Because that this, you may be wondering how the firm makes together a huge amount that money ($70 billion united state dollars in 2019).

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To begin with, that is in reality a legend that on facebook sells data.

Instead, facebook (FB) makes many of its money by offer ads top top the social media and also messaging communication it owns -- Facebook, Messenger, Instagram, and WhatsApp.

Advertisers pay on facebook to make their ads visible to people. Castle can choose to "target" the ads by only showing them to human being who fit particular characteristics. These include age, gender, country, interests, etc.

But the advertisers never ever get accessibility to personal user information, contradictory to what some world say. They select the targeting options, and also Facebook then reflects the ads come the right people based upon automated computer algorithms.

In other words, facebook does no "sell" data in any type of way. That is simply not how their organization model works.

Facebook renders a many money

Facebook has actually 2.89 billion monthly active users throughout its "family" of products. The these, 2.26 billion civilization use at the very least one that their assets each day.

This means that on facebook reaches about 3/4 that the world's web population.

Because of its enormous user base, the firm makes a many money from serving ads.

In 2019, Facebook's revenue to be $70.7 billion united state dollars, an increase of 27% native $55.8 billion in 2018.

Their revenues in 2019 were $18.5 billion, a 16% diminish year-over-year since of some legal fines and big investments in privacy and also security.

Here's a graph from Facebook's latest revenue release reflecting revenue expansion in the past 9 quarters, from October 2017 to December 2019:

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Facebook currently makes 98.5% that its money from digital advertising, greatly ads top top Facebook and also Instagram. They also own WhatsApp and Facebook Messenger, however these apps don't drive a lot of of advertisement revenue yet.

Additionally, Facebook makes money from hardware products. They very own the virtual fact headset maker Oculus and also sell the facebook Portal.

The firm is additionally expanding into services prefer online payments, eCommerce, and also business messaging. These services don't make much money yet yet likely will certainly in the future.

Here is a breakdown of the seven key ways that Facebook renders money.

1. Digital ads ~ above Facebook and also Instagram

About 98.5% the Facebook's revenue originates from ads ~ above Facebook and Instagram.

Most the the ads room "pay-per-click," an interpretation that advertisers pay on facebook each time a person clicks on an ad.

Even though each click may not cost that much, it easily adds up to billions that clicks and also billions of dollars.

Advertisers who are interested in reaching world use Facebook's advertising tools to decide what type of world they desire to reach.

For example, here's what one advertiser indigenous a high-end car company like Mercedes-Benz might decide to target:

Location: united StatesGender: MenAge: 30-60Interests: deluxe vehicles
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Advertisers can achieve a much higher return on invest by targeting their ads to people who are likely to be interested.

It is actually a myth the targeted proclaiming is "bad" in some way.

Most ads ~ above the internet are targeted in one method or another. Facebook is just much better at it than everyone else.

Given a choice, most users would fairly see appropriate ads rather of irrelevant ads. The relevance offers a far better user endure than ads on TV, for example.

In addition, having accessibility to such an effective advertising devices is very an important for small to medium-sized businesses, i beg your pardon are currently able to contend with big companies without having large advertising departments.

According come Facebook, over there are currently 8 million businesses worldwide that use their declaring platform.

Here's an example of an advertisement on Facebook, targeted to me due to the fact that I have displayed an attention in this product in the past:

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You can see that it's an ad by the "Sponsored" label at the top.

Same as with the facebook platform, the firm also makes money indigenous ads on Instagram. Lock don't have actually a the majority of ads ~ above WhatsApp yet, so that platform doesn't contribute much revenue at the moment.

The ads in the old news feed on Facebook and Instagram make the many money, yet ads in the disappearing story are likewise becoming much more popular and making more money every year.

Interestingly, many of Facebook's revenue now originates from ads on their mobile apps. This is a huge change from the company's beforehand days when many of the revenue came from the website.

However, Facebook has actually recently been rolling the end privacy tools that permit users to avoid some of your data being offered for target ads.

These privacy tools may come to be a headwind because that revenue development in the future. It might make targeted ads less effective and also less popular with advertisers.

2. Oculus virtual truth headsets and apps

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Back in 2014, Facebook obtained a firm called Oculus for $2.3 billion.

Oculus is the worldwide leader in making virtual fact headsets because that consumers. Your top assets are the Oculus Rift, Oculus Go, and also the recently launched Oculus Quest.

Each Oculus headset prices several hundreds dollars, so Facebook renders money for each unit sold. But Oculus likewise has an app marketplace where world can acquisition apps and also games to usage on the Oculus headsets.

The revenue added by Oculus is relatively small compared to the proclaiming business. Lock don't say precisely how much it is, but it is probably a big percentage of Facebook's 1.5% non-advertising revenue.

Oculus is at this time spending a most money top top research and also development, and they are likewise developing augmented fact (AR) headsets, which could become popular in the future.

