Facebook Plans to Make Money by Selling Your Data
The Telegraph is reporting that social networking giant Facebook has new plans for generating revenue; offering its 150 million user database as a market research tool to corporations.
Starting this spring, companies will be able to selectively target Facebook's members in order to research the appeal of new products through a polling system called Engagement Ads as demonstrated at the World Economic Forum in Davos.
The Evolution of Engagement Ads
Engagement Ads are not new to Facebook. Last year, The Wall Street Journal reported that Facebook had begun "quietly testing" the product in August and was hoping to roll it out by the end of November.
Engagement Ads, said the WSJ, would appear on the home page of Facebook when you first log on and prompt you to interact with an ad. If you did interact with the ad, Facebook would then attempt to share your action with your friends thus "getting the ad in front of more eyeballs."
At the time, Chief Operating Officer Sheryl Sandberg said that ads systems are "built over time through continual tweaking." She added that Facebook's existing ad offerings were doing well but "undersell Facebook's broader opportunity."
If the Telegraph report is correct, Engagement Ads have had a massive tweak; companies will be able to pose questions to and receive feedback from selected members in real time based on user information that Facebook provides.
Randi Zuckerberg, Facebook's Global Markets Director, told the Telegraph that companies are excited about this new polling system. "It takes a very long time to do a focus group, and businesses often don't have the luxury of time. I think they liked the instant responses," she said.
Facebook's Advertising Attempts
Facebook's foray into advertising over time has been weak at best. Forrester's Jeremiah Owyang has called Facebook's marketing toolset 'confusing', adding that brands will only succeed with engagement advertising if they lean on user behaviors like communication, self-expression, and social exploration.
When Facebook launched it's much hyped advertising strategy in 2007, we had hoped it would not be met with backlash. Unfortunately this wasn't to be the case and the Beacon saga came to an end the following month with Mark Zuckerberg apologizing for the way Facebook had dealt with the situation.
It appears Facebook has run the gamut when it comes to advertising efforts. What began with fliers, display banner ads and even the very similar Facebook Polls have not yet inspired marketers to run in droves to the popular social networking site.
But could this be the year things turn around for them? Maybe. Change certainly is in the air at Facebook. Zuckerberg had noticeably dressed up for Davos, telling blogger Robert Scoble it was to denote that this was Facebook's 'intense' year. The Facebook founder bio page has had a recent addition. And as for Engagement Ads? Well, we'll just have to wait and see. What do you think?
Update: Facebook has contacted us and said that the technology demonstrated at the conference was not a new service and that there have been no changes to the company's existing polls and Engagement Ads services. We'll made a new post later today to discuss why the prospect of this new service has raised so much interest and concern. See Why a Facebook "Sentiment Engine" Would be Huge
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Gees I am all for Facebook making money but I don't see this going down well with the community.
Facebook faces the truth : the need of making money.
The Face of Facebook has changed.
Will the user still face Facebook?
Being targeted based on sexual orientation etc. has the potential to anger people - I know Facebook has few options, but I wonder how this will be received.
I just can't see this being a good thing. I use Facebook right now, and I have to tell you if this becomes a market research thing I will start taking off my information and maybe even close my account. This really seems like an invasion of privacy. I don't want to give information to marketing companies, and using what I choose to share with my friends to try and sell leaves a bad taste in my mouth.
This cannot be good. There probably are better ways to monetize, but this is not one of them. Wonder if we even get a chance to opt-out.
Funny misprint: Facbook.Sigmund Freud would be satisfied.:)
How can they do this? Is this legal?
Facebook will probably open a can of worm with this move, especially when they try to expand into Germany.
A few things that need to be clarified here:
1. Facebook isn't really selling user data - e.g. they are not going to know that my name is Ron West and that I live in North Attleboro and that I like Twitter. They will be selling demographic data and customers will say "We want to target people in North Attleboro who like Twitter". Saying it the way you said it will certainly freak people out. Certainly.
