Investment Management Certificate (IMC) Practice Exam

Facebook earns its revenue primarily from _____.

1. selling data

2. membership fees

3. corporate profile fees

4. advertising

The correct answer is: advertising

Facebook primarily earns its revenue through advertising. This business model relies on creating a vast user base that generates massive amounts of data, which can then be leveraged to deliver targeted advertising. Advertisers are willing to pay a premium to reach specific demographics effectively, which enhances the platform's appeal and drives significant revenue. Many businesses benefit from advertising on Facebook due to the detailed analytics and targeting capabilities the platform provides, enabling them to reach potential customers based on interests, behaviors, and other criteria. This advertising-centric approach has been a major factor in Facebook's growth and its ability to continuously innovate and expand its services. Other options do not accurately reflect Facebook's main revenue stream. Membership fees or corporate profile fees do not play a significant role in Facebook's revenue model, as the platform is free for users and monetizes primarily through ads. Selling data, while it may occur in some capacity, is not a primary source of revenue, particularly in the manner that advertising operates—where user data is utilized to enhance ad effectiveness rather than being sold directly.