Facebook Now Earns More Advertising Revenue Than All US Newspapers Put Together

This is what disruption looks like.

Facebook had started off as a small project to connect college students in the US. Around a decade later, it’s the biggest social network in the world. With its billion-plus monthly users, Facebook commands the attention of today’s population like no other medium. Predictably, advertisers are flocking to it, hoping to latch on to some of its eyeballs.

And they’re leaving traditional advertising mediums in the lurch.

Within a mere 10 years of its existence, Facebook now earns more advertising revenue than all US newspapers put together. Over the last 9 months, ad revenue on Facebook was $17.9 billion (Rs. 1,20,000 crore). The sum of advertising revenue earned by American papers was $16.4 billion.

In the last 9 months:
Facebook ad revenue: $17.9b??
All newspaper ad revenue: $16.4b?
. @ValaAfshar pic.twitter.com/hn8rldas4r

— JM Alvarez-Pallete (@jmalvpal) November 3, 2016

The reasons for this are twofold – even before Facebook burst on to the scene, Google had taken away a chunk of the revenue that newspaper publishers received. Newspaper ad revenues started falling the moment Google started offering advertisers its AdWords program in 2001, and by 2009, Google had overtaken newspapers altogether. Facebook, too, had been chipping away at print revenues since 2008, and has finally overtaken newspapers 8 years later.

And this is as much of a tale of digital’s stunning rise as it is of print’s precipitous fall – it took a half century for annual newspaper print ad revenue to gradually increase from $20 billion in 1950 (adjusted for inflation in 2014 dollars) to $67 billion in 2000, and then it took only 12 years to go from $65.8 billion in ad revenues back to less than $20 billion in 2012, before falling even further in 2013 and 2014.

And even newspapers’ digital editions haven’t helped much. Even though most print newspapers also have websites, they just earn a fraction of their revenues from them – just around $3 billion, compared to $16 billion from their print publications. It’s the platforms, like Facebook, that are now kings, and earn a lion’s share of ad dollars.

For now, Facebook is riding high. All these advertising revenues have meant that it’s now the 5th most valuable company in the world, and it’s setting its sights even higher, launching satellites and flying solar planes. But it would do well to be careful – as print’s fall has shown, it doesn’t take long for market leaders to be dethroned by brash, young upstarts.

Featured image: Fan Digital