Days after rebranding the Calibra wallet to Novi, Facebook founder Mark Zuckerberg explained to shareholders how Libra, the firm’s upcoming digital currency, can help bolster revenues from advertising.
Ads make over 85 percent of the tech giant’s revenues as per estimates, with payments and other sub-enterprises making up the remaining.
Powering global payments
Zuckerberg believes using Libra on online marketplaces and global commerce will prove more effective for businesses, causing an increase in advertising rates and, ultimately, Facebook’s stock.
Unlike other advertiser-reliant businesses, Facebook ads undergo a “bidding” process by prospective buyers, based on the results they are looking to achieve. Such dynamic pricing, calculated on factors like location, interests, and age, help create highly-specific, targeted ads that Facebook can charge high prices for.
Libra is a digital stablecoin pegged to widely-used fiat currencies, such as the U.S. dollar, Euro, and Pound. Users will, as per existing plans, be able to transfer funds or pay for goods across national borders, which would further benefit Facebook.
In a transcript of the annual shareholder meeting obtained by Reuters, Zuckerberg’s was fairly upbeat about Libra’s larger plans:
“Because we don’t have to set a price, every business can just bid for themselves what an ad is worth to them in terms of what results they’re trying to get (…) Millions of businesses around the world can participate, and the business can be very efficient.”
Great for the economy
Zuckerberg said Libra could prove to be “great for people around the world,” in addition to helping the overall economy.
With Libra as a global payment method and e-commerce facilitator, Zuckerberg thinks a larger audience can be tapped into.