The Oculus app marketplace could likewise become a large revenue driver eventually, similar to Apple's (AAPL) app Store and Google's (GOOGL) beat Store.

On their latest earnings call, Facebook claimed that the Oculus app store had $5 million in sales top top Christmas work alone.

3. On facebook Portal smart video communication devices

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Facebook additionally makes smart video clip communication tools called on facebook Portal.

These are smart-home tools that permit you to communicate via video chat on facebook Messenger and WhatsApp.

The an equipment has a screen and a video camera that can follow you around as you walk approximately a room while video chatting through a friend or family members member.

The Portal additionally has the Amazon (AMZN) Alexa smart home assistant built-in, therefore it also functions as a smart-home device. You have the right to use it come ask because that the weather, news, control your house lighting, etc.

Facebook does not say exactly how much money they do from the Portal, however it's more than likely not much since the tools are fairly cheap.

The facebook Portal tools have become very popular among particular groups -- particularly families that communicate a many through video chat. Lock get very positive evaluate online, commonly 4.5 stars or higher on Amazon.

4. Payments and also digital currency

Facebook watch a huge market possibility in digital payments and they recently started rolling the end a new service dubbed Facebook Pay.

They setup on having various payment features on your apps that allow users to send money to people and also businesses.

Facebook is also developing a cryptocurrency called Libra, which has the potential to disrupt the worldwide payment space in the future.

Using Libra, human being may eventually be able to send money almost everywhere the world, instantly, with almost zero fees.

Eventually, payment may become a significant revenue resource for Facebook.

5. Commerce on Instagram and Facebook Marketplace

One of the greatest growth locations online is eCommerce.

Facebook look at a huge opportunity here due to the fact that people currently use their solutions to discover new products and shop.

The on facebook Marketplace platform currently has thousands of millions of users. Countless brands and influencers also rely greatly on Instagram to industry their products.

Facebook has currently launched Instagram Checkout in the US. This renders it feasible for some businesses come sell commodities directly v the platform.

Along with payments, this is an area that facebook is investing in heavily. Much more features are most likely to be rolled out soon.

6. Organization messaging ~ above WhatsApp and Facebook Messenger

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Another future monetization chance for on facebook is organization messaging on WhatsApp and also Facebook Messenger.

Many businesses are currently using these messaging communication to communicate with customers.

For example, numerous websites now have actually Facebook Messenger chat widgets the customers can use to send messages directly to sales or client support.

The agency is most likely to discover ways to monetize these functions in the future. Because that example, they can charge businesses for premium attributes that enable them to enhance their customer service.

7. Workplace by Facebook

Facebook supplies a business called Workplace, i beg your pardon is a means for businesses to regulate their inner communications.

This organization competes straight with service communication services like Slack and Microsoft Teams.

Workplace has a free subscription option, however its progressed service expenses $4 per month for each user.

There are over 30,000 businesses and organizations internationally that use Workplace, including huge companies favor Starbucks and Walmart.

Back in February the 2019, Workplace had over 2 million payment users.

Other ways

One other way that Facebook renders money is by collecting interest on its vast cash reserves.

The company is so financially rewarding that that is making far more money 보다 it deserve to spend. Due to the fact that of this, the has about $56 exchange rate in cash and cash equivalents.

Like other huge businesses, on facebook stores many of its preventive cash in financial products that salary interest, such as bonds and money industry funds.

In 2019, facebook made $826 million in "interest and also other income" -- i m sorry is greatly interest payments on its substantial cash reserves.

The interest earnings was virtually as huge as their whole non-advertising revenue, which come in at $1,042 million in 2019.

Facebook's revenue breakdown per geography

Finally, right here are some charts published by on facebook that show an ext details about the revenue breakdown.

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In 2019, facebook had total revenue the $70.7 billion. Here is the breakdown by geography:

US & Canada: $34.15 billionEurope: $17 billionAsia-Pacific: $12.6 billionRest that World: $6.87 billion
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In 2019, facebook made $29.25 united state dollars in revenue per user, but this was greatly skewed based upon user location:

US & Canada: $139.35Europe: $44.14Asia-Pacific: $12.63Rest that World: $8.74

One of the means Facebook makes an ext money annually is by enhancing its average revenue every user. This number has actually been walking up continuously over time.

The Bottom Line

Facebook is just one of the biggest companies in the world.

They don't simply own the on facebook platform, but additionally Instagram, on facebook Messenger, and also WhatsApp.

In addition, they own the virtual fact headset device Oculus and sell various other products and also services.

Despite typical belief, on facebook does not sell user data in any kind of way. Almost every one of their revenue comes from serving targeted heralding on their web platforms.

Although Facebook currently makes most of that money indigenous ads, the chances are the payments, eCommerce, and other services will become far-ranging revenue motorists in the future.

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With over 2 billion users per day and nearly 3 billion individuals per month, facebook has numerous different options to make even much more money in the future.