How Facebook Doubled Its Revenue and What You Can Learn From It

Facebook Doubles ProfitGone are the days when people questioned if a social network such as Facebook could make money. In fact, I wasn’t surprised when Facebook was valued at $50 Billion. A recent Reuters report suggests that Social network Facebook managed to double its revenue in the first half of 2011 to $1.6 billion. Many critics had questioned whether Facebook would be able to weather the Google+ storm.

To be honest, since Google+ business profiles haven’t yet launched, it would be unwise to talk about how it would affect the business aspects of Facebook and other social networks. However, one thing is for sure – Facebook shows no signs of down turn. On the other hand, it just keeps on moving from strength to strength.

In this post, I express my opinion on how Facebook doubled its revenues and what your business can learn from it.

Online Advertising

It’s fair to say that Facebook has redefined the paradigm of online advertising for good. Big brands as well as SMBs continue to rush to the site to interact with consumers through display ads and fan pages. Facebook brand campaigns, or fan pages created by big companies to interact with their consumers, are up 104% from last year. Business lesson for you – if you aren’t tapping online advertising, you’re missing an opportunity of a lifetime.

Valuation

Facebook is a classic example on how a business should realize its true worth. Back in 2006, when Yahoo offered $1 billion for Facebook and was turned down, people heavily criticized Zuckerberg and company. When Microsoft offered $20 million for a tiny stake, experts said that the Redmond-giant miscalculated Facebook’s worth. For what it’s worth, Facebook is now worth $80 Billion and may even cross the monumental $100 Billion mark by the end of this year. Business lesson for you – believe in yourself and realize your true worth.

Competition

Facebook has never been scared of competitors. In fact, it’s shown the willingness to take on anyone and everyone including giants such as Google and Microsoft. It’s a classic example of how you can beat your competitors at their own game. Both Google and Microsoft were well established players in social media with Orkut and MySpace respectively, before Facebook blew them away. Business lesson for you – watch your competition but don’t copy them, instead come up with novelty to beat them.

Loyalty

I think one of the biggest reasons behind Facebook’s monumental success is user loyalty. In contrast to Google+ which is quickly losing sheen, Facebook has a loyal user base. In fact, most Facebook users admit that accessing the world’s leading social network is their daily habit and an integral part of their lives. Businesses must strive to build a loyal customer base. If your customers stand by you, you’ll succeed.

Innovation

Facebook was the first social network to experiment with social gaming and virtual currencies. While it was a risky move, it has paid rich dividends – Facebook generated more than $500 million in revenue from selling virtual goods last year. In fact, Facebook takes 30% revenue cut from game developers. Business lesson for you – even though there may be risks involved, you shouldn’t be shy of innovation!

What’s your opinion on Facebook’s recently announced revenue? Do you think Facebook is a model example for businesses? Please share your experience by leaving a comment.

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  1. Well, with the courage and innovation FaceBook has shown, no doubt it can be said that they have really made a statement with their business style. As said above, with respect to concepts like online currency and redefining the whole meaning of Online Marketing, it has had a much wider effect on people than most people think. Just take the case of marketing alone. The means FB has provided for companies to interact with their consumers, though simple, is phenomenal. And that should be really appreciated.
    Now only if FB could solve the problems associated with their privacy issues….

  2. Yeah its not easy to compete facebook. Even Giants like Google is unable to do so. In the world of social media Facebook is indeed the only true King.

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