If you haven’t noticed it yet, it looks like Facebook is now actively asking users of their social-networking site to advertise with them. Well, they bluntly state the main reason why they are doing this and according to Facebook somebody needs to pay for all of their expenses just to keep Facebook alive and free. Actually the notification comes out intermittently above your News feed tab just above your “Update Status” link. The message shows inside a box with a megaphone (looks like Facebook’s emphasizing the message to all) saying “About Ads: Ever wonder how Facebook makes money? Get the details:”. The link when clicked will redirect you to Facebook official page about “Advertising on Facebook”. Refer to the screenshot below just in case you haven’t seen that message yet.
Is Facebook really losing revenue or money and can’t keep up with their expenses even though it’s already a fact that this online social-networking website is the most popular and dominating website in the Internet today? Statistically speaking, Facebook is still dominating and for months, OK for years. Even if you check it with third-party online website analytics such as Compete, Quantcast, and Google Ad Planner – it will show you how many users around the world is using Facebook. Below is an example statistic data of Facebook (US only) from Complete.com.
In reality, this only shows that even a powerful and popular website such as Facebook needs to find a way to feed themselves while they keep their services free for all of us. And one way to do this is for them to offer business group or other companies to advertise on Facebook and pay them back for delivering the ads. According to Facebook last year it cost them over a billion dollars just to keep the site running and they were able to pay it from the advertisements. Now it seems that Facebook is and will still grow in the next few years and to sustain it they need advertisers to earn money. The question now is would they be able to attract more and more investors to advertise on their website?
Well, if you’d ask me if such website is getting large traffic like the graph above which shows more than 162 million unique visits within a month then that’s really a big possibility that I will surely earn from advertising my website or product on Facebook. However, Facebook says that their advertising scheme will only show related ads into your Facebook home page where and if the product is nearby you or related to your interest – now this will have a negative impact on the advertiser if the product being sold is available only locally or within their area unlike if your product can be shipped overseas. So I guess advertisers should be wise before investing their advertisements on Facebook if this will be a win-win situation.
This is not really different from big web companies like Google where one of their source of revenues is through advertisement. But the difference of Facebook with Google in terms of advertising, Google have Adsense where it shares its profits by offering it to other webmasters and/or bloggers to become publishers. In this way, a certain product from an advertiser is easily propagated and will soon be known to all since there are more than a million blog sites around the world that uses Adsense as one way for them to earn money as well. Of course, bloggers like me also needs to find a way to pay for my web hosting, domain, electricity bill and of course to have an additional revenue to keep us alive.
However, if you are an entrepreneur or if you own a small business would you still plan to acquire this and pay Facebook to advertise your product when you can create your own Facebook page and promote it yourself using the same social networking website? Well, it’s really up to you on how you want to manage your business. But the truth remains, a company even like Facebook which is popular as we know it also needs to find a way to break-even to survive. For those who are not yet aware, making something like this social-networking website to work it will need a lot not only of hard work but also money and since this online service is FREE for all then a company like Facebook needs to find a way to sustain it.
Although I fully understand Facebook, the question on my mind still remains – are they really losing a lot of money and they cannot sustain their Free services anymore that is why they are now asking investors and business group to advertise with them? Or they are just living too extravagant now and they wanted more. What do you think?
For more information, you can visit Facebook official website for their advertising services - link.