Facebook Really Does Make Money

Aside from “Are you on Facebook?”, it seems like everyone’s favorite question about the latest social networking phenomenon is “But how are they making money?” Today the Wall Street Journal answers that question for us: targeted advertising.

The WSJ writes:

Social-networking Web site Facebook Inc. is quietly working on a new advertising system that would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves. . . .

The new service would let advertisers visit a Web site to choose a much wider array of characteristics for the users who should see their ads — based not only on age, gender and location, but also on details such as favorite activities and preferred music, people familiar with the matter say. Facebook would use its technology to point the ads to the selected groups of people without exposing their personal information to the advertisers.

This new breed of ads would be displayed as part of each user’s News Feed. What, like, these ads that I’ve been seeing for months (only, y’know, relevant)?

Now, of course, targeted advertising on Facebook is sure to have its detractors, just as some people who claimed that YouTube’s new InVideo ads aren’t relevant to their viewers (even though they can be targeted by age, gender, location, genre, interest and day part) or are a huge step backwards (even though they’re miles better than pre- or postroll and only interrupt the video for 10 seconds).

To Facebook (and YouTube) advertising detractors I say: Get over it. The fact of the matter is that users of these sites receive quite a bit of benefit from these sites—for free. Facebook’s creators and investors aren’t exactly philanthropists—they’re not spending millions of dollars to make sure you and your friends can plan teh beast partay EVAR!!!1! Advertising is what it takes to bring users a free site without running its creators into bankruptcy (and if they make a buck—hey, we all have to eat).

Some would also claim that using the information which users freely and openly disclose to Facebook (and its entire gated community of potential identity thieves and perverts) as leverage for advertisers is an invasion of privacy. (Even though, as the WSJ says, “Facebook plans to protect its users’ privacy and possibly give them an option to keep certain information completely private.”) The point of targeted ads is to show you ads that you might actually be interested in. There’s no benefit to advertising on Facebook if they can’t provide their advertisers with a “prequalified” audience.

If you don’t want to receive targeted advertising you can a.) provide no personal information in your profile (gender, age, location, interests, etc.) and b.) settle for receiving completely irrelevant ads. Because either way, you’re getting the advertising.

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