How Does Facebook Make Money, and Why Should I Care

Facebook’s model involves gathering information about you and your customers and “selling” the opportunity to advertise to them to other companies

How Does Facebook Make Money, and Why Should I Care?

Do you want to have the information about your customers in Facebook’s hands? Are you comfortable with the idea that Facebook, in effect, sells information about your customers, including their interests and browsing habits to advertisers, so they can target visitors to your Facebook pages? Are you comfortable with Facebook putting ads on YOUR customer service pages, over which you have no control?

These are important questions for any business that wants to use Facebook for any purpose, including customer service reasons.

Facebook makes its money by displaying ads on all its pages. you can’t have a Facebook page without their ads. In effect, they sell visitors and users. They collect huge amounts of information about what users do, how they spend their time, (purportedly even off of Facebook), and they use this information to target ads more specifically. Targeted ads are both more expensive to purchase, and more effective, so the information they gather is worth a fortune. And that’s one reason Facebook is making so much money.

When you use Facebook as a business platform, you are supporting this, and often customers are not even aware they are being “followed” around. And, of course, because those customers who are interested in your company, will be flagged as being interested in your competitors, it’s likely, they will see ads for your competitors, EVEN ON YOUR FACEBOOK pages.

So far, this has been an issue operating below the rader, but recent events in the EU (November, 2011) suggest that governments will step in and at least require greater transparency on the part of Facebook, and changing the user defaults so that Facebook, by default will NOT gather and use user information. Right now the default is to gather it.

Are you comfortable with all that?

Author: Robert Bacal

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