Here’s how Facebook makes money off you

We’ve discussed the economics of social media before, and while you shouldn’t hold your breath for Facebook to cut you a check for all the data – and therefore advertising revenue – that you supply the company, it’s important to understand how Facebook turns information about its users into profit.

Facebook’s advertising and privacy settings are in a near-constant state of change. But the company recently released its new ad education portal to explain to users in general terms how it targets them for advertisers.  

There are at least 98 targeting options for each of Facebook’s estimated 1.7 billion users. Options range from the general – location, age, school, and educational level – to the much more specific – “users who buy allergy medications, cough/cold medications, pain relief products, and over-the-counter meds” and “users whose household makes more purchases than is average.”

Each of the 98 targeting options has a range of answers, and when combined create a profile of the Facebook users like you. That profile is valuable for companies that want to sell you things and for Facebook – which sells your profile to companies that want to sell you things. Data means money.

It’s great that Facebook is being transparent in this specific instance, but their targeting options raise serious privacy concerns. “Facebook’s business model is to amass as much first-party and third-party data on you as possible, and slowly dole out access to it,” said Peter Eckersley, chief computer scientist at the Electronic Frontier Foundation. “If you’re using Facebook, you’re entrusting the company with records of everything you do. I think people have reason to be concerned about that.”

Links:

Should Facebook pay its users? (Speed Matters, Aug. 19, 2015)

98 personal data points that Facebook uses to target ads to you (Washington Post, Aug. 19, 2016)