2. You have not clarified (or attempted to clarify) what type of data is being offered up. My Comments, my photos, my "Info" ....
I really enjoy reading your work and I am glad that you are adding young journalists like @jbruin - but this is the same type of "journalism" that the mainstream public sees in places like CNN, Fox etc....
This is not a lite topic and requires a bit more thought and information.
(sorry, I'm trying to improve my english) Well, I'm working in a website in Chile, that allows companies get information that user in a opt-in way, send by responding surveys and polls. But is very important the benefit issue. What do the users get with this? If a brand wants to get data, what do they give?
Every system that intent to get something about users, has to have a benefits system for better results.
LOL, Glad I use MySpace instead. Never did like Facebook.
RT
www.internet-privacy.us.tc
We don't like spam in our mailboxes so don't throw spam advertising our way on our facebook pages. I'm sick of the banner ads already, but now if I happen to click it, my friends will see what I did. That's my personal information and leave it alone.
They have been doing this for months already... As a gay man listed in a relationship on facebook, 90% of the ads I see on the right are 'gay themed', or 'gay directed'.
Pisses me off..... I sleep with men, well one man, but that doesn't mean I give a crap about circuit parties, gay cruises, etc....
RC
http://www.authspot.com/Journals/Driving-Down-South.479661
I'm confused. How is this different from what they've been doing? And the headline makes it appear as though my personal information is being bartered and sold; but that's not accurate, correct?
Thanks for clarifying!
This is basically going to be infringing on the communities privacy if this is to go through
No big deal. We'll just block these latest targetted intelligent ads like all the other ads. Are people really stupid enough to compulsively block a product that suddenly jumps out at them on a website? If a company does that to me that's an automatic ban for interrupting my web browsing experience.
http://www.facebook.com/home.php?ref=home#/group.php?gid=48561188389
spread the word ;)
Is this even legal? I am a member of facebook and I do not like the idea of my data being sold to more and more companies, it seems you cannot enter yourself into anything these days without data being collected and then sold, quite bad really :(
I will be cancelling Face Book. Why do U think people cancelled most land mine service, "I DO NOT WANT TO BE BOTHERED WITH SALES INFO". iNFO SUCH AS THIS TAKES UP MOST OF THE COMPUTERING TIME NOW.
Thank You
What? They weren't doing this already?
Facebook stated that "companies are excited about this new polling system." No doubt about it. What about the users?
Very misleading title and it is no different from what Magazines, Newspapers and Universities have been doing for years.
Everybody who bitches about advertising on FB seems to think that everything in the world comes for free. Wake up morons.
As a researcher, I'm all for new ways to gain consumer info. However, I'm about doing so ethically. Facebook has an obligation to allow their users to opt-out of the poll. If they don't, then they are dead wrong.
http://tinyurl.com/fecesbook
http://tinyurl.com/myaids
Put yourself in their shoes for a moment, and imagine running that business. Facebook provides a free service to its users, but the growing IT infrastructure, staffing salaries, office space, etc. certainly don't come for free.
To A. Beard, I ask, why should Facebook somehow be obliged to allow users to opt-out? That may be true if Facebook was subscription-based, but not for a service that is going to have to rely on advertising dollars to keep going.
The opt-out is to stop using the service - and plenty of people might choose to if this is poorly implemented.
I have a social network software and other important data.
Its Possible
?
The opt-out is to stop using the service - and plenty of people might choose to if this is poorly implemented.
Facebook has an obligation to allow their users to opt-out of the poll. If they don't, then they are dead wrong.
Like some have said. They are not going to sell your data so companies can connect your name to your interests.
And... advertisers have been able to target all kinds of demographics since FB ads started.
Fight the Power!
http://www.facebook.com/home.php#/group.php?gid=58542789084
This is not going to settle well with anyone, I don't think. Already I don't like the cheesy offers to 'test out an iPhone! for free!' or, because I'm listen as interested in men and women, the gay cruises and swinger parties shown. I'm sure Facebook can make money in better ways. And as said above, if I click on one of the ads, my friends see?
