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How Much Would You Pay For Ad-Free Facebook?

The big question: Could Facebook release an ad-free version of the service and if so, what would it cost?

In order to answer this question, we need to take a deeper dive into how Facebook makes money.

Facebook revenue per user in 2017:
1) U.S./Canada — $84
2) Non-U.S./Canada — $11

U.S./Canada has 11% of Facebook’s users but accounts for 49%of revenue.

The rest of the world has 89% of Facebook’s users but accounts for 51% of revenue.

Facebook revenue per user in U.S./Canada (% increase):
1)
2016 — $62
2)
2017 — $84 (↑ 35%)

Breakeven: If Facebook charged $7/month, then they would generate the same amount per user as they did in 2017.

Other networks monthly fee:
1) Hulu — $8
2) Spotify — $10
3) Netflix — $11

Our guess: We would not be surprised if Facebook posted a monster revenue number for Q1–2018 which would necessitate a higher $/month for this math to work.

Early indicator: 4C estimated that advertisers spent 62% more on Facebook in Q1–2018 versus Q1–2017.

Flashback #1: Facebook ad costs spiked higher after a big change to its News Feed algorithm

Facebook changes for January 2018:
1) Impressions — ↓ 3%
2) Ad prices — ↑ 122%

Flashback #2: Do Big Advertisers Even Matter to the Platforms?

Advertisers on Facebook by year (% growth):
1) 2016–3M
2) 2017–5M (↑ 67%)

More:
1)
Could Facebook Exist Without Ads?

2) How Much Could Facebook Charge For Non-Ad-Supported Version?

3) What Hearings? Advertisers Still Love Facebook

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