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Business Model Canvas Examples

Facebook business model.

Facebook Business Model Canvas

The Facebook business model is a multisided platform . Although other brands have called themselves “social networks” before, such as MySpace or Orkut, it’s fair to say that the first to turn this digital environment into a successful business model is, no doubt, Facebook. With over 15 years in the market, Facebook now has more than 2 billion users all over the world, and it keeps active and growing.

Also, due to the acquisitions that the company has been taking on brands — and competitors as well —, like Instagram and WhatsApp. In spite of all the speculation about selling users’ data, Mark Zuckerberg, Facebook’s founder, states that this has never been — and never will — the network’s revenue stream. Even because it wouldn’t be financially healthy for its own business. But, if that’s true, then what’s Facebook’s Business Model ? How does Facebook make money? Let’s take a closer look.

More than a social network

According to Zuckerberg , as he was developing Facebook, he wouldn’t have the ambition to build a worldwide enterprise. Unlike that, he would only realize that one “could find almost anything on the internet — music, books, information — except the thing that matters most: people”. Nowadays, Facebook has several other companies under its “umbrella”. Among them, there are Instagram, WhatsApp, Oculus (virtual reality tech), Moves (step counter app), and more.

A brief history of Facebook

Facebook’s history goes back to 2003, when the founders Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes were studying at Harvard University. It began as an online service where students would judge each other’s appearance, called Facemash — but it was shit down on only two days, for violating some policies. In January of the next year, the four of them developed, a social network for Harvard students to post photos and personal information.

As its popularity grew, was open for students from other institutions to join. By the end of 2004, over one million people had registered and, in the same year, companies such as MasterCard offered to pay for advertising on the website.

In 2005, the social network removed the “the” and became only Facebook, and high-schoolers and students from outside the United States were allowed to join. That enabled the website to jump to six million users.

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The next year, anyone above 13 years of age would be welcome. In 2008, Facebook surpassed MySpace and, four years later, it became a public company, with its initial IPO raising $16 billion, which lead its valuation to $102.4 billion.

Who Owns Facebook

Facebook is owned since its foundation by Mark Zuckerberg, through its holding group, Facebook Inc. After acquiring Instagram and WhatsApp, Zuckerberg decided it was better to rename the holding group to separate the Facebook social network from the group. So, in October 2021, Facebook Inc. was relabeled to Meta Inc., with Zuckerberg as its CEO and owner of all the companies of the group.

Facebook’s Mission Statement

Facebook’s mission is to give people the power to build community and bring the world closer together.

How Facebook makes money

The great revenue stream of Facebook is the targeted advertisement, due to the benefit that the platform offers, of allowing the advertisers to reach their target audience, through information the network collects from its users. And, according to Zuckerberg, that’s precisely why it wouldn’t make any sense for Facebook to sell its users’ data. It would be cutting its own throat, as the platform would be handing over its greatest differential.

Soon, the advertisers wouldn’t need Facebook anymore. Facebook’s trump card is exactly to permit its advertisers to invest money in the right audience. Within more than 2 billion profiles, the businesses are able to have their products/services viewed only by American 25-30-year-old females, who have a degree and are interested in marriage, for example.

That’s the way advertisement became accounting for 97% to 99% of Facebook’s revenue. The other 3% or less is made up of payments received by games played and products sold on the platform, private social network services to businesses, and other products offered by each of the brands under its umbrella, such as Oculus, a Virtual Reality device.

Facebook’s Business Model Canvas

Let’s see what the Facebook’s business model canvas looks like:

Facebook Business Model Canvas

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Facebook’s Customer Segments

Facebook’s Value Propositions

As Facebook has three diverse customer segments, each segment will perceive the brand’s value differently. That said, let’s divide the value proposition by segment:

Facebook’s Channels

It’s quite clear that the main distribution channels of Facebook are its own website and app, because that’s where users find each other, and advertisers access their audience. Inside that, the channels can be divided into feed, notifications, direct messages, and stories. Other channels include the app stores, other products of the company, e.g. Instagram and WhatsApp, and, of course, word of mouth power.

Facebook’s Customer Relationships

Facebook’s customer relationship is based on its own platform, which is very user-friendly, as it allows users to specify their profile configurations and use them with no hard time. In addition, Facebook has an international sales organization, that works alongside marketing and advertising agencies, to attract advertisers.

Facebook’s Revenue Streams

Facebook’s Key Resources

Within Facebook’s key resources , the only tangible one (but essentially digital) is its platform, which demands technological infrastructure. Aside from that, the other key resources are the network users and their content production, and the Facebook brand. The active users are the company’s biggest asset. Because, if there aren’t users, there is no audience to view the ads. And to make them engaged, there must be relevant content, to avoid churn. As for the brand, it’s a very powerful name, still the great synonym for “social network”, indeed.

Facebook’s Key Activities

Above all key activities , it is the platform development and maintenance, in order to ensure a positive experience and avoid negative effects on the social network. Then, besides all the infrastructure that the website demands, to keep it working properly and optimized 24/7, Facebook also needs to invest in good practices and control bad behavior within the network. Furthermore, the company focuses on user acquisition and engagement, data and information storage and security, talent hiring and retaining, and sales and marketing.

Facebook’s Key Partners

Facebook’s Cost Structure

The biggest share of Facebook’s cost structure revolves around platform maintenance and its billions of users’ data storage. Besides, there is user CAC (cost of acquisition) by delivering tools that foster user engagement, research and development investment, marketing and advertising, customer support, and all the regular general and administrative expenses of a worldwide company.

Facebook’s Competitors

Facebook’s SWOT Analysis

Below, there is a detailed  swot analysis  of Facebook:

Facebook swot analysis - facebook business model

Facebook’s Strengths

Facebook’s Weaknesses

Facebook’s Opportunities

Facebook’s Threats

Despite all the accusations and controversies, Facebook is still booming. Although many people believe this social network is going to end soon, Facebook’s brand and business are going to certainly remain, investing in new approaches and brand names, as you may have noticed.

Daniel Pereira

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The Best Digital Tech Business Models Today

February 29, 2020

Business Model Canvas Facebook: how to become a giant?

Facebook is social media. They are dominating this category so much, that the CEOs of  Twitter ,  Pinterest  and  Snapchat  are calling themselves something different. I have pointed this out in the linked articles. Facebook is one of a few platform businesses that have proven the theory of  platform business models  right. The theory always stated – or should we say assumed – that explosive growth would be possible due to the indirect network effects.  A review of Twitter’s, Snap Inc’s, Pinterest’s financials would let us wonder if this is true.

A look at Facebook’s financials will convince you that it indeed is possible. How Facebook got there has not been without criticism. It has had great positive but also some grave effects on individuals and communities and the question is whether the platform (and societies were unprepared for some of the ill-effects). I will cover this in great depth because it is so crucial to the trajectory of the business. As always we will be using the business model canvas tool to structure our thoughts.

This articles is structured in line with the elements of the business model canvas:

The vision and what they stand for

Mission statement.

Facebook’s mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.  Facebook   And   Give people the power to build community and bring the world closer together.

“Our principles are what we stand for. They are beliefs we hold deeply and make tradeoffs to pursue.

