Facebook can triple its profits with just one move
Facebook's stock soared 30% after the social networking site's report about its earnings. However, Twitter's co-founder Biz Stone stated that Facebook could earn more.
Facebook earned US$656.5 million from mobile ads from April to June. The number was more than 41% of the total US$1.6 billion revenue from advertising.
Stone said that providing a choice to pay for an ad-free experience on the site including other exclusive advantages would generate US$12 billion more in its annual revenue. Greenlight put the assumption of Stone into a survey test. Exactly 500 Facebook users were asked about the social network's advertisements. The results showed that most of the users do not appreciate the advertisements. 70% never clicked a single ad while 15% said they were willing to pay for an ad-free experience. Furthermore, 8% of the respondents stated that they would pay US$5 or more each month.
If 15% of 1.15 billion Facebook users would pay US$7.50 each month, Facebook could earn as much as US$1.25 billion monthly. The figure would be three times more than Facebook's second quarter earnings.
Experts said that Facebook should let the users pay if they really want an ad-free experience. With the tripled profit, the social network could spend more of its time on enhancing the user experience rather than focusing on its ad business.