How Instagram And Facebook Make Money

Summary

Facebook, with its family of apps, reaches over two billion users daily, generating $55.8 billion in 2018 revenue, primarily from targeted ads. Despite privacy concerns and scandals, its user base continues to grow. The company uses vast user data to personalize ads, influencing consumer behavior and even political outcomes. However, with increased regulation and user awareness, Facebook is adapting its strategies, including a new 'Clear History' feature to address privacy issues.

Takeaways

• 🌐 Facebook and its apps reach over two billion users daily, which is more than a quarter of the world's population.
• 📈 Despite privacy concerns, Facebook's revenue grew 37% from 2017 to 2018, reaching $55.8 billion, with advertising being the main revenue source.
• 💼 Advertising accounts for approximately 99% of Facebook's revenue, highlighting its reliance on this income stream.
• 🎯 Facebook offers highly targeted ads, allowing advertisers to reach specific audiences, which is more efficient than traditional advertising methods.
• 📊 The company's advertising strategy has contributed to the decline of television and print advertising as digital advertising is set to surpass traditional methods.
• 🔍 Facebook gathers extensive user data to create detailed advertising profiles, which helps advertisers reach potential customers more effectively.
• 📱 Facebook can track user behavior across its family of apps and even on other websites through the Facebook Pixel.
• 🚫 There have been controversies and legal issues related to Facebook's ad targeting practices, including discrimination and misuse of data.
• 🛑 Users have limited options to avoid personalized ads, and even deleting Facebook may not remove the data the company has collected.
• 📉 Factors like increased regulation, social media concerns, and new features like 'Clear History' could potentially impact Facebook's advertising business in the future.

Q & A

How many people use Facebook, Instagram, WhatsApp, or Messenger daily?

More than two billion people use Facebook, Instagram, WhatsApp, or Messenger daily.

What percentage of the world's population uses Facebook's apps?

The usage represents more than a quarter of the world's population.

How much was Facebook's total revenue in 2018?

Facebook's total revenue for 2018 was $55.8 billion.

What percentage of Facebook's revenue comes from advertising?

Approximately 99% of Facebook's revenue came from advertising in 2018.

How many advertisers are there on Facebook?

There are about 7 million advertisers on Facebook.

What type of ads does Facebook use to target its users?

Facebook uses sophisticated and targeted ads that allow advertisers to select the kind of audience they want to reach.

How does Facebook ensure advertisers that their ads will be seen by the right audience?

Facebook provides a near guarantee to advertisers that their ads will be seen by people likely to buy their products, ensuring that they won't waste time or money.

What is the role of Sheryl Sandberg in Facebook's advertising strategy?

Sheryl Sandberg's experience with advertisers on Google influenced Facebook's targeted advertising approach, utilizing Facebook data that users voluntarily provide.

How does Facebook gather information to target ads?

Facebook gathers information from user activities on its apps, including likes, groups joined, events RSVPs, and location shares.

What is the Facebook Pixel and how does it contribute to ad targeting?

The Facebook Pixel is a piece of code that can be placed on other websites to track user activity and gather data for ad targeting.

What kind of information can advertisers target with Facebook ads?

Advertisers can target ads based on user interests, phone type, political leaning, ethnicity, and even income level.

What has been Facebook's response to criticism regarding its ad targeting practices?

Facebook has pledged to reform its system to prevent discrimination in ad targeting and has been working on features like 'Clear History' to give users more control over their data.

How does Facebook's new vision for a privacy-focused platform impact targeted advertising?

Facebook's new vision for a privacy-focused platform raises questions about how targeted advertising will work if users are encouraged to post privately.

What is the impact of Facebook's 'Clear History' feature on its advertising business?

The 'Clear History' feature allows users to delete the data Facebook has on them, which could reduce the precision of ad targeting and potentially affect the company's advertising revenue.