Key properties

Facebook’s key properties (ecosystem) are its various platforms which all have separate apps/websites. However, the accounts are linked (unless the user decides to create separate accounts – but Facebook algorithms will still try to identify the same user with different accounts across platforms and for it as one “person” – metrics “daily active person” and “monthly active person”). We will be focussing on the key social platforms:

Facebook:  Facebook enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers. There are a number of different ways to engage with people on Facebook, including News Feed which displays an algorithmically-ranked series of stories and advertisements individualized for each person. 

Instagram:  Instagram brings people closer to the people and things they love. It is a community for sharing photos, videos, and messages, and enables people to discover interests that they care about. 

Messenger:  Messenger is a simple yet powerful messaging application for people to connect with friends, family, groups and businesses across platforms and devices. 

WhatsApp:  WhatsApp is a simple, reliable and secure messaging application that is used by people and businesses around the world to communicate in a private way. 

I will occasionally mention their other platforms (e.g. Oculus, Workplace, Libra, Calibra, Hobbi, Threads, etc) where it fits into the discussion. But focusing on the above will explain their vast success best. Btw, as always: anything in  blue italics  is their own words (either from their annual reports or webpages).

Business Model Canvas

Facebook business model canvas ... but there is much more to learn (click image if you want to know more)

We generate substantially all of our revenue from advertising. Our advertising revenue is generated by displaying ad products on  Facebook, 

Marketers pay for ad products either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions, such as clicks, taken by users.   (1) Advertising  Facebook’s payment models fall into the known CPM, CPC, CPA models typically via auctioning mechanisms (which also is standard).

(2) Payments and other fees: 

(3) Hardware and other

Value Proposition

As always with platform business models, we need to think about the value proposition to all sides of our multi-sided platform (well, there are more sides than shown below but these are the most important ones).

Value proposition for users

Value proposition for influencers

Influencers are important to Facebook and even more to Instagram (though likely not quite as vital as they are to Twitter). And Facebook is trying to present more content from friends. Though not yet exactly clear what that means, it is likely not good news for influencers (if you look at our Snapchat article, same has happened there where non-friends were moved to a less prominent area in the app)

Value proposition for businesses / advertisers

Businesses were able to reach a lot of users organically but these times have changed. Now, they have to pay to reach sizeable parts of their audience.

canvas business model facebook

Value proposition for developers and other groups


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Key Partners

Facebook is a multi-sided platform with a large ecosystem of partners. Most of them are “just” a partner rather than one “side” of the platform.

canvas business model facebook

Key Activities

The most important activities for platform business models are to enhance positive network effects and reduce negative ones. Facebook has significant positive network effects for its users but needs to constantly manage and improve these.  It is often mentioned that Facebook’s very success is rooted in the fact that they have managed negative network effects more stringently than MySpace who were one of the biggest internet companies (by traffic) before Facebook even existed. Reasons often mentioned are: managing bad behaviours, a more controlled growth with opening the platform gradually to wider users, less aggressive monetisation in the early days.

Key Resources / Assets

The master resource (or asset) of any platform are its network effects. It is the resource/asset that needs to be built and nurtured. Here is how this translates into more detail.

Customer Segments

With over 2.5b users on the different platforms, the question is not really who they can address (the answer to that is: basically a third of the world population) But the question is which micro-segments they can address. And that boils down to the data users share through the various ways with Facebook. Liking things (on or off Facebook) tells them a lot about you, your profile information (there is a lot users can share), tagging on photos, location check-ins (it will track location even if users don’t “check-in” so long location is not disabled), who people are affiliated with, who they follow, their profile which has education, it gets data from apps that user log-into with their Facebook account, it gets data from pages that install the Facebook Pixel and that use Facebook APIs and so on. But it says that it doesn’t  mine your text  data (posts, messages, calls, etc).

User segments

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From a technical perspective, their various websites and apps are the most important channels. Most transactions are automated and self-serving. Facebook’s functionality is significantly larger than most other social media apps/sites.

Other interaction channels:

Customer Relationships

(We are looking at this from the lens of the underlying needs, how they are served and the things that affect customer relationships. There is a natural overlap with the value proposition) If you are a regular follower of my blog, you know that this is one of the most important categories for platform business models (in the long run) and in particular for social media (or similar) platforms.

There is obviously a lot of value that users get out of Facebook. But first, we need to understand the risks and negative externalities. Saying this, it is clear that we can only get a glimpse into this complex topic.  Negative network effects can bring a platform down before they ever reach potential. Some form of managing negative network effects will be required even in the smallest platform.

Community standards

Some examples that you can find in the  community standards  are shown below and reading through these standards is a very sobering moment when you realise what platforms (and innovation in general) can be used for.

canvas business model facebook

Election meddling

All hell broke loose after the US election of 2016 and Facebook’s role therein, followed by probes, investigations, congressional hearings and media coverage. Facebook occasionally publishes taking down “coordinated inauthentic behaviours” and accounts in their  integrity  section.

Twitter was in a similar boat and has released more details. In 2018, Twitter shut down 80 million fake accounts a staggering amount given their ~300m MAUs at the time. In 2019, they have shut down 80,000 linked to an authoritarian regime (who would have thought).  In the case of Facebook, there are detailed 3rd party accounts that help us to understand the staggering details behind manipulation through Facebook’s apps. Here is a very lengthy account published about  a year after the 2016 election  and here is a more recent (even more lengthy) account with even more  refined tactics  leaving us to wonder what will happen towards the 2020 election.

Twitter has banned political advertising (but their revenues from this were relatively small). Facebook hasn’t banned it. And reading the above sources, we have to wonder if Facebook is going to face its biggest challenges yet.  This topic is super important – but I am trying to keep my articles not much longer than 4,500 words (which is already a lot). Any of my committed readers can get more on this in the advanced stuff.

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Facebook Business Model | How does Facebook make money?

Company: Facebook, Inc CEO: Mark Zuckerberg Year founded: 2004 Headquarter: Menlo Park, California, USA Number of Employees (June 2020):   52,534 Public or Private: Public Ticker Symbol: FB Market Cap (Nov 2020):  $786.63 Billion Annual Revenue (2019): $70.697 Billion Profit |Net income (2019): $ 18.485 Billion

Products & Services:  Facebook | Instagram | WhatsApp | Oculus | Facebook Marketplace | Facebook Media | Facebook Messenger | Facebook Ads | Facebook Watch | Facebook Games | Facebook Local | Facebook Business | Competitors:   Apple in messaging| Google in advertising | Amazon in advertising | Tencent in social media & messaging | YouTube in video | Twitter | Snapchat | LinkedIn | Pinterest | Quora | Microsoft | Vkontakte |

Facebook has been a pioneer in triggering a social media revolution in the digital hemisphere. Today it has over 2 billion users worldwide, contributing to the globalization process every day. Initially exclusive to Harvard students in 2004, the site grew in popularity enough to inspire its founder Mark Zuckerberg to expand it in the public domain. The world was never the same once it hit the virtual landscape.

Regardless of the nationality, background, continent or location, as long as there is Internet connectivity present, then Facebook is always available for you to access. With the world more connected than ever, it is highly unlikely that people will ever abandon this platform even for alternative sites like Twitter , Snapchat or Instagram.

