How does Meta get paid?

Meta (formerly Facebook) makes money primarily through the following avenues:

1. Advertising Revenue

Meta’s primary source of revenue is digital advertising on its platforms, which include Facebook, Instagram, Messenger, and WhatsApp. Businesses pay Meta to show ads to specific user segments based on demographics, interests, and behavior, which is powered by Meta’s vast data collection and targeting capabilities. Ads appear in users’ feeds, stories, and as banner ads, and advertisers are charged through a model of either cost-per-click (CPC) or cost-per-impression (CPM).

• Example: When a company wants to promote a product, it can pay Meta to display its ads to users who are most likely to be interested based on Meta's data on user preferences.

2. Meta Platforms (Facebook, Instagram, Messenger, WhatsApp)

While all these platforms are free to use, Meta monetizes them by displaying ads in users’ feeds, stories, and messages. With billions of active users, Meta has access to extensive data that allows it to offer targeted ads, which in turn helps businesses reach their ideal customers.

• Instagram ads: Businesses and influencers pay to promote products or services on Instagram stories, posts, and the Explore tab.
• Messenger ads: Ads appear within the Messenger app, allowing companies to promote their products or services directly to users.

3. Virtual Reality (VR) and the Metaverse

Meta also generates revenue through its Oculus VR hardware and software sales. With the development of the metaverse, Meta is investing heavily in creating immersive virtual environments where users can socialize, work, and play. The sale of VR headsets, virtual goods, and digital services within this space is another growing revenue stream.

• Oculus Quest: Meta sells its line of VR headsets, such as the Oculus Quest, and offers a marketplace for apps and games, where the company takes a commission on sales.

4. In-App Purchases and Other Services

Meta earns money through in-app purchases and other services within its apps. For example:

• Marketplace: Meta charges businesses for higher visibility of their products.
• WhatsApp for Business: The company offers paid features for businesses, allowing them to communicate with customers more effectively.

Sources of Meta’s Revenue:

1. Digital ads: The majority of Meta's revenue comes from advertising across its platforms.
2. Virtual reality: Sales from Oculus VR headsets and apps are growing as Meta pushes into the metaverse.
3. Business services: WhatsApp Business API and Instagram shopping contribute additional revenue streams.

Sources:

• Meta's Q3 2021 Earnings Report
• Meta Platforms Financial Overview