Advancing the World through Innovation

Evolution of the Facebook Business Model

There is no denying the huge historical impact that social media has made on the way in which the modern world conducts its business and marketing activities, but how have these supposedly “free” services managed to provide such an impactful product and still appear to operate and remain profitable (especially in such a rapidly evolving industry)?

Facebook, the infamous social networking platform is undeniably one of the 21^st centuries greatest (and potentially most controversial) technologically innovative online businesses that has played a pivotal role in the development of digital marketing and the modern-day marketing industry as a whole.

In the beginning, the original owners of Facebook (Zuckerberg included) developed and spent time cultivating a business model that allowed for the customer to coexist both as the consumer and the product. At face value, users of the social media platform were invited to connect and share amongst their “Facebook friends”, interacting with a whole range of user generated content. In order to capitalise on this “product” and essentially continue to provide the service, Facebook would collect psychographic and behavioural data from each user by tracking each like, post reaction, search, buying habit etc. as well as all user provided information (soon to be referred to as “Big Data”). In turn Facebook provided this information to businesses that utilised their “Facebook Ads” service in order to target an extremely refined target segment based on desired characteristics. (Phys.Org, 2018)

Currently this business and revenue model still accounts for 98% of Facebook’s revenue with the remaining 2% resulting from on-site payments. (Cuofano, 2018) In recent years though the tech giant has stuck with their mission to “Give people the power to build community and bring the world closer together” and have diversified their business and revenue models. Zuckerberg states that his overall goal is to

“make affordable access to basic internet services available to every person in the world”

and therefore ultimately developing a business model that allows Facebook to capture the “eye-ball time” (Goklani, 2016) from every person in the world during some point of their lives. In order to achieve this long-term goal, “Internet.org” was developed by Zuckerberg as a partnership and initiative to get the world online through the development of new technologies and “connectivity aircraft”. (Zuckerberg, 2014)

“Today, we’re sharing some details of the work Facebook’s Connectivity Lab is doing to build drones, satellites and lasers to deliver the internet to everyone. Our goal with Internet.org is to make affordable access to basic internet services available to every person in the world.” (Zuckerberg, 2014)

As of Q1 2018, although facing criticism and concerns about the “net neutrality” and Zuckerberg’s true intentions, through the Internet.org initiative, Facebook has successfully connected over 100 million people to the internet. (Constine, 2018) Combined with Facebook’s continuous journey to “recognise eyeball distractions beforehand and acquire them” (Goklani, 2016) such as buying up Instagram and WhatsApp etc. has developed many successful and innovative business and revenue models that continue to evolve and impact the world.

Works Cited

Constine, J., 2018. Facebook’s Internet.org has connected almost 100M to the ‘internet’. [Online]
Available at: https://techcrunch.com/2018/04/25/internet-org-100-million/
[Accessed 6 September 2019].

Cuofano, G., 2018. How Does Facebook Make Money? Facebook Business Model In A Nutshell. [Online]
Available at: https://fourweekmba.com/how-does-facebook-make-money/
[Accessed 6 September 2019].

Goklani, S., 2016. What is Facebook’s Business Model?. [Online]
Available at: https://www.linkedin.com/pulse/what-facebooks-business-model-sunny-goklani-eit-bmc
[Accessed 6 September 2019].

Phys.Org, 2018. You’re the product: Facebook’s business model explained. [Online]
Available at: https://phys.org/news/2018-03-youre-product-facebook-business.html
[Accessed 6 September 2019].

Zuckerberg, M., 2014. Facebook. [Online]
Available at: https://www.facebook.com/zuck/posts/10101322049893211
[Accessed 6 September 2019].