Facebook offers a four-pronged approach to advertising: it delivers to advertisers reach, relevance, social context, and engagement. The majority of Facebook’s revenue is derived from its advertising products; this trend continued in the second quarter 2012.
Facebook generates revenue primarily from advertising products on its desktop website. It leverages its 955 million monthly active users, and allows advertisers to target its user base by age, location, gender, or interests, which are shown either directly or through relationships with advertising agencies. Costs are measured by impressions delivered or the number of clicks by users.
In the second quarter 2012, Facebook reported $922 million in revenue. This represents 84% of Facebook’s total revenue for the quarter, and a 28% increase from the second quarter 2011.1 While Facebook’s revenue is down slightly from the September 2011 quarter, it is perhaps too early to predict advertising revenue growth.