Background
Mark Zuckerberg is most famous for being the founder and CEO of one of the world’s largest social media platforms, Facebook. The platform was first created in an American college dorm room in 2004, and has since grown to become the most successful social media platform in the world. It now reaches a staggering 2.8 billion active users every month. Facebook’s success has enabled Zuckerberg to become a billionaire, and its innovative advertising system has enabled businesses to advertise to millions of potential customers. This article will look at how Zuckerberg has used Facebook to make money and how this has changed over the years.
Pre-IPO Advertising Model
Prior to its initial public offering (IPO), Facebook relied heavily on the sale of advertisements to make money. These advertisements were predominantly presented to users in the form of banners and sidebars on their news feeds and profiles. This programmatic approach allowed businesses to specifically target ads to their desired demographics, so that the more their ad was clicked on, the more money they made. This method also allowed Facebook to offer an optimum customer experience, as the ads they served to their users were not intrusive.
Post-IPO Expansion
In the years following its IPO, Facebook made further changes to its business model, further diversifying its income streams. Firstly, Facebook began a program allowing businesses to create their own ‘Pages’, or business profiles. This allowed businesses the opportunity to interact with customers and engage with their customers in ways that had not been possible before.
Facebook made further changes, introducing features such as sponsored stories, premium brand pages, and even job postings. All these features enabled Zuckerberg to make more money from Facebook as businesses were willing to pay for the extra exposure and engagement these features provided.
2018 Acquisition of Instagram
The most significant financial move by Zuckerberg, however, was the 2018 purchase of Instagram for $1 billion. This allowed Facebook to integrate the photo sharing platform and its user base into the Facebook ecosystem, generating even more advertising revenue for the tech giant. This was a hugely beneficial move for Zuckerberg, as Instagram had quickly become one of the largest social media platforms in the world, with over 1 billion active users.
2020 Covid-19 Boom
The Covid-19 pandemic led to an unprecedented boom in the tech industry and Facebook was no exception. During the initial lockdown period, it was estimated that Facebook’s user base had grown by an additional 150 million users, with more and more people looking for ways to stay connected. This enabled Zuckerberg to increase his profits exponentially, as there were now more people to advertise to and interact with.
2021 Digital Services Tax
This year, however, Facebook has faced difficulties, particularly in relation to the introduction of a new digital services tax. This tax was introduced in the UK and is expected to raise £500 million a year, with Facebook being one of the firms that has been singled out to pay it.
In response to this, Facebook has said it will no longer undertake certain activities in the UK that are liable for the tax, such as creating new jobs or investing in new offices. While the exact effect of these changes on Zuckerberg and Facebook remains to be seen, it does appear that this new tax could have a negative effect on the tech giant.
Final Thoughts
Overall, it is clear that Mark Zuckerberg has made considerable amounts of money from Facebook. The platform has experienced unprecedented growth thanks to its innovative features and services, as well as its expansive user base. However, the introduction of new taxes may have an effect on Zuckerberg and Facebook in the years to come.
Monetising Content
One of the main ways that Facebook has been able to make money is through monetising its content. Facebook has implemented various tools and services to allow users to better monetise their content. The most prominent of these tools is Facebook Ads, which allows users to create targeted ads which appear in their news feed and profiles. Through this, Facebook can generate revenue from every ad that is clicked on, making this an effective way to make money.
Data-Mining
Facebook is renowned for its extensive data-mining capabilities, which it uses to make money from its user base. By collecting data from its users, Facebook is able to gain a better understanding of its users and tailor its services to their needs. This data is then used by Facebook to create targeted advertisements and provide businesses with increased insight into their target audience. This in turn allows businesses to adjust their advertising strategies and generate greater returns.
Virtual Reality
In recent years, Zuckerberg has focused increasingly on developing Facebook’s virtual reality products. These products include the Oculus Rift and Samsung Gear VR, both of which allow users to create virtual reality experiences. This has presented huge opportunities for Facebook to make money, as businesses are now able to invest in creating their own virtual reality experiences to be used on their products.
Conclusion
Facebook has been incredibly successful at making money, with Mark Zuckerberg at the forefront of this success. Through creating innovative business models and introducing new products and services, Zuckerberg has been able to make Facebook one of the world’s most successful technology companies. Although there are still some challenges that Facebook must overcome, one thing is clear: Zuckerberg will continue to innovate and lead Facebook to further success.