Table of Contents

Business Model Canvas of Facebook

Business Model Canvas of Facebook

1. Customers of Facebook

Users – Facebook’s customers mostly comprise its users. Users who wish to communicate with different people and interact with those in the outside world. Facebook is now its own marketplace where users can buy and sell  property like clothes and jewelry and even fundraise for their respective causes. Remote workers and colleagues working from home can use Facebook’s new Messenger Rooms that allows up to 50 people to meet virtually in a videoconference. [ 1 ]

Advertisers and Marketers – Brands and advertisers also form a part of its customer base that earns revenue for the company by placing offers and promotional ads.

Developers – The site also has its own App and Game development platform where users can play while the game developers like Zynga and Facebook both benefit.

canvas business model facebook

2. Value Proposition of Facebook

Global Connectivity – Facebook has made it its mission to spread a free medium of communication and connectivity with people across the world regardless of their nationality, religion, culture or background.

Sharing of ideas – It is a platform where different people can interact with each other and expose themselves to different cultures, experiences, and ideas.

Global Communication – Many popular critics have noted the contribution of Facebook is enhancing common understandings and pioneering efforts in the globalization movement.

Brand Publishing – It is a platform where you can showcase your talents as well as play games whenever you want.

Easy Accessibility – There is no time limit where its network is concerned. Whatever you wish to search will be delivered in your domain.

Business Expansion (Marketplace) – It has also become a platform to utilize your business where you can sponsor, sell or buy from either your own company or any other company.

Virtual reality – With the acquisition of Oculus, Facebook is trying its hand in the field of virtual reality hardware.

Payment infrastructure – user can purchase digital goods or applications from developers using Facebook payment services.

Virtual meeting rooms – Messenger Rooms allow users to create virtual meeting rooms and open for up to 50 people to join and interact just like videoconferencing. While in a room, users can swap their background for a virtual one or apply Facebook’s augmented reality filters. [ 2 ]

Remote work tools and groups – Facebook added remote work tools on its app to facilitate collaboration between colleagues and freelancers. It includes Workplace Rooms that offer more features for professional workers to collaborate on the network. As of May 2020, Work Groups had more than 20 million active monthly users and 170,000 active groups. [ 3 ]

Live-streaming – Facebook also expanded its platform with new tools that enable users to live-stream sessions and events like wedding or birthday for friends and family to attend. The live-streaming feature is also used by professionals for remote work. [ 4 ]

3. Channel of Facebook

Internet – The first prerequisite is the Internet for its service; Facebook operates through the Internet via Laptops, Computers, Tablets or Smartphones.

Website & mobile apps – Then, it makes its usage of its website and mobile app to reach more users. Through its site, Facebook allows advertisers to market their products. Many public figures and celebrities have also contributed to its channeling efforts.

Third party developer Tools and APIs – These are used by developers for channeling purposes as well. Other partnerships assist in these purposes in their own distinct ways depending on the agreement.

4. Customer Relationships of Facebook

Self Service platform – Facebook’s network and site are user-friendly and easily accessible for its users. It assists new users through its instructions to form their own accounts and identities. The users gradually get the hang of it and realize how easy it can be utilized.

Self-Taught Site – It is basically a self-learning site. You can expand your online visibility by finding more friends through your new profile owing to Facebook’s community building applications.

Global Salesforce – Facebook has an extensive global sales organization that works directly with Advertising agencies and ad resellers. Sales work to attract, retain and support advertisers.

5. Key Partners of Facebook

Content Creator – Key Content Partners such as Movies, TV Shows, Gaming, Music and News articles. Facebook recently signed several deals for the right to show music videos on the platform. The partnership includes Universal Music Group , Sony Music Entertainment, and Warner Music Group, which are the three largest music houses. [ 5 ]

Third Party – Facebook’s platform continues to create new partners for it as it grows. Mobile operating system developer (iOS, Android), credit card companies (Visa, PayPal ), handset manufacturers ( Apple , Samsung ), and browser developers (Safari, Chrome, Firefox) have collaborated with Facebook.

6. Key Activities of Facebook

Platform development & maintenance – Facebook is a platform that produces a myriad of activities. One of them being its web development alongside App Development and game development.

Data maintenance and security – Invest in user data security and privacy.

Establish partnership & develop new offer – It offers other activities like projects, marketing, software development and other forms of innovation which it has been duly credited for.

Strategic acquisition – such as Instagram, WhatsApp , Oculus. Its most recent acquisition was a Swedish mapping start-up Mapillary that built a street-level imagery platform for creating maps using photos of members of the public. [ 6 ]

Maintaining government regulations – complying with laws in different countries is essential for Facebook operations.

Hire & retain talent

Sales, marketing and operations

7. Key Resources of Facebook

Platform – Facebook utilizes its platform as its primary resource to access more users and advertiser. The more users’ access and log in to its site the more subsidiaries it receives.

Network – Facebook’s network has provided limitless communication opportunities for its users despite their background.

Technology talent – Facebook takes immense pride in its technology and pool of talented employees. It was able to hire and retain. Thanks to its brand value.

8. Cost Structure of Facebook

Platform – Majority of the costs incurred by Facebook are directed in its platform that amasses millions of users worldwide.

Data Maintenance – Facebook incurs considerable costs from its Data Maintenance owing to how it manages, stores and protects its data, including the cost of data centers maintenance, equipment purchases, and upgrades.

Content acquisition cost – Facebook license and pay to content producers to increase user engagement.

Research and Development – Facebook focuses much of its time in the growth of its platform which demands costly investments.

Marketing & advertising – Facebook’s marketing strategy revolves around the audience and how it can expand that base. This tends to cost them exponentially.

Customer Service – Facebook values the feedback of its customers. It invests substantially in providing its services to customers who are new or require assistance in managing their accounts.

At a high level, according to Facebook’s 2018 annual report, here is a breakdown of its cost:

Facebook Cost breakdown (FY2018)

*Cost of revenue includes Operations expense, Datacenter, traffic and content acquisition cost, partner payment, and credit processing fees, etc.

*General & Administrative cost includes employees compensation and salaries, office maintenance, legal, HR, finance and administrative expense. 

9. Revenue Stream of Facebook

How does facebook make money .

Let’s see how does Facebook make money?

The most vital money making system for Facebook is in its advertising program. Most of its revenue (99%) is generated from advertising alone. It has always supported itself by its ads and will most definitely continue down this path. In Q3 2020, Facebook’s quarterly ad revenue was $21.2 billion , up by 22.1% compared to Q3 2019. [ 8 ]

Many have begun to spread conspiracy theories that Facebook will someday begin charging its users for utilizing or accessing their site. But these have been dismissed as mere rumors and fake news.

Self-Serve Advertising

Engagement Ads

Payment Revenue 

It’s the fees that Facebook receives from the developer community or wholesalers for utilizing Facebook’s payment infrastructure . Facebook charges a fee for any business transaction on its platform, whether it be :

Sale of Oculus

Facebook sells “ Oculus ” Virtual Reality (VR) products and makes a small portion of revenue from its sale. It introduced Oculus Go in 2018, starting at $199 that relied on the user’s smartphone for computing, and then later launched a more powerful all-in-one headset Oculus Quest, Oculus Rift, and Rift S, all going for $399 Quest.

