In our times, Facebook is an extremely powerful tool. It can affect the outcome of civil uprisings, as seen in Egypt, it can lead to the rise of now extremely powerful organisations, as seen with ISIS, and overall brings people together from all around the world. But yet, I cannot bring myself to join the site. There are so many questions on their business practices, it becomes hard to justify.
Regardless, Facebook is by far the biggest social media company with around 1.3 billion users on its main site as well as around 700 million monthly users on its it begs the question: How is Facebook making so much money?subsidiaries Instagram and WhatsApp. Because of this, Facebook made almost $18 billion last year which is an astronomical 40% increase from the year before. But when companies like Twitter who have 567% less monthly users are making 790% less annual income (around $2.2 billion in 2015),
Facebook, much like most other social media companies, gather almost all of their income through advertising. What separates them from the pack, however, is that they use a system called targeted advertising, which is what allows them to generate so much more income than other companies.
Essentially, targeted advertising is a system by which specific ads are chosen for each user based on what Facebook thinks will attract them. To do this, companies must gather information about the user, and in most cases this is done without their knowledge.
Although this is an ethically questionably practice, it is done by many companies ranging from Facebook to supermarkets like Coles. The intrusiveness is extensive, and the amount of data gathered about each user is dangerously high.
When Coles or other supermarkets gather information in order to target ads, they just examine the products that the person buys (through the loyalty card). In comparison, Facebook gather information in many different ways.
Before Facebook even has to actively gather any information, they are given it by their users. Just from your account, Facebook knows your date of birth, your gender, your interests (from the pages you “like”), your close friends (from whom you communicate most with), your occupation and your location (from the address you give them and from geotagging the photos you post).
They then actively track the sites you visit by using something called “cookies” which are data files collected by websites when you visit them. Facebook use a specific type of “cookies” called tracking cookies which, as the name suggests, track the websites you visit. They add tracking cookies to the actual site and its “like” button, even allowing other 3rd party companies to do so as well. This means that when you have Facebook open, Facebook and other 3rd party companies who have paid Facebook, know and store information on the websites you visit.
Even if you visit unaffiliated pages that contain a Facebook “like” button embedded on it, Facebook will track it. There have also been multiple allegations that Facebook listens in to people’s conversations through their phones or computers microphones.
Now, these claims have not been proven and Facebook have disputed all of them, there is still uncertainty surrounding this issue and it may be one of the main ways Facebook gets information to target advertisements, although disputed.
The main way Facebook uses this information is standard advertisements, mostly banner ads which are picked in order to be similar to your interests or needs. They also advertise through videos, specifically sponsored videos that you can watch whilst playing games on the site to get extra in game credits and through their “Deals” page which companies can pay to get featured on. “Sponsored Stories” is similar to advertising in “Deals” as it involves companies paying Facebook to get featured in the “News Feed”. All of these forms of advertising are designed so that users still get advertisements targeted towards them.
Facebook also utilises far subtler means of advertising. Under Facebook’s terms and conditions (which you are forced to agree upon if you want to have a Facebook account), they are allowed to tell your “friends” that you have “liked” a product or company, without your knowledge.
This is because many psychological studies have proven that, if your friends or people you are close to openly say that they like or support something, you are more likely to view it favourably. This is a very effective form of advertising and due to its subtlety, most people don’t even recognise that it is an advertisement in the first place.
Facebook also manipulates the things that you are told your friends “like” to synchronise them with your interests and needs, making the ads more effective. I find it disturbing how easily Facebook has access to information on it’s users, and how blatantly it sells it for profit. Whilst I understand that targeted advertising is a good business strategy, the complete lack of privacy is appalling and to me, and that outweighs all the benefits that come with being on Facebook.