Thursday, July 28, 2016

Facebook Shows That Selling Your Data Continues to Be Big Business!

When Facebook reported their quarterly earnings  earlier this week one thing was glaringly true; the company is making more money of you than ever before! According to their own estimates Facebook earns roughly $3.82 per user, multiple that by the more than 1.7 billion active users, and you can see why the social media giant was able to usher in another $6.44 billion in revenue.

Facebook ARPU for Q2 2016
Facebook's main money stream has continued to be ad revenue, hitting more than $6.24 billion with  Mobile ad revenue taking the highest share (84 percent) at $5.42 billion. Facebook is now in fact pushing so many ads and making so much money on you the user, that they have in effect ran out of ad space.

When it comes to on site and in app advertising the company has it a wall of sorts, or the tip of what they are calling  “ad load”—the volume of ads its users typically see. Right now they believe they are in a "green zone” which means they don’t think they can push many more ads to users than they are already seeing during the time they are spending on the site without users becoming overwhelmed or overly annoyed (I personally think most already are!).

In short, Facebook is say they are about to max out on the number of ads it can show users without coming up with even more ways to push ads to you. This means it will need to find other ways to grow the company’s ad business moving forward, they simply don't believe increasing the number of ads it shows people will not be an option.

“The optimal ad load is really a mix of art and science,” Wehner said. “We also want to be thoughtful about making sure each person’s overall feed experience has the right balance of organic and ad content.”

This is why we see the company making bigger pushes to become a "video first" social network. During this week's conference call Chief Executive Mark Zuckerberg said the company sees “a world that is video-first, with video at the heart of all our apps and services.” Facebook executives also noted that video is playing a large part in driving up time spent on the social network. More time, means more advertising dollars!

Facebook uses a targeted advertising system, in layman's terms they collect as much of your data as possible and either sell or use that data to offer advertisers more lucrative ads and it appears to be working and working well.

Facebook promises that with their targeted advertising you can "reach the right people, every day, everywhere, to get more traffic and sales for your website". Their system not only utilizes traditional  things like demographics: age, gender, race, occupation ect but they also use site specific items. Things like your listed hobbies, favorite bands or brands, Facebook likes, location and check-ins. Beyond just what you do on their own site Facebook also tracks browsing and spending habits on other sites, giving company's a much more accurate picture of who you are and what you do!

What does this all mean? Well at the end of the day it means that, user willing, Facebook will continue to collect all the data it can on you, and they will continue to make as much money as possible off of that data! It also means that we can expect to see more adverting on Facebook's other services, as well as more in app and in video advertising. Pretty much we'll just see more ads period!

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