In Q1 2020, Facebook shipped 55,000 units of Oculus Go , 141,000 Quest units, and a combined 87,000 units of the Rift and Rift S headsets. Oculus sales contributed to the revenue of $297 million from its non-advertising businesses. It announced that it stop the sale of Oculus Go in 2020 after demand declined in subsequent quarters. [ 9 ]

Facebook Revenue breakdown (FY2018)

Future Revenue possibilities

WhatsApp, a giant social messaging platform, is still not monetized successfully to its full potential. Facebook can potentially make a huge amount of revenue from Whatsapp in the near future. Another potential revenue stream is its Libra cryptocurrency that was launched in 2019 but has faced pushback by lawmakers from countries across the world based on the company’s history of scandals. If the Libra project is successful, Facebook can become the biggest player in digital payments in the world as an alternative global transaction system. [ 10 ]

Read: How does WhatsApp make money?

How does Facebook make money?

In Conclusion

Facebook is a gift that just keeps on giving. It has continued to handle controversies and competition at a safe place without losing too much in terms of revenue or public image. Although many social media platforms have risen since its establishment, they are not as commonly used as Facebook.

Many sites like Twitter and Instagram have managed to provide adequate competition, but others like SnapChat, Pinterest, Tumblr and others continue to struggle in the hopes of catching up to their competitors.

All in all, Facebook is the one that will remain constant in the long run.

 References & more information

 Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

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Facebook’s Company Overview

Facebook, Inc. builds products that enable people to connect and share through mobile devices and personal computers. The company enables people to share their opinions, ideas, photos and videos, and other activities. Its products include Facebook, Instagram, Messenger, WhatsApp, and Oculus. Facebook is a mobile application and website that enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. Instagram is a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them to friends. Messenger is a messaging application available for mobile and the Web on various platforms and devices. WhatsApp Messenger is a mobile messaging application that is used by people around the world. Oculus virtual reality technology and content platform allow people to play games, consume content and connect with others.

Country: California

Foundations date: 2004

Type: Public

Sector: Information & Media

Categories: Internet

Facebook’s Customer Needs

Social impact: self-transcendence

Life changing: provides hope, self-actualization, affiliation/belonging

Emotional: rewards me, badge value, fun/entertainment, attractiveness, provides access, design/aesthetics

Functional: organizes, connects, variety, informs, integrates, organizes, saves time, avoids hassles, sensory appeal, makes money

Facebook’s Related Competitors

Facebook’s business operations.

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.


Cross-selling is a business strategy in which additional services or goods are offered to the primary offering to attract new consumers and retain existing ones. Numerous businesses are increasingly diversifying their product lines with items that have little resemblance to their primary offerings. Walmart is one such example; they used to offer everything but food. They want their stores to function as one-stop shops. Thus, companies mitigate their reliance on particular items and increase overall sustainability by providing other goods and services.


This approach generated money by sending promotional marketing messages from other businesses to customers. When you establish a for-profit company, one of the most critical aspects of your strategy is determining how to generate income. Many companies sell either products or services or a mix of the two. However, advertisers are frequently the source of the majority of all of the revenue for online businesses and media organizations. This is referred to as an ad-based income model.

Culture is brand:

It requires workers to live brand values to solve issues, make internal choices, and provide a branded consumer. Developing a distinctive and enduring cultural brand is the advertising industry's holy grail. Utilizing the hazy combination of time, attitude, and emotion to identify and replicate an ideology is near to marketing magic.

Blue ocean strategy:

The blue ocean approach is predicated on the premise that market limits and industry structure are not predetermined and may be reconfigured via the actions and attitudes of industry participants. This is referred to as the reconstructionist perspective by the writers. Assuming that structure and market boundaries exist solely in managers' thoughts, practitioners who subscribe to this perspective avoid being constrained by actual market structures. To them, more demand exists, primarily untapped. The core of the issue is determining how to produce it.

Benchmarking services:

Benchmarking is a technique for evaluating performance and gaining insights via data analytics. It may be used to conduct internal research on your firm or compare it to other businesses to enhance business processes and performance indicators following best practices. Typically, three dimensions are measured: quality, time, and cost. In this manner, they may ascertain the targets' performance and, more significantly, the business processes that contribute to these companies' success. The digital transformation era has spawned a slew of data analysis-focused software businesses.

Collaborative production:

Producing goods in collaboration with customers based on their input, comments, naming, and price. It represents a new form of the socioeconomic output in which enormous individuals collaborate (usually over the internet). In general, initiatives based on the commons have less rigid hierarchical structures than those found on more conventional commercial models. However, sometimes not always?commons-based enterprises are structured so that contributors are not compensated financially.


This pattern is based on the capacity to convert current goods or services into digital versions, which have several benefits over intangible products, including increased accessibility and speed of distribution. In an ideal world, the digitalization of a product or service would occur without compromising the consumer value proposition. In other words, efficiency and multiplication achieved via digitalization do not detract from the consumer's perceived value. Being digitally sustainable encompasses all aspects of sustaining the institutional framework for developing and maintaining digital objects and resources and ensuring their long-term survival.


Commissions are used in the affiliate revenue model example. Essentially, you resell goods from other merchants or businesses on your website or in your physical store. You are then compensated for referring new consumers to the company offering the goods or services. Affiliates often use a pay-per-sale or pay-per-display model. As a result, the business can access a more diversified prospective client base without extra active sales or marketing efforts. Affiliate marketing is a popular internet business strategy with significant potential for growth. When a client purchases via a referral link, the affiliate gets a portion of the transaction's cost.

The aikido business model is often characterized as using a competitor's strength to get an edge over them. This is accomplished through finding weaknesses in a competitor's strategic position. In addition, it adds to marketing sustainability by exposing rivals' flaws, finding internal and external areas for development, and attracting consumers via specific product offers that deviate from the norm.

Customer data:

It primarily offers free services to users, stores their personal information, and acts as a platform for users to interact with one another. Additional value is generated by gathering and processing consumer data in advantageous ways for internal use or transfer to interested third parties. Revenue is produced by either directly selling the data to outsiders or by leveraging it for internal reasons, such as increasing the efficacy of advertising. Thus, innovative, sustainable Big Data business models are as prevalent and desired as they are elusive (i.e., data is the new oil).

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).


The critical resource in this business strategy is a community's intellect. Three distinct consumer groups comprise this multifaceted business model: believers, suppliers, and purchasers. First, believers join the online community platform and contribute to the production of goods by vendors. Second, buyers purchase these goods, which may be visual, aural, or literary in nature. Finally, believers may be purchasers or providers, and vice versa.

Conversational commerce:

It is a reference to the nexus between chat applications and business. That is the trend toward engaging with organizations through messaging and chat applications such as Facebook Messenger, WhatsApp, Talk, and WeChat, or via speech technologies like Amazon's Echo, allowing users to engage with businesses via voice commands.


When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Combining data within and across industries:

How can data from other sources be integrated to generate additional value? The science of big data, combined with emerging IT standards that enable improved data integration, enables new information coordination across businesses or sectors. As a result, intelligent executives across industries will see big data for what it is: a revolution in management. However, as with any other significant organizational transformation, the difficulties associated with becoming a big data-enabled company may be tremendous and require hands-on?or, in some instances, hands-off?leadership.

