Exploring Facebook's Business Model
14 Jan 2009 in Amusements
After resisting the pressure for months (years?), managing editor Richard Belzer on Sunday succumbed and joined Facebook. I rationalized it as a research project, of course.
To get over 100 million people to sign up, Facebook clearly offers something of value to its users. Moreover, the service is free.
Facebook depends on advertising, which to be effective must be carefully targeted. How can Facebook do that? Certainly it could electronically analyze its customers messages for clues and use that information to assign each customer into an N-dimensional category of interest to various advertisers. Until today, the only advertisements I saw concerned retirement property (Facebook knows my age), anti-snoring aids (ditto), and an ad inviting me to advertise (Facebook knows I am both self-employed and run two nonprofit organizations).
I had left blank most of the personal information Facebook invites customers to provide, because the simplest way to test hypotheses is to change exactly one variable at a time. Facebook asks for some potentially sensitive information including political and religious affiliations. Marketing toward these characteristics being something I do not need, I entered nonstandard or ambiguous classifications: "Monarchist" for political affiliation and "Reformed" for religious affiliation. Facebook tried to assign me to an established category for "Reformed ..." but I declined to choose one. And either Facebook lacks a category in its database for "monarchist" or there are no sellers of crowns, scepters, guillotines, and similar accoutrements of absolute power.
Today I entered "wine" as an interest. This is hardly private information to many of my Facebook "friends," and it is nothing to hide from the thousand or so "friends" I now have who hardly know me. After all, I am a member of the American Association of Wine Economists -- an affiliation I proudly include on my CV.
Suddenly the advertising directed to me has changed. I am still being sent ads for coastal retirement properties and anti-snoring aids, but now I get ads for companies that sell wine and cheese, and one company that wants to help me make my own vanity wine.
So far I have found none of these ads burdensome or offensive, and there is a high probability that I will click on some of them. Mrs. Neutral Source says I need an anti-snoring aid.
