Facebook's Business Revolves Around Media

Facebook is a media business trying to call itself something else. Yes; Facebook operates an online service and website and yes, Facebook develops new applications and services. The company owns Instagram and WhatsApp and has helped push or pull these two businesses along, but at its core Facebook is a media company because it generates massive revenue from advertising. The company, however, would rather be called something else: they would rather be considered a technology company, presumably as this sounds more glamorous to their employees and investors. For many, media still evokes images of newspapers and paper magazines, when a significant amount of the media that the developed world consumes involves a display panel. In a similar vein, much of the advertising we see is also shown on an electronic screen - but of course, not all. However, Facebook generated a $1 billion from advertising revenue in Q2 2012 climbing to over $6 billion by Q2 2016: this is not an inconsequential sum!

This raises an interesting point: there are some technology companies making money from technology operating in the world, such as Apple, where they manufacture and sell a range of technology products. Apple have dipped a toe into the media industry with their own news division but this is a small part of the revenue that the company generates. At what point do we draw the line? In the United Kingdom, many bus companies use the sides of their vehicles for advertisements but these are mass transport businesses and a relatively small part of their revenue is derived from advertising. However, other big names that we might consider to be a technology company, such as Google or Facebook, generate most of their revenue and hence profits from advertising space. Google sell a range of products, some software and some hardware, but the majority of its profits are derived from advertising of one sort or another. Facebook has shown that it has the ability to influence the media and earlier in the year upset many people by adjusting the Trending Topics feature on the website. Facebook has adjust how it operates some aspects of its business following this story, including how it now uses computer software to determine the trending topics rather than editors.

Facebook's news feed has also been adjusted over the years, firstly to align it better with those businesses promoting themselves on the website and more recently, the company has adjusted the news feed to make it a more personal feature. This change is unlikely to make a material change to how much revenue the company makes from advertising because when advertisers consider an online presence and branding in social media, advertising on Facebook is at the top of the list. Facebook has shown itself to be adaptable and flexible where the media industry has often struggled to reinvent itself.

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About the Author

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.