Most social networking sites employ the ad based business plan where they accrue a large user base that they serve ads from signed advertisers. Most of their revenue comes from ads and it looks like a successful business plan, as shown by the likes of Facebook, who are raking in billions in net income each quarter.
However, it seems like Facebook might be considering to offer an ad free experience as reported by Bloomberg. Apparently Facebook has been conducting market research in the past weeks to determine whether offering an ad free version would spur people to join Facebook.
Facebook had apparently had considered this option in the past but now this has gained momentum due to the recent privacy scandal the company suffered. Although they might be considering this, these plans might not go through.
Recently, Facebook revealed its Q1 2018 earnings and they earned over $11.795 billion from ads which was 98% of the total revenue. Their current system of targeted ads to its 2 billion active users has proven to be quite successful due to the constant income growths each quarter.
However, you would see why Facebook would consider wanting to offer a subscription version of the social networking sites. The current system employs a process where your user data is used to give you targeted ads and such a system could be misused like the Cambridge Analytica scandal that led to Facebook’s stock tumbling down. An ad free service would potentially get rid of this liability and we have to wait and see if they would roll this out in the future.
