After much speculation and anticipation, Facebook went public in May 2012. Facebook’s IPO is one of the most infamous stock let-downs in recent history – making a huge splash and ultimately disappointing thousands with disappointing numbers. Since the public launch, Facebook has rolled out several ways to better monetize their website in creative ways and ultimately improve their IPO.
Since it has always been a free-to-join service, most of Facebook’s revenue comes from ads. However, a site can only have so many ads before they begin turning off users to the point where they quit. In order to keep their IPO rising, Facebook has had to resort to micro-fee monetization tactics to earn more revenue.
Increasing Facebook’s Revenue Through Promoted Posts
With a simple click of a button, business and personal users have the option to promote a post for a small fee ($5-$10 or more), which makes the fan page or a particular post highlighted on followers’ news feeds. Promoting a post is not only helpful to highlight high-level messaging and direct more pointed traffic to their pages – but also steadily increases a fan page’s following.
Facebook has also increased the reach of sponsored posts by increasing the budget amount. Previously, promoted posts and pages were limited on how much they could spend to promote. This budget increase allows businesses with large social media marketing budgets to pay more to improve a post’s visibility.
Personal profiles also have the ability to promote posts to their friends. For a small fee ($7 as of Spring 2013), personal users can highlight significant posts. Many users are taking advantage of this for fundraising for their personal hobbies, work-related items, and more.
In late 2012, Facebook launched a feature that allows users to buy their friends gifts for special occasions, like birthdays and marriage announcements. Gift suggestions are based on the recipient’s likes, and include things like gift cards for iTunes and Starbucks.
This not only allows Facebook to make a little cash, but also creates an opportunity for users to quickly buy a friend a gift at the last second if they forgot about a loved one’s birthday until the day of the event. In the future, Facebook will likely be expanding the types of gift that are available for purchase.
Monetizing Messages for More Revenue
One of the other ways Facebook is increasing their revenue is through paid messages. In the past, if a user was not connected to someone and they sent them an email, there would be a potential for that email to go into the recipient’s ‘other’ inbox, which acts as a sort of spam filter and is rarely checked. Now, If a users is not connected to someone, they can pay $1 to ensure their email goes directly to the person’s Facebook inbox rather than their ‘other’.
Users have been highly divided about having to pay for a message to be received, but so far thousands of Facebook users are using the service.
All of these new changes are adding up. Facebook’s revenue shot up 40% in Q4 2012 over Q3 2012, however as of Q1 2013, their IPO has remained steady at $25-$30/share. Facebook is continuing to find creative ways to monetize the website, and users expect to see more of these changes roll out in the coming years.