No. Not a wise move, FB.
its like selective advert. lets just support whats new on facebook and lets see what happens.
The day Facebook becomes a marketing engine is the day it begins its decline.
@Michael – I suppose the trick is to do it in such a way that it is not too intrusive and also doesn’t give away any specific data. Unfortunately I didn’t see a lot of information about the type of data FB plans to make accessible – if in fact this goes ahead.
We received an e-mail from Facebook (mentioned at the end of the story) and will be analyzing this later today.
@Engago Team – yeah, they do need to make money. I think a lot of social sites are struggling trying to find the balance, so at least they’re not alone.
@Kat – Have to agree I would not like to be targeted based on my sexual orientation.
@Kate – I have to admit, there seems to be some confusion about where to draw the line when it comes to [any] social sites and marketing – it’s a double edged sword – they want to offer a service for free – but they need to make money to keep providing it. I’m looking forward to seeing how it all turns out.
@Igor – thanks – fixed
@Ron It’s true. I don’t know the type of data being offered – if any at all (check our update) that’s why I didn’t speculate on that. But I agree; it’s not a light topic and this is the beauty of blogs – we can talk about it in more detail here. :)
@Richard – good to hear that you guys are offering an opt-in. I think most social sites are trying to do that – we’re just living in experimental times.
@Katie – unfortunately while some of us see ads as spam, the companies providing the service need to make money so it becomes a real challenge. I for one can't wait until it’s all sorted out.
@Robert – I didn’t realize that you get ads based on sexual orientation (I’m not a user of Facebook) – but yeah, I can see how it would be annoying.
@Josh – Sorry I couldn’t give you more information – it’s all I had. But I do understand that Facebook has been allowing for ads to be targeted based on profile – although they claim to do it in a non identifiable (personal) way.
@Michelle and Carl – like I said earlier, sites that provide free services need to make money – and advertising is just one way that they can do this. Unfortunately, a lot of people put up too much information about themselves and then (sometimes too late) realize that the data may be used for other things. Often times, it’s a real trick to get the information back out
@Jonathanwthomas – I believe that they have been working on Engagement Ads, but I was under the impression that the polls had been dropped not long ago – see this post - regardless, it will be interesting to watch what happens this year with Facebook.
@ Geno – I don’t know. There are some free services that I would pay to use, yet others I’d be happy to drop if they started charging. Facebook and sites like it need to work out what’s best for them – and their users. I guess they need to make a call – charge for the service – or allow funds to come in via advertising. Certainly, it wouldn’t be cheap to maintain the service.
@Rich – I’m sorry you feel that way. Yes, the title could probably have been a lot clearer, but I tried to ensure the post was very clear in saying that the information was from the Telegraph – not Facebook itself. It’s difficult to get confirmations late at night, especially during the weekend, but I understand we’ll be analyzing this a little more in another post so stay tuned.
@Joe – You’re right. But boy, do you think you could quit with the name calling, it’s not necessary when your point is valid. :)
@A Beard – I would like to think that if social sites do try and use user information, that they would try and do it as best they can. I’m sure they wouldn’t want to lose their user base.
@Andrew You’re right. People need to stop and think about free services before they sign up because as you put it so well, maintaining this type of service certainly isn’t free - there has to be give and take.
@Jon I don’t think that any of the more reputable social sites would sell personally identifiable data – but I always wonder with the way that the Web is moving whether that data one day will somehow link all of that together. Certainly interesting times we live in.
@boiledpotato – Yeah, I think you’re right – advertising is still a bit of a hit and miss- but again, that could be exactly the reason why companies are trying to offer up parts of their user profiles – so that ads can be targeted better and you don’t end up with the cheesy ones. Delicate balance I think.
@armando Absolutely. Users should stand by their communities and help them out. Isn’t that what community is about anyway?
Like all of the major web properties Facebook is now too big, too powerful.