Corporate innovation:

Innovation is the outcome of collaborative creativity in turning an idea into a feasible concept, accompanied by a collaborative effort to bring that concept to life as a product, service, or process improvement. The digital era has created an environment conducive to business model innovation since technology has transformed how businesses operate and provide services to consumers.

Data as a Service (DaaS):

Data as a Service (DaaS) is a relative of Software as a Service in computing (SaaS). As with other members of the as a service (aaS) family, DaaS is based on the idea that the product (in this instance, data) may be delivered to the user on-demand independent of the provider's geographic or organizational isolation from the customer. Additionally, with the advent[when?] of service-oriented architecture (SOA), the platform on which the data sits has become unimportant. This progression paved the way for the relatively recent new idea of DaaS to arise.

Online lead generation is the technique of gathering or gaining a user's information ? often in return for an item, service, or information ? and then reselling that information to businesses interested in advertising to or selling to those gathering leads.

Disruptive banking:

The banking industry's disruptors are changing the norms that have been in place for decades. These new regulations, however, will only be effective until the next round of disruption occurs. Banks and credit unions must thus be nimble and responsive. We need audacious tactics. 'Disruptive Innovation' is a term that refers to the process whereby a product or service establishes a foothold at the bottom of a market and then persistently climbs up the value chain, ultimately replacing existing rivals.

Reputation builders:

Reputation builders is an innovative software platform that enables companies to create, collect, and manage positive internet reviews. It was a pioneer in the utilization of user-generated material. The website services are provided for free to users, who supply the majority of the content, and the websites of related businesses are monetized via advertising.

Unlimited niches:

Online retailers provide specialized content to various niche client groups via continuing mass-customized customer relationships. The sector of technical content providers is a second client segment. Combining these two factors may result in an infinite number of niches. New material is produced and distributed through online channels, which implies that online retailers must prioritize platform maintenance and marketing in addition to service delivery.

Markets are conversations:

For professional services firms, the difference will be made by converting non-engaged customers into engaged customers. Product development will be obsolete. Customer relations and conversations will replace it. By sharing modular and beta products and services with your current and future customers, companies and their customers interact and collaborate in ongoing conversations. Not only will customers find and follow companies in online social networks, but it will also be the other way around as well.

A business ecosystem is a collection of related entities ? suppliers, distributors, customers, rivals, and government agencies ? collaborating and providing a particular product or service. The concept is that each entity in the ecosystem influences and is impacted by the others, resulting in an ever-changing connection. Therefore, each entity must be adaptive and flexible to live, much like a biological ecosystem. These connections are often backed by a shared technical platform and are based on the flow of information, resources, and artifacts in the software ecosystem.

Mobile first behavior:

It is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices. The term is “mobile first,” and it is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

This method allows the modification of current structures via the use of cutting-edge technology, as shown by growing political unrest, a crisis in representation and governance, and upstart companies upending established sectors. Nevertheless, the nature of this transition is often exaggerated or severely underestimated. As a result, some cling to delirious fantasies of a new techno-utopia in which greater connection results in direct democracy and wealth.

Virtual reality:

AR/VR is the fourth significant platform change (after PC, web, and mobile). First, CEOs must choose how to play. Business models are determined by installed bases, use cases, and unit economics; there is no one-size-fits-all answer; each situation is unique, and developers must do market research and analysis before making a choice. Relying on advertising-income is a handy strategy for unknown businesses or newcomers to the market. It allows them to use their prior expertise with mobile and online ad campaigns.

Tag management:

Tag management refers to the capability of the collaborative software to handle both your own and user-generated tags. Marketers use various third-party solutions to enhance their websites, video content, and mobile applications. Web analytics, campaign analytics, audience measurement, customization, A/B testing, ad servers, retargeting, and conversion tracking are examples of such systems. At its most fundamental level, tag management enables new methods for your business model to use data.

Trading data:

Combining disparate data sets enables businesses to develop a variety of new offerings for complementary companies. Robustness is a property that describes a model's, test's, or system's ability to perform effectively when its variables or assumptions are changed, ensuring that a robust concept operates without fail under various conditions. In general, robustness refers to a system's capacity to deal with unpredictability while remaining practical.


A retail business model in which consumers self-serve the goods they want to buy. Self-service business concepts include self-service food buffets, self-service petrol stations, and self-service markets. Self-service is available through phone, online, and email to automate customer support interactions. Self-service Software and self-service applications (for example, online banking apps, shopping portals, and self-service check-in at airports) are becoming more prevalent.

Two-sided market:

Two-sided marketplaces, also called two-sided networks, are commercial platforms featuring two different user groups that mutually profit from the web. A multi-sided platform is an organization that generates value mainly via the facilitation of direct contacts between two (or more) distinct kinds of connected consumers (MSP). A two-sided market enables interactions between many interdependent consumer groups. The platform's value grows as more groups or individual members of each group use it. For example, eBay is a marketplace that links buyers and sellers. Google connects advertising and searchers. Social media platforms such as Twitter and Facebook are also bidirectional, linking consumers and marketers.

Fast fashion:

Fast fashion is a phrase fashion retailers use to describe how designs travel rapidly from the catwalk to catch current fashion trends. The emphasis is on optimizing specific supply chain components to enable these trends to be developed and produced quickly and affordably, allowing the mainstream customer to purchase current apparel designs at a reduced price.

Featured listings:

A highlighted listing is more important and noticeable than a regular listing, providing maximum exposure for your workplace to consumers searching in your region. In addition, customers are attracted to these premium listings because they include more pictures of your home ? and its excellent location.

Referral marketing is a technique for acquiring new consumers by advertising goods or services through recommendations or ordinary word of mouth. While these recommendations often occur spontaneously, companies may influence this via the use of suitable tactics. Referral marketing is a technique for increasing referrals through word of mouth, arguably the oldest and most trusted kind of marketing. This may be done by incentivizing and rewarding consumers. A diverse range of other contacts to suggest goods and services from consumer and business-to-business companies, both online and offline.

Skunkworks project:

A skunkworks project is one that is created by a small, loosely organized group of individuals who study and develop a project with the primary goal of radical innovation. The terminology arose during World War II with Lockheed's Skunk Works project. However, since its inception with Skunk Works, the phrase has been used to refer to comparable high-priority research and development initiatives at other big companies that include a small team operating outside of their regular working environment and free of managerial restrictions. Typically, the phrase alludes to semi-secretive technological initiatives, such as Google X Lab.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

User design:

A client is both the manufacturer and the consumer in user manufacturing. For instance, an online platform could offer the client the tools required to create and market the product, such as product design software, manufacturing services, or an online store to sell the goods. In addition, numerous software solutions enable users to create and customize their products to respond to changing consumer requirements seamlessly.

Disruptive trends:

A disruptive technology supplants an existing technology and fundamentally alters an industry or a game-changing innovation that establishes an altogether new industry. Disruptive innovation is defined as an invention that shows a new market and value network and ultimately disrupts an established market and value network, replacing incumbent market-leading companies, products, and alliances.

Network builders:

This pattern is used to connecting individuals. It offers essential services for free but charges for extra services. The network effect is a paradox that occurs when more people utilize a product or service, the more valuable it becomes.


