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Facebook Plans to Make Money by Selling Your Data

February 4th, 2009 by admin

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 be making a new post later today to discuss why the prospect of this new service has raised so much interest and concern.

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  1. Gees I am all for Facebook making money but I don’t see this going down well with the community.

    Posted by: Michael McGimpsey | February 1, 2009 11:00 PM

  2. Facebook faces the truth : the need of making money.
    The Face of Facebook has changed.
    Will the user still face Facebook?

    Posted by: Engago Team | February 1, 2009 11:39 PM

  3. 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.

    Posted by: Kat | February 1, 2009 11:41 PM

  4. 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.

    Posted by: Kate | February 1, 2009 11:45 PM

  5. 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.

    Posted by: Web2Mom | February 1, 2009 11:47 PM

  6. Funny misprint: Facbook.Sigmund Freud would be satisfied.:)

    Posted by: Igor Poltavskiy | February 2, 2009 12:02 AM

  7. How can they do this? Is this legal?

    Posted by: Sujan Patricia | February 2, 2009 12:03 AM

  8. Facebook will probably open a can of worm with this move, especially when they try to expand into Germany.

    Posted by: Natalie | February 2, 2009 1:13 AM

  9. 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.

    Posted by: Ron West | February 2, 2009 3:27 AM

  10. (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.

    Posted by: Richard Johnson | February 2, 2009 5:15 AM

  11. LOL, Glad I use MySpace instead. Never did like Facebook.

    RT
    www.internet-privacy.us.tc

    Posted by: John Savage | February 2, 2009 5:58 AM

  12. 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.

    Posted by: katie | February 2, 2009 5:58 AM

  13. 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

    Posted by: Robert | February 2, 2009 5:59 AM

  14. http://www.authspot.com/Journals/Driving-Down-South.479661

    Posted by: Derrick | February 2, 2009 6:06 AM

  15. 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!

    Posted by: Josh Chambers | February 2, 2009 6:10 AM

  16. This is basically going to be infringing on the communities privacy if this is to go through

    Posted by: Adam | February 2, 2009 6:14 AM

  17. 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.

    Posted by: Nt Crawler | February 2, 2009 6:15 AM

  18. http://www.facebook.com/home.php?ref=home#/group.php?gid=48561188389
    spread the word ;)

    Posted by: me | February 2, 2009 6:17 AM

  19. 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 :(

    Posted by: michelle | February 2, 2009 6:26 AM

  20. 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

    Posted by: Carl W. Cary | February 2, 2009 6:33 AM

  21. What? They weren’t doing this already?

    Posted by: jonathanwthomas | February 2, 2009 7:07 AM

  22. Facebook stated that “companies are excited about this new polling system.” No doubt about it. What about the users?

    Posted by: Geno Prussakov | February 2, 2009 7:19 AM

  23. Very misleading title and it is no different from what Magazines, Newspapers and Universities have been doing for years.

    Posted by: Rich Taylor | February 2, 2009 7:38 AM

  24. Everybody who bitches about advertising on FB seems to think that everything in the world comes for free. Wake up morons.

    Posted by: Joe Armstrong | February 2, 2009 8:05 AM

  25. 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.

    Posted by: A. Beard | February 2, 2009 8:12 AM

  26. http://tinyurl.com/fecesbook
    http://tinyurl.com/myaids

    Posted by: MMDE | February 2, 2009 8:37 AM

  27. 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.

    Posted by: Andrew Terry | February 2, 2009 9:13 AM

  28. I have a social network software and other important data.
    Its Possible
    ?

    Posted by: Dinesh | February 2, 2009 9:19 AM

  29. The opt-out is to stop using the service - and plenty of people might choose to if this is poorly implemented.

    Posted by: Muhabbet | February 2, 2009 9:36 AM

  30. Facebook has an obligation to allow their users to opt-out of the poll. If they don’t, then they are dead wrong.

    Posted by: mIRC | February 2, 2009 9:37 AM

  31. 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.

    Posted by: Jon | February 2, 2009 10:09 AM

    32. Source: feedproxy.google.com

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