Facebook’sbusiness 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 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 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.
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
In the first nine months of 2018, mobile advertising was estimated at 92% of the total advertising on Facebook products. Active monthly users decreased from 376 million to 375 million in Europe. In the US and Canada, users increased from 241 million to 242 million. At the same time, average revenue per user grew worldwide. Besides all the buzz of 2018, the Facebookbusiness model seems (for now) unshakable.
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
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.
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.
Facebook, rebranded as Meta in 2021, is primarily owned by Mark Zuckerberg, founder and CEO. Zuckerberg keeps tight control over the ownership and decision-making of the company. Other large individual shareholders comprise former COO Sheryl Sandberg and co-founder Eduardo Saverin. Large institutional investors include BlackRock, Vanguard, and Fidelity.
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 from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm).
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.
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 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.
As of September 2022, Facebook, rebranded as Meta, is a profitable company, generating $18.54B in net profits. Yet, if we look at its Reality Labs segment, which is in charge of building the Metaverse, it recorded a net loss of $9.44 billion in the first nine months of 2022.
Instagram makes money via visual advertising. Acquired by Facebook for a billion-dollar in 2012, today, Instagram is integrated into the overall Facebook (now rebranded as Meta) business strategy. In 2018, Instagram founders Kevin Systrom and Mike Krieger left the company as Facebook pushed toward tighter integration of the two platforms. In 2022, Instagram is the most successful product still, in Meta’s portfolio.
Founded in 2009 by Brian Acton, Jan Koum WhatsApp is a messaging app acquired by Facebook in 2014 for $19B. In 2018 WhatsApp rolled out customers’ interaction services, starting to make money on slow responses from companies. And Facebook also announced conversations on WhatsApp prompted by Facebook Ads.
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Facebook Statistics To Understand Its Business Model">
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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