In most instances, support is not intended to be philanthropic; instead, it is a mutually beneficial commercial relationship. In the highly competitive sponsorship climate of sport, a business aligning its brand with a mark seeks a variety of economic, public relations, and product placement benefits. Sponsors also seek to establish public trust, acceptability, or alignment with the perceived image a sport has built or acquired by leveraging their connection with an athlete, team, league, or the sport itself.

This model collects data and connects it to others; it is suggested to investigate the impact of advertising on consumer purchase dynamics by explicitly linking the distribution of exposures from a brand's media schedule to the brand purchase incidence behavior patterns over time. The danger is that we may be unable to react productively and cost-effectively to technological and market changes.

Hidden revenue:

A hidden revenue business model is a revenue-generating strategy that excludes consumers from the equation, preventing them from paying for the service or product provided. For example, users of Google do not pay for the search engine. Rather than that, income streams are generated via advertising dollars spent by companies bidding on keywords.


An infomediary acts as a personal agent for customers, assisting them to regain control over the information collected about them for marketing and advertising purposes. Infomediaries operate on the premise that personal data belongs to the individual represented, not necessarily the person who manages it.

Take the wheel:

Historically, the fundamental principles for generating and extracting economic value were rigorous. Businesses attempted to implement the same business concepts more effectively than their rivals. New sources of sustained competitive advantage are often only accessible via business model reinvention driven by disruptive innovation rather than incremental change or continuous improvement.

Product innovation:

Product innovation is the process of developing and introducing a new or better version of an existing product or service. This is a broader definition of innovation than the generally recognized definition, which includes creating new goods that are considered innovative in this context. For example, Apple launched a succession of successful new products and services in 2001?the iPod, the iTunes online music service, and the iPhone?which catapulted the firm to the top of its industry.

Layer player:

Companies that add value across many markets and sectors are referred to be layer players. Occasionally, specialist companies achieve dominance in a specific niche market. The effectiveness of their operations, along with their economies of size and footprint, establish the business as a market leader.

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Profitable Business Models > Business models of large companies

Facebook’s Business Model Canvas: From College Experiment to Becoming the King of Social Media

TL;DR: Summary of the Facebook’s history


Undeniably, Facebook has become part of our daily routine. Opening the Facebook app on your phone has become second nature. The way Facebook has effortlessly integrated into the daily lives of users is by design. It’s hard to imagine life before Facebook, which is reflected in how well the company has done financially.

As of August 2021, the social media giant has been ranked with a market cap of more than $1.024 Trillion, making it the world’s 6th most valuable company. Facebook has 2.80 billion monthly active users and 1.84 billion daily active users.

A survey conducted in January 2021 found that of the five most popular social media platforms (YouTube, Facebook, WhatsApp, Facebook Messenger, and Instagram), Facebook owns four. This means that Facebook has significant control over crucial data and advertising.

From its inception in 2004, Facebook and its chief founder Mark Zuckerberg, have been at the forefront of innovation and the development of social media. It revolutionized the way people connected online and has made information sharing a breeze. Millions of businesses rely on the Facebook platform to advertise their products and services. Therefore giving Facebook the title of “King of Social Media” seems very apt.

Nevertheless, its rise to giant status has not been without missteps, controversies, and criticism. Marred with lawsuits from the very beginning, Facebook has managed to sustain its monopoly and dominance using various tactics, including a razor focus on innovation and platform development.

While the idea of a social network did not originate from Zuckerberg, his tenacity, adaptability, and quickness at launching the site gave him an advantage. Being a latecomer into the social network scene, Facebook has managed to disprove the proverbial theory that the early bird always gets the first worm.

So let’s take an in-depth look at how Facebook did it. How it managed to evolve from a free networking site for a few select college students to a multi-billion dollar empire with over a billion users worldwide.

Facebook's Business Model Canvas Evolution And History

2002-2005: How Facebook was born

2002: the history of zuckerberg’s programming passion & the state of social networking.

Mark Zuckerberg had been dabbling in coding and programming since the age of 11. Seeing a growing interest in the industry, his parents hired a software developer named David Newman to teach him. He successfully created an internal instant messaging program called ZuckNet for his father’s dentist’s practice through this tutoring. 

A few years later, while attending an elite boarding school called Phillips Exeter Academy, Zuckerberg attracted the interest of Microsoft and AOL, who offered him a job. Both companies were looking at purchasing Synapse, a software that used AI to map a user’s music taste. Zuckerberg declined and chose to go to Harvard instead.

He decided to major in psychology and took several classes in computer science. This might seem like an odd choice for a kid with a knack for coding. However, his selection would prove to be very strategic in developing the very ‘addictive nature of Facebook and social media.

The Social Networking landscape 

The Social Network landscape in 2002 was just in its infancy. Before Zuckerberg landed on his idea, several other social networking sites captured the interest of young teens and college students at that time.

There had been several early movers around the globe from as far back as the late 90s. When was launched in 1997, it became the first website to combine the basic features that we associate social media with today. Features such as; “…user profiles, listing of “friends,” and the ability to browse[ through a] friend’s list.”  was developed by Six Degrees.

Three sites were trendy and quite successful before Facebook came onto the scene. These were; Friendster, Myspace, and Second Life. All three sites functioned on a non-subscription-based business model, meaning users could use the site for free. The aim was to make money by selling advertising to companies who want to reach the vast number of users.

Friendster, in particular, was launched in 2002. Within a few months, the company had more than three million monthly active users. Unfortunately, the Friendster platform was riddled with glitches and had too many restrictions for the user. These problems resulted in many early adopters migrating to MySpace the following year. 

2003: Facemash, an Early Facebook Prototype & Competition from MySpace

Still, in his freshman year, Zuckerberg created an early Facebook prototype called Facemash. This new website allowed Harvard students to compare female student’s pictures side by side and rank them based on attractiveness.

Within a few hours, Facemash had garnered over 22 000 photo views. It was a smash hit; unfortunately, the website was shut down before it even took off. Zuckerberg didn’t have permission to use student photos from the Harvard student system for his website. Fortunately, he was not expelled for breaking the rules, and after a public apology, he set his sights on the next big thing.

That same year MySpace burst into the market and became an instant hit. It was a place for users to connect and build a private community to share blogs, groups, music, photos, and videos.

The platform was similar to Friendster’s model but focused more on sound infrastructure and scalability. It allowed users to personalize and continuously added new features based on user demand. By the end of the year, MySpace was established and dominated the social networking market.

2004: The Facebook is launched, tackling the first Lawsuit & Taking on MySpace & Friendster

Mark’s experience with his prototype helped him create a new site vastly different from Facemash. He noticed the mistakes and problems that sites like MySpace and Friendster were having.

Mainly the fact that Friendster was beginning to face challenges with managing their rapid new subscriber rate. The site often crashed, was slow to load, and the Friendster team didn’t bother with improving the platform design.

While MySpace was growing in leaps in bounds, Zuckerberg felt it necessary to control the growth of his new venture. He began working on a social networking site that connected Harvard students using their school email addresses and photos. Unlike MySpace, where the platform was open to anyone, The Facebook was exclusive to Harvard students only at first.

