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How Does Facebook Make Money? | Privacy Now TV from Privacy Now on Vimeo.

This is a short 3 minute video which clearly highlights a growing trend of deep concern amongst internet users: what exactly is the price we pay for FREE?

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Click here to read my popular post It’s Free So How Does Facebook Make Money?

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So!

How highly do YOU value your privacy? Low enough to freely give all your intimiate details to a social network so they can sell your data to the highest bidder and in exchange you get to swap your status updates with friends and play mind numbing childish games – is that a fair trade in your opinion?

Many users are becoming increasingly concerned at how Facebook casually trades their personal data for profit. So exactly how does Facebook make money?

The Upward Trend Is Steadily Growing For Facebook

Can the world’s most popular social network continue to grow and will the advertising revenue continue this phenomenal upward trend? That is the $50 billion dollar question at Goldman Sachs, who, after an initial investment of $450 million have further invested $1.5 billion during 2011, prior to a likely 2012 IPO. Facebook’s advertising is constantly gaining ground on Google with many companies multiplying their budgets for social promotion this year.

The profit margin growth is exciting news for Wall Street, with $200 million profit on $777 million intake in 2009, $400 million profit on 2010 revenue of $1.86 billion, and a strong January 2011 prediction of a possible $1 billion profit on $5 billion income, with reports now in of  a likely $3.8 billion advertising gross according to Bloomberg: there will be more income to follow, settling 2011 revenue at around an estimated $4.27 billion. 

Being a private company, no official figures are publicly required until prior to its IPO which allows a certain margin for guess work from the financial institutions. The co founder, Mark Zuckerberg publicly claims he is more interested in growing the network at present than in making a profit, but how much further than 750 million users can a social site grow?

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“There’s no point right now in having a massive profit,” Zuckerberg said.

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However, one thing is certain: the profits are being leveraged from users freely signing up and giving their personal data first through registering and second through building their profile wall page with likes and dislikes including education details and sexual orientation. Advertisers claim this allows them to only show their promotions to potential buyers based on intimate demographics. 

How long will it take before the majority of users see through the hoax and pull their data offline? Can a diet of monotonous status updates and boring games requiring no skill continue to enthral the world’s online population? Is peer pressure behaviour enough to value this private company at $50 billion?

Although a considerable percentage of revenue is now coming in from Facebook Credits, the in house currency system, licensing the open platform to games developers like Zynga, and a new initiative based on offering coupons Groupon style, it is clear that the answer is a little more controversial.

How Does Facebook Make Money?

Facebook leverages the personal data freely provided on sign up and during usage on the network to provide ideal demographic advertising to companies and individuals globally. For a price your business can promote its website or service to exactly the sort of prospects you wish to specifiy. If you want to promote to 45 year old female heterosexuals in Surrey, you can!

Clearly this is highly appealing to businesses requiring result for their promotions budget. This is why the figures continue to grow.

But how good is this for Joe Public?

There’s no such thing as a free lunch so how do YOU feel about having all your very personal details sold to the highest bidder daily around the world for whatever marketing purpose they desire? It’s your ball!

Can you live life as a social animal offline normally? We all used to! Could YOU live without Facebook? Do you feel the peer pressure?

Read Wikipedia’s article on Facebook.

Please share this page to highlight this difficult issue – many thanks

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 Thanks for reading – have a great day!

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Tags: advertising revenue, business strategy, Facebook Money, make money, online privacy

This entry was posted on October 13, 2011 at 13:40. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted in Marketing Momentum by Clare Brown No Comments Yet