facebook-statistics

The Facebook Statistics To Understand Its Business Model

Facebook business model is based on hooking users on its feed, which is a highly personalised page, with an infinite scroll, where users find whatever kind of entertainment or connection they are looking for and companies can segment their markets, thus targeting potential customers for their products and services.

From ARPU to ARPP

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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 monetise that engagement through it 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):

facebook-arpp-2020

Mobile advertising turned in a cash cow

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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 Facebook business model seems (for now) unshakable.

Facebook started to transition to mobile-first a few years back and that paid off. Today mobile advertising is Facebook‘s cash cow.

Most of its revenues come from there. What else? There is a specific product that turned the most successful so far.

Instagram is the core product

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Instagram makes money via visual advertising. As part of Facebook products, the company generates revenues for Facebook Inc. overall business model. Acquired by Facebook for a billion dollar 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.

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) goes through Instagram.

North America is still the most important market

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ARPU or average revenue per user is a critical measure to assess Facebook ability to monetize its users. ARPU is given by total revenue in a given geography during a given quarter, divided by the average of the number of monthly active users in the geography at the beginning and end of the quarter.

The most profitable advertising market for Facebook is 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 much higher compared to any other countries.

Of course, going forward, countries in the Asia and Pacific Area might also turn out to be extremely profitable in the next few years.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here