The platform was straightforward. Students could upload photos, share their interests and connect with people they knew at first.

Once he had worked on the platform for a few weeks, he told a few friends who suggested that Zuckerberg share the site on one of the school’s mailing lists. He launched the new site on the 4th of February 2004, incorporating it as a Florida LLC.

The strategy was a hit, and at least 1,200 students had signed up within a day of launch. The appeal was that this was a safe and exclusive place for Harvard students to meet each other.

The First Lawsuit from ConnectU

Barely a week after its first incorporation in February, The Facebook platform received the first of many lawsuits to follow. Zuckerberg was accused by three senior Harvard students of having stolen the idea from them.

The three students alleged that they had engaged Zuckerberg as a programmer to help them figure out a similar platform to The Facebook that they were calling ConnectU. This allegation soon developed into a full lawsuit.  This started a cascade of legal issues that would plague Facebook for decades.

Monetizing the site

From the get-go, Zuckerberg saw the platform’s potential but needed a way to sustain it. So far,

Zuckerberg and his friend Eduardo Saverin absorbed the costs of operation from their own funds.

Borrowing the idea from MySpace who had lots of adverts running on their site, Saverin and Zuckerberg started a Flyer project to generate ad revenue in April. They started selling small advertising spaces to companies and individuals. They marketed services, job listings, T-Shirts, and other products from students.

While it wasn’t particularly sophisticated, it gave them a cushion to offset the cost of running and maintaining the platform servers while getting the company off the ground.

Within a month, at least 50% of all Harvard undergraduates had a profile. Around April 2004, The Facebook became available to college students from Yale, Columbia, and Stanford. Sensing the potential growth of the platform, Zuckerberg moved out of his Harvard dormitory in June and rented a house in Palo Alto, California, to serve as the company’s headquarters.

Getting Investors

He partnered with Sean Parker, who in 1999 had co-founded Napster, a file-sharing service that would change the way music was consumed. Parker became the first President of The Facebook when the company was incorporated in July in Delaware. 

Parker went on the hunt for investors. After getting rejected by a few investors, he was directed to PayPal co-founder Peter Thiel. After an initial meeting with Zuckerberg and Parker, Thiel agreed to make a $500,000 investment for a 10.2% control of the company. Thiel became a member of the board and helped steer more people towards The Facebook.

As the year ended, The Facebook accepted membership from almost all universities in the U.S and Canada. They closed off their first year of operations with over 1 million active users and 7 employees.

2005: Early Expansion, Changing Name & Zuckerberg drops out

In May 2005 The Facebook received more capital. They got $12.7m from Accel and $1m from a venture capitalist Jim Breyer. All this money was being absorbed by the costs of operating, maintaining and developing the site. Selling ad space was still their only source of revenue. The platform was beginning to gain traction now, and a lot of people were paying attention.


In August, they dropped the ‘the’ and renamed the company Facebook. They bought the domain for a whopping $200,000 and continued to expand. Facebook continued to make improvements to the site, introducing a high school version of the platform in September and photos.

They expanded the site to allow Microsoft and Apple employees. They were soon ready to move beyond being a student platform. In October, Facebook expanded to the U.K and other countries, opening the site for up to 21 universities.

In November, Zuckerberg decided to drop out of Harvard and focus his efforts on running the company as CEO. By the end of the year, Facebook had expanded to Australia, New Zealand, Canada, Mexico, and Ireland. It had over 6 million users and 15 employees.

By avoiding the temptation to grow rapidly and instead opting for controlled and staged growth, Facebook built and developed a solid infrastructure to support the growing number of users. This attracted investors, users, and great engineers and designers who would create new products and features that catered to Facebook users. It was clear, Facebook was out for blood, and everyone could see it coming.

Facebook’s Business Model Canvas: The Early Days

At this point, Facebook’s Business Model Canvas looked like this:

canvas business model facebook

2006-2012: Facebook to the World, Some Strategic Acquisitions & Going Public

2006: facebook becomes available to everyone and goes mobile.

2006 saw several significant changes to the site. Firstly, Facebook redesigned the group and events features to make them more accessible. They also launched a My Messages Page, a Browser Page, and several other improvements to their site. This made the site more user-friendly and convenient by allowing people to instantly connect with each other

Facebook took advantage of the rising availability of broadband and went mobile. They capitalized on the rise of smartphones and introduced additional networks that allowed people with corporate email addresses to join in May.

About two months later, Yahoo sent an acquisition offer of $1 billion to Facebook. Zuckerberg rejected it because he thought that Yahoo was grossly undervaluing Facebook’s potential. (Boy, was he right!)

As internet participation began to spread among diverse groups of people, social media was slowly becoming entrenched in the daily lives of individuals, schools, and families. Sensing this, Facebook lowered the age of users to 13, signally that they were a much ‘safer’ space for the youth and more family-friendly than MySpace.

Later that year, they launched the News Feed feature, which gathered users’ posts into one place. This made the site even more user-friendly. However, the change was met with resistance and outrage as certain users felt that Facebook was breaching their privacy. This outrage was to become a common thing for the company.

Partnership and Investment from Microsoft

Several vital things happened in 2007 for Facebook. Firstly, in October, Microsoft became highly interested in Facebook and purchased a 1.6% stake for $240 million. This new investment raised Facebook’s value to $15 billion. A month later, Facebook and Microsoft entered into a partnership intending to launch their Beacon ad program.

The aim of the program was to track a Facebook user’s behavior on third-party platforms. The product was highly unpopular and turned into a public relations nightmare because of user privacy concerns. Eventually, the many legal issues and lawsuits over the program forced Facebook and Microsoft to shut it down.

Acquisition of Parakey

The second significant event was Facebook’s first acquisition of a small startup called Parakey. Parakey was a crucial acquisition mainly because its founders Blake Ross and Joe Hewitt, were programming geniuses accredited for creating the Firefox web browser. They joined Facebook to help develop its platform and website.

Their programming and web development talents were immediately felt at Facebook with the launch of Facebook Marketplace for classified listings. The marketplace was a feature aimed at maximizing Facebook’s advertising revenue. The pair also helped create video posting and Facebook Ads and Pages. They were instrumental in developing the Facebook Application Developer platform aimed at developers who wanted to build their own applications and games integrated with Facebook.

It was clear that Facebook was now looking beyond personal user profiles. They were focusing on how businesses could use the site. By the end of the year, the platform had over 100,000 companies registered. Facebook’s value and appeal was accessibility, even for the smallest of businesses.

The decline of MySpace

The third critical event that occurred in 2007 was the beginning of MySpace’s decline. Although valued at a whopping $12 billion, MySpace was losing users to Facebook for several reasons. The platform was overloaded with advertising that made it extremely annoying to use. Its loading time was slower compared to Facebook. They were being beaten left, right and center in terms of innovation and features by Facebook. Facebook closed off the year with a membership of 58 million.

2008: Key Hires and settling lawsuits

Facebook started the year with a bang. In March, they hired Google executive Sheryl Sandberg as COO. Sandberg had extensive leadership experience and significant political acumen from her tenure as chief of staff for the Treasury Department under the Bill Clinton administration. This hire would prove crucial later on in the year when the financial crisis hit.

