Facebook makes money with internet service providers

How do Google, Facebook and CO earn the billions

In the beginning, Google was an easy-to-use search engine, just as Facebook started out as a simple network. At that time the numerous services of the companies were not to be found on the Internet and the possibility of making money with targeted advertising was not immediately the focus of interests. In the meantime the tide has turned, because both companies advertise and earn a lot of money from it. After all, companies get a few cents for every advertising banner they place or for every link they click - but with millions or even billions of users, even the smallest income per user is enough to earn billions of euros a year.

How Does Free Facebook Make Its Billions?

With over 900 million members, Facebook is not only the market leader among social networks, but also a billion-dollar machine. The billion dollar business is driven by the data of its users and enables the platform to sell its actual goods or attractive advertising spaces to paying customers. When the company went public at the beginning of 2012, its balance sheets were also made public and provided information about its own business. At that time, the financially healthy company had an annual turnover of almost € 3 billion or a profit of around € 750 million.

Its separate services such as Instagram or WhatsApp have also contributed to Facebook's income and profits. The company was successfully trimmed for profitability, which is also proven by the profit of around one euro per user.

The main thing is advertising

According to a Bitkom study, at least a third of German companies use the free business pages on Facebook - regardless of whether it is a handicraft shop, swimming pool or small business. They all advertise their Facebook presence and thus also for the platform itself. That is also the reason why Facebook continues to grow and new contacts and users are constantly being added. Competitors such as the German StudiVZ or MySpace had less success in converting their number of members into sustainable profits. The billionaire company Facebook offers its services free of charge to all users, but a look at the company's balance sheet reveals the truth - because the company's biggest source of income is advertising.

The enormous number of users is of course an essential factor for the lucrative business, because there are now 22 million active users in Germany alone, according to the Facebook advertising planner. In addition, advertising on the platform is still comparatively cheap compared to other advertising media, which is why smaller companies and self-employed people with a smaller budget are increasingly investing in advertising on Facebook. In this way, established brands can maintain contact with their target group at low cost and even enjoy tailor-made forms of advertising on Facebook when the activity rate is high. Not only are classic advertising banners offered on the platform, but a more prominent placement in the user's personal timeline is also sold.

Google & Co. also make billions with advertising

The search engine giant Google is now making unbelievable sums of money and has continued on its growth path for years. The question arises as to whether there are any risks and what it will look like in the future, but one thing is certain: Google will definitely continue to earn its billions with advertising in the future. As a public company, Google has to issue the quarterly reports that give you an accurate insight into its earnings. In the third quarter of 2013, the company posted revenues of around € 11 billion, an increase of around 12% compared to the previous financial year. Although the rates of increase are not always as high, the overall development remains positive. At Google, too, at least 80% of its income comes from advertising through AdWords and Adsense ads on websites, YouTube, etc. The mobile sources of income that are due to the development of the mobile market are also remarkable. More and more services are being switched to use with smartphones and the proportion of income from mobile advertising and internet use will also be higher and higher in the future.