Facebook’s business model is based on hooking users on its feed, which is a highly personalized page with an infinite scroll, where users find whatever kind of entertainment or connection they are looking for. Companies can segment their markets, thus targeting potential customers for their products and services.
From ARPU to ARPP
The average revenue per user is a key metric that Facebook continuously monitors on all its products.
This, coupled with the monthly active users on the platforms, help assess the level of engagement coupled with the ability of the company to monetize that engagement through its advertising machine.
However, Facebook has the so-called power users (those who engage more like super-fans or produce higher-quality content like influencers) that drive the business.
In 2020, Facebook renamed its ARPU into ARPP (the user is finally called person to make it more human).
Mobile advertising turned into a cash cow
Facebook started transitioning to mobile-first a few years back, which paid off. Today mobile advertising is Facebook’s cash cow.
Most of its revenues come from there. What else? A specific product has turned out to be the most successful so far.
Instagram is the core product
The successful transition to mobile-first for Facebook, as a company, was also successful thanks to a product that Facebook owns (Instagram) that is a native mobile players (Instagram was born as an App).
Therefore, most of the advertising revenues sold on the Facebook platform (comprising all its products) go through Instagram.
North America is still the most important market
The most profitable advertising market for Facebook in North America.
While Facebook expanded globally and Europe also represents a good chunk of its revenues, the average revenue per user in the US and Canada is much higher than in other countries.
Of course, in the future, countries in the Asia and Pacific Area might also turn out to be extremely profitable in the next few years.