When a company has tens of millions of users, it will focus on generating revenue as a primary concern. My bet, Facebook will eventually yield to corporate primal instincts and serve greed over community.
Another big issue is the company can't services individual requests.
Here are several examples:
- people have their accounts deleted with no recourse
- people are denied using Facebook advertising with no explanation
Facebook needs to address these issues as well.
Eventually, the community will turn on them. I, for one, look forward to having balance in the relationship.
hmmmm, a website where you put everything about what you're doing, did and going to do, photos of it all. Oh yeah -- and all of your friends are on it too. What did you think was going to happen?
If you don't want to be targetted based on your sexual orientation, then don't publish it. The same goes for any other piece of personal information...
So this leads to more disruptions while minding your own business on facebook.
I hope not. Oh, maybe that's the reason why approval from them is mandatory before changing your real name on Facebook. They are probably gearing towards selling our info. Try changing your name to something else and see what happens.
For those of you who use Facebook, they've been doing something like this for a while.
Ever noticed while checking the latest on the live feed that the ads on the side bar strangely enough always feature your favorite artists, daring you to "test your knowledge" on the given subject?
It's USER-SPECIFIC ADVERTISING.
If I'm not mistaken, most internet advertising companies have caught onto this including GOOGLE ADS.
Why is this a surprise to anyone? Facebook is a treasure trove of data just waiting to be exploited.
My own experience is similar to Chris Brogan's (see: http://tinyurl.com/9vbuye). If this is 'targeted' advertising, even the Internet God cannot help Facebook.
So this leads to more disruptions while minding your own business on facebook..
Okay, I'm both a Facebook user and a Facebook advertiser. Yes, Facebook offers keyword advertising. And I like it, because I sell to a very small subset of people (knitters). If you don't knit, you're not going to be interested in the stuff I make & sell, so I don't want to pay to show you an ad you don't want to see.
The reverse is also true: if, for example, it's an ad for a clearance sale on knitting yarn, I really DO want to see that ad.
And, I don't want to pay a subscription fee to use Facebook, so I'd rather advertisers pay for the service for me. As a business owner, I can tax-deduct direct advertising costs, but not social network subscription fees.
Seems to me, a compromise solution would be a check-box below each Facebook ad, saying "I'm not interested in this product/service." Click the box, and you don't see that ad again, ever.
Just my 2 cents worth!
number 11: MySpace is worst when you are aware of the security lack.
I just want to say "lol", if you want to be anonymous don't trust such companies, adopt free open source solution to communicate. Else, don't come moaning if your privacy has been violated. Did any of you (facebook users) actually read the Terms and all these legacies ?
Facebook (and even myspace, it's all the same) are the best way for you to mix private life to public life, and then enable a lot of people to access to your privacy.
Number 42: +1;
However it's just for money, this story's nothing dangerous. Just remember that widgets may be similar to worms, and I bet you've been infected (it's a kind of recursive worm) months ago, so all your data has been sent to some servers and can be sold. Sold to your firm or futur firm. Sold to some pirates who are looking for some SE possibilities or the answer to your so sophisticated secret question.
It isn't about Facebook, it's you !
For the one interested in privacy: Unix-like system + silc communication + phpBlogs on a server you rent. GnuPG is a very good idea too. Sure you will still be able to use your favorite programs, but having an alternative when transmitting private information is still a good thing.
I use facebook and myspace I think this want go well with FB users because they thought face book would be different then myspace.
I guess the reality is those sites aren't really that different after all. At least myspace is up front about things they are doing.
People need to accept that Facebook actually needs to make money. And the way you make money is from companies. What do companies want? Demographic information to sell their stuff to a targeted audience.
Really, what's wrong with that? Ads are ads. Accept them.
What I don't like though is when my "interaction" with these ads are broadcasted to all my friends via the news feed. That wouldn't go down well with most people.
Not sure why the trackback is not working but I have written a reply to this here:
http://www.notronwest.com/blog/2009/02/02/your-facebook-data-is-for-sale-and-it-always-has-been/
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