associate apps like Messenger, WhatsApp and Instagram.
Note: Whatsapp plus and OG Instagram is a modded version of the official app so, maybe you can’t use this feature.
Users can use it to buy and sell products of its platforms.
Facebook also enable users to pay for fundraisers, donation, game purchase, ticket, we have the best example of Facebook pay to donate money on your birthday or even your friend’s birthday to fight against COVID-19.
As we all know Instagram is very popular nowadays. It is a photo and video-sharing social media platform.
Instagram was founded by Kevin Systrom and Mike Krieger in October 2010. Facebook acquired in April 2012 with around US$1 billion in cash and some stock.
Instagram is also a very good source of revenue by advertising.
As of May 2020, Cristiano Ronaldo is the most followed person with around 216 million followers. Nowadays, Instagram is also very popular for personal brand building. Many people use a modded version of original Instagram like OG Instagram and Gb Instagram. That is a drawback for Instagram and also against its policy.
It was founded in January 2009 and acquired by Facebook in February 2014 for around US$19.3 billion.
WhatsApp became the world’s most lovable and popular messaging application by 2015. It has more than 2 million users globally.
This messaging application allows users to send text messages and voice messages, users can make calls, share photos/videos/documents/user location and other media.
4. Atlas Solution:
This is a subsidiary of Facebook and acquired in 2013 from Facebook that helps in providing services in online advertising.
Atlas helps to track advertising campaigns and the best tools to manage campaigns and reach your targeted audience.
It was an Israeli mobile web analytics company and owned by Facebook. It was acquired by Facebook in 2013 for around $120 million and used to analytics platforms to monitor competitors.
Target Audience Of Facebook
1. Users:- Facebook is a very good platform for users to communicate with different people and make a friend from around the world.
Users can buy and sell a product and services and even easily fundraise for needy people.
2. Advertisers And Marketers:- As we know advertiser and marketer shifted toward digital marketing and Facebook and Instagram is an excellent platform for advertising with detail targeting.
3. Developers:- Facebook also has its own App and Game development platform where users can play games and developers like Zynga and Facebook also benefit from this.
Services Provided By Facebook
Facebook is very big and all services provided by Facebook and it’s subsidiaries companies aim to generate revenue.
Some subsidiaries play a major role to generate data that is used to identify users behaviour and advertising.
The business model of Facebook include some of the services which are:-
As we discussed above Facebook is a topmost player in the social media network platform. It helps you to connect with your friends, family, neighbours, classmates and others.
Facebook also launched Facebook Lite in 2015 which is a less data consumption version. This is the topmost revenue-generating source for the parent company.
Facebook Messenger separated messaging services from the main Facebook app.
It is used for messages, exchange photos, stickers, audio, files, videos as well as video calling support.
Users can play the game here and this also helps Facebook to generate more revenue by advertising and gaming.
Facebook also launched integrated payments in messenger for its users residing in the US.
As we all know Instagram is the second most loved social media platform. This photo and video sharing network is very popular nowadays.
Instagram is growing day by day and it is also popular to share your life moments and build your personnel brands.
This platform is also becoming the best choice for a marketer to advertise their product and services by targeting specific age groups and their interests.
Workplace By Facebook
It is an in-house social networking platform that connects to everybody in the company from the head office to the shop floor.
The workplace is currently used by more than 30,000 organisations worldwide that include Walmart, World Health Organization, Domino’s, Starbucks, Algar telecom, Spotify Booking.com Air Asia and many more.
This is an excellent platform to connect everyone in the company.
It provides the best communication tools with many features like Groups, chat, video calls and live video broadcasting.
At the time of Covid-19 pandemic, it is playing a major role for many companies that continue their work from home.
It is a digital marketplace where users aged 18+ in the UK, US, Australia and New Zealand can easily buy and sell items with other people in their area.
Facebook Marketplace is available for Android and iPhone users.
Moments By Facebook
This is a cloud storage service provided by Facebook. Moments is a competitor of Google photos that lets their users sync their photos to the cloud.
Moments allows its users a cloud storage facility if your friends have taken an image on the same date and place and you are a part of that image that will sync and form an album of all photos.
It is a photo and video application that is used to create a digital built-in mask on your face while taking photos and videos. Users can save the video and photos on their device.
This is the world’s fastest messaging app amongst its users. It allows its users to send text and voice messages along with the video, documents, video calls, voice calls and others.
Facebook launched a standalone WhatApp business to allow companies to communicate with their customers.
Facebook’s Major Source Of Revenue
Facebook earns revenue with the help of advertising on its platform.
It helps the marketer to reach their target audience at less cost as compared to traditional marketing.
Nowadays digital marketing is a good platform that came in light for engagement, reach and want to know user behaviour.
Facebook provides advertising services to every individual to promote their business and also it enables the user to use this service to make self-branding.
You can run your campaign on Facebook and Instagram platform and reach your targeted audience for this Facebook will charge a certain amount that varies according to days and impression of ads.
Let’s understand Facebook ads by an example: you have recently opened a shop of pizza in a particular city and want to advertise your shop so, Facebook and Instagram is the best platform to reach your targeted audience.
You can advertise your shop by detail targeting like select age group from 18-35 and you can also select a particular demographic area to reach your customer.
Facebook detailed targeting also allows you to select your audience interest like a foodie, food lover etc so that helps you to reach your advertising to those people who are a foodie and loves to eat.
Apart from this Facebook also earns from the App centre.
Users can download their desired application from that app centre and from this developer paid to Facebook.
Facebook games like Farmville, Mafia Wars and Facebook gifts shop also help Facebook to generate more revenue.
As we know Facebook is very big, so they also generate revenue from its subsidiary company.
Facebook 2020 First Quarter Amid COVID-19
World’s number one social media platform is supporting public many health communities to ensure everyone has the right information of COVID-19.
Facebook also committed around $300 million investment till 29 April 2020 to help its community amid COVID-19. That also included $100 million big programs to help small scale business and also announced to support news industry by investing $100 million.
Apart from this Facebook also launched an information centre for real-time updates on COVID-19 and suggesting tips to stay fit and happy. This platform is also supporting by giving $20 million in donations to the COVID-19 relief effort.
Some Highlights Of 2020’s 1st Quarter Of Facebook
- Daily active users on Facebook for march 2020 were around 1.73 billion that increase 11% year-over-year.
- The monthly active user during the 1st quarter of 2020 was around 2.36 billion that is also increased by 10% year-over-year.
- Total capital expenditure including principal payments on finance leases were $3.66 billion in 1st quarter or amid COVID-19 lockdown 2020.
- Facebook revenue was $17.74 billion in the 1st quarter and revenue of Facebook 1st quarter has increased by 18% as compared to the 1st quarter of 2019.
- If we talk about the average revenue generated by Facebook from a single user so, that is $6.95.
Facebook Funding And Investment
Facebook has raised a total $2.3 billion of the fund in its 15 round of funding. And their last funding was on Jun 30, 2013, from a secondary market round.
If we talk about the investment, Facebook recently signed a deal of Rs.435.7B with Reliance Jio on April 22, 2020.
Facebook also made an investment in more than 20 other companies like Tech Matters, Unacademy, Peanut, Albany Can Code etc.
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You can also read the Business model of Alibaba Group that helps to grow your business skills.