In April, Facebook launched Facebook chat, giving users an instant connection to their friends and family. The company also added Spanish as a language option, giving millions of Spanish speakers easier access to the side.

Another significant platform development was Facebook Connect, which allowed members to link their Facebook profiles to third-party sites. Lastly, they launched the Facebook for iPhone mobile app partnering with Apple.

Settling the ConnectU Lawsuit

After four years of back and forth, Facebook finally settles the lawsuit with the three senior Harvard students who claimed Zuckerberg had stolen their idea.

Navigating the Financial Crisis

When the global financial crisis hit, Facebook was just a small startup that relied heavily on ads for revenue. The situation made it challenging for this business model to survive. Fortunately, with Sandberg at the helm, Facebook managed to weather the storm by changing its advertising pricing and adapting the way it advertised.

2009: The Like Button Arrives and Product Expansion

2009 saw the launch of the iconic like button, allowing people to endorse other people’s posts. The launch was made possible through Facebook acquiring FriendFeed, a social media feed aggregator with many similar features to Facebook. As part of the acquisition, all 12 employees of FriendFeed joined Facebook, including its four founders, who played a crucial role in developing Google products such as Gmail and Google Maps.

Facebook also ventured into gaming, releasing Farmville in June. Within two months, the game had 10 million daily active users.

In 2011, Facebook purchased Snaptu, a small Israeli app developer tasked with redesigning and launching Facebook’s mobile app. Within a few years, the app had been downloaded by 100 million users. The same year Facebook retired the “Wall” and introduced the Facebook Timeline. This changed the platform’s user interface, reorganizing a user’s posts and putting them in chronological order.

2012: Disappointing IPO & Acquiring Instagram

The 18th of May, 2012, was a momentous day for Facebook. The company had the largest and most anticipated IPOs in history. They were offering 421,233,615 shares at $38 per share. Although they raised $16 billion through that offering, the IPO failed to meet expectations.

The stock fell immediately at opening, and the share prices plummeted by over 40% over the next few months. By August, Facebook had made a total loss of $50 billion. So why the lousy IPO turnout? The problem was that 57% of the shares sold on the IPO originated from Facebook insiders. This lack of confidence in the stock came from within Facebook itself.

Regardless of the disappointing IPO, the year 2012 saw Facebook make one of its most significant acquisitions. They bought Instagram, a photo-sharing social network that was integrated into the Facebook platform itself. This acquisition allowed Facebook to expand its user base and revenue from adverts. The year ends with Facebook announcing 1 billion active users.

2013-Present: A Maniacal focus on Advertising, Acquisitions & Product Launches

2013: htc phone fail.

In one of its few ill-advised ventures, Facebook partners with HTC to create a Facebook phone. The phone featured a home screen that was based on Facebook’s design and technology. It failed to garner any attention, and within a month, the selling price dropped from $99 to just $ 0.99. There were simply better phones on the market.

2014: Buying WhatsApp

In 2014, Facebook bought WhatsApp, a messaging app that increased Facebook’s reach. Despite already having a messaging system, Facebook wanted to have access to a younger user base and overseas users. This acquisition boosted Facebook’s presence in the mobile world, ensuring that their presence was felt one way or another.

2015-Present: Growing beyond Social Networking

From the years 2015 onward, Facebook continued to buy up everything in sight they felt was relevant for the company’s survival. Their advertising-dependent business model relied heavily on mining user’s data, behavior, and content. This landed them in trouble on several occasions, with privacy breaching complaints and lawsuits following them at every turn.

Nevertheless, Facebook continued to evolve beyond a place where students connect. It slowly grew into a business, entertainment, and news platform. Soon every business, organization, government, and individual was clamoring to be on Facebook. Its integration with third-party apps made it the most sought-after social media platform. Not to mention the thousands of updates, added features, and upgrades the platform introduced over the years.

Without a doubt, in today’s world, Facebook is the “King of Social Media”!

Facebook’s Business Model Canvas: The King of Social Media

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The Business Model Canvas Explained: Cost Structure

The last (but not least) segment on the Business Model Canvas is the cost structures. In this segment, you must ask yourself, how much will

Business Model Canvas: Key Partners

The Business Model Canvas Explained: Key Partners

No man is an island; the same goes for your business. They are other companies, 3rd parties, and people that you will need to achieve

Business Model Canvas: Key Resources

The Business Model Canvas Explained: Key Resources

On the Business Model Canvas, the Key Resources segment refers to the supplies, assets, and materials required to deliver your value proposition to your customer

Privacy Overview

canvas business model facebook

Facebook Business Model Canvas

canvas business model facebook

Cost Structure of Facebook

The above table shows the breakdown of costs of Facebook as of December 2021 and 2020.

Here, the cost of revenue includes data centre, traffic and acquisition cost, partners payment, credit processing fees, etc.

General and Administrative costs include employee compensation, salaries, legal expenses, administrative expenses, etc.

Facebook Business Model

Facebook’s revenue sources

The majority of Facebook’s revenue is generated from advertisements. Ads displayed on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications generate revenue. Based on the number of actions and impressions like clicks or likes, marketers pay for the ads displayed either directly or indirectly via advertising agencies or resellers.

Facebook recognizes revenue from the display of impression-based ads in the contracted period i.e., when an ad is displayed to users. Moreover, they recognize revenue from the delivery of action-based ads in the period based on likes or clicks. The Facebook Business Model calculates advertising revenue on a gross basis since it controls the advertising inventory before it gets transferred to customers. For revenue generated from third-party publishers, Facebook recognizes revenue on a net basis if they were the agents. Customers may receive cash-based incentives, credits, or refunds. The company estimates these amounts and reduces revenue.

Facebook has two types of ads. Firstly, in self-serve advertising, one just needs to visit the Facebook ‘following’ page and create an ad campaign. The advertisements are visible on sidebars and other apps on Facebook. The ad is for a specific target audience. Examples of groups using these ads are restaurants, lawyers, doctors, etc. Secondly, Engagement ads, are on the homepage of Facebook for large advertising brands. The company increases the recruitment of the brand advertisers. many brands test the effectiveness of their product due to the unique Facebook business model.

Reality Labs Revenue

The delivery of consumer hardware products like Meta Quest, Facebook Portal, and related software and content helps in generating Reality Labs Revenue. Revenue is recognized at the time of delivery of the product to the consumer.

Deferred Revenue and Deposits

Deferred revenue and deposits mostly include billings and payments from marketers in advance of revenue recognition. The revenue is not yet recognized for unspecified software upgrades and updates for various Reality Labs products. The unused balances held on behalf of our users are used to make purchases in games on Facebook. Further, on utilizing the balance, the majority of the amount is payable to the developer, and the balance acts as recognized revenue.

The payment terms vary from product to product. For Facebook, the period term between billings and when payment is due is not significant. For certain products or services and customer types, the company requires payment before the delivery of the products or services to the customer.

Payment Revenue

Facebook receives fees from wholesalers and the developer community for using Facebook’s payment infrastructure. The company charges a fee for marketplace deals, sale of apps and digital products, money transfers, etc.

Facebook Business Model

SWOT Analysis


canvas business model facebook

To sum up, Facebook is still booming irrespective of the accusations about the end of the business. Hence, the brand will exist with diversification of business and new approaches.

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