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February 22, 2012

How Facebook Earns its Revenue: Advertisements Vs Payments

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Facebook's ad revenue may not be growing fast enough to justify a $100 billion valuation. But ads are not the company's only source of revenue.Payments are becoming a big deal as well.
Last summer, Facebook started charging companies like Zynga 30 percent of each transaction — like purchasing a virtual good like a cow. (That's a big reason why Zynga accounts for 12 percent of Facebook's revenue, alhough that figure includes advertising as well.)
So although payments started as a tiny sliver of Facebook's overall revenue, now it's up to about 17 percent of the total.
As companies start to sell other kinds of goods through Facebook, like concert tickets, this percentage could grow