facebook-revenue-breakdown

Facebook Revenue Breakdown

Business / By / February 3, 2023
Revenue Source2022
Advertising$113.64B
Reality Labs (primarily sales of Oculus, now called Meta Quest)$2.16B
Other revenue (payments and fees)$0.8B
FourWeekMBA Intelligence Analysis

For most of its life, Facebook relied on advertising revenues to power up its business model.

In the last couple of years, though, the company has been trying to pivot toward the Metaverse.

In October 2021, Facebook rebranded to Meta, showing its interest in developing the Metaverse infrastructure.

Why did it do that?

Multiple reasons. However, let’s see the three main ones:

  1. Business model threat given by Apple’s privacy changes: in the last couple of years, Apple has been intensifying its privacy policies on the App Store. The latest move was the new opt-in mechanism for users to enable third-party tracking. This dismantled the whole Facebook advertising machine. This forced Facebook to move much more quickly toward its vision for the Metaverse.
  2. Lack of vertical integration: Unlike Apple or Google, Facebook lacks vertical integration. Indeed, Facebook’s advertising machine primarily relied on third-party tracking over Apple and Android devices to fuel its business model. This has made Facebook prone to attacks from these companies that control the mobile pipelines, which is where most of Facebook’s business relies on. Indeed, today most of Meta’s revenues come from mobile and Instagram. And a simple change in policy by Apple threatened the whole business model of Facebook.
  3. New entrants: the social media space, which has been dominated by Facebook and Instagram in the last decade, suddenly has seen the rise of new entrants in the previous few years. Among these, TikTok is the one that successfully gained traction and reached over a billion users! This created further pressure on Facebook to move quickly in a new direction, where it could develop a new business ecosystem that it controls to sell its ads.
2021 vs. 2020
N. of ads delivered growth rate10%
Price per ad increase24%
Geography
US & Canada51,54143.71%
Europe (includes Russia, Turkey)29,05724.64%
Asia-Pacific26,73922.67%
Rest of the World (includes Africa, Latin America, and the Middle East)10,5928.98%
Total117,929
Key Facts
FoundersMark Zuckerberg, Andrew McCollum, Dustin Moskovitz, Eduardo Saverin, Chris Hughes
Year FoundedFebruary 2004, Cambridge, MA
Year of IPOMay 18, 2012
IPO Price$38.00
Market Cap at IPO$104 Billion
Total Revenues at IPO$3.7 Billion by 2011, prior to the IPO
Total Revenues in 2021$117.9 Billion
Changed nameMeta, in October 2021
Employees71,970 employees, globally, as of December 31, 2021
Revenues per Employee$1,642,693.97
Who owns Meta?Mark Zuckerberg is the primary individual shareholder, with 81.7% of Class B shares, and 52.9% of the total voting power
Founded in February 2004, in Cambridge, MA, by Mark Zuckerberg, Andrew McCollum, Dustin Moskovitz, Eduardo Saverin, and Chris Hughes, Facebook IPOed on May 18, 2012, at a price of $38 per share, and a market cap of $104 billion and total revenues for $3.7 billion in 2011, prior to the IPO. In 2021, Facebook generated over $117 billion in revenues, and it changed its name in October 2021, to Meta. With 71,970 employees, Meta generated $1,642,694 per employee. Mark Zuckerberg is the primary individual shareholder, with 81.7% of Class B shares, and 52.9% of the total voting power

Read Also: Facebook Business Model

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Facebook ARPU

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ARPU, or average revenue per user, is a key metric for attention merchants like Facebook. It assesses the ability of the platform to monetize its users. For instance, by the end of 2022, Meta’s ARPU worldwide was $10.86. While in US & Canada, it was $58.77; in Europe, it was $17.29; in Asia, $4.61 and in the rest of the world, it was $3.52.

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Facebook Revenue Breakdown

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Mark Zuckerberg Empire

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Mark Zuckerberg is the principal shareholder of the company. Not only he retains ownership and control of the company. Facebook, like Google, has issued two kinds of common stocks, Class A and Class B. Where the holders of Class B common stocks are entitled to ten votes per share, and holders of our Class A common stocks are entitled to one vote per share. Mark Zuckerberg has a total voting power of 57.9%. 

Attention-Merchants Business Model

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In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Asymmetric Business Model

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In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility.

Facebook Business Model

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Facebook, the main product of Meta, is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion was from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm). 

Facebook ARPU

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The ARPU, or average revenue per user, is a key metric to track the success of Facebook – now Meta – family of products. For instance, by the end of 2021, Meta’s ARPU worldwide was $11.57. While in US & Canada, it was $60.57, in Europe, it was $19.68, in Asia $4.89, and in the rest of the world, it was $3.43.

Facebook Organizational Structure

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Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organizational structure is organized around the leadership of Mark Zuckerberg and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).

Metaverse Supply Chain

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Google Business Model

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A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.

TikTok Business Model

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TikTok is a Chinese creative social media platform driven by short-form video content enabling users to interact and generate content at scale. TikTok primarily makes money through advertising, and it generated $4.6 billion in advertising revenues in 2021, thus making it among the most popular attention-based business models or attention merchants.

Instagram Business Model

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Instagram makes money via visual advertising. As part of Facebook products, the company generates revenues for Facebook Inc.’s overall business model. Acquired by Facebook for a billion dollars in 2012, today Instagram is integrated into the overall Facebook business strategy. In 2018, Instagram founders, Kevin Systrom and Mike Krieger left the company, as Facebook pushed toward tighter integration of the two platforms.

YouTube Business Model

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YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.

Twitter Business Model

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Twitter makes money in two ways: advertising and data licensing. In 2021, Twitter generated $4.5 billion from advertising and $570 million from data licensing. While Twitter generated $5 billion in total revenues, it lost 221 million.

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About The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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