In just a few short years Facebook has grown to become a central part of our daily lives. Dr Karen Nelson-Field explores the business that drives one of the world’s most successful social networks.

With active user numbers now at more than one billion, it is little wonder that when it was revealed that Facebook had been, what some would consider, a bit naughty recently by secretly offering a platform for a “mood manipulation” study conducted by three United States universities (apparently all done in the name of improving the user experience), the global reaction was one of swift condemnation.

But while we may be concerned about the wider ethical issues around such a study, as ‘seasoned’ users of Facebook should we really be so surprised by the episode?

In all our addiction to funny photos, comments on causes, holiday snaps, news of hatches and matches – that cozy sense of connectedness it offers in our busy lives – perhaps the pure genius of Facebook has been to make us forget it is a business.

Many users still don’t really understand how much information they are inadvertently revealing on Facebook and what Facebook then does with the information.

This goes far beyond basic account details such as your name, gender and birthday; it even goes beyond demographic targeting based on your relationship status, your work information and your interests (i.e. pages you have liked).

Did you know that every single Facebook entry you make, of any type, on either your or your friends’ pages are now being offered to advertisers in exchange for advertising revenue, and that even when you are not logged on to Facebook you are being tracked?

A few years ago wised-up users started not only to pare back the amount of time spent on the site, they also began to get more considered about which and how many brands they befriended. Of course this has had implications for advertisers.

Major advertisers started retreating, asking some tough questions about advertising effectiveness on Facebook and the newly floated company saw its share value slide.

In an effort to counter the worrisome spiral, Facebook has made some radical changes to monetise its advertising model and lift revenue quickly. And it has done so successfully.

You may be asking why you should care. Well, for an average user, like me, it means a lot.

There are a couple of changes that are, in my opinion, both the most exciting for marketers and at the same time the most concerning for users.

The real-time advertising marketplace is now here. This means marketers can now target users based on their web browsing.

So when you go onto an external website (unrelated to Facebook) a “cookie” can be dropped on your browser and then when you re-open Facebook, the cookie is recognised and cannily you can be confronted with a very specific advertisement related to that recent search.

For example, if a user has searched “SUV” and then goes on Facebook, automotive advertisers will be able to serve that person advertisements for SUVs on Facebook. Perhaps you have noticed the convenient relevancy, most have not.

This goes as far as what music you listen to and what apps you use. At the hub of the technology is the Facebook Exchange.

Facebook has partnered with several ad-buying giants and now advertisers can fully access the data you have generated as a result of being a Facebook user. According to Facebook, the Facebook Exchange offers advertisers a platform that ‘helps you reach people who have expressed an interest through their online behaviour so you can reach them with a similar kind of product or service.’ From a marketing perspective they are right! This is cutting-edge technology to ensure an advertiser gains high-quality reach AND relevance – a combination unparalleled by its traditional counterparts.

While this is all good news for advertisers, many people have raised concerns about the privacy implications of this new feature.

Yes, you can still opt out or disable cookies, but the task is cumbersome and instructions are difficult to access.

This all comes down to informed consent.

There is some talk that soon marketers should also be able to target users based on story keywords. This means when you are personally connected to any text (i.e. when you write in your status, or in your friend’s feed, are tagged in photographs that have comments, or have RSVP’d to an event with text details) words are tracked and can be sold as targeting hashtags.

Typing in ‘I could go for some pizza tonight’ may well result in you being served an advertisement with a coupon from the local pizza shop.

And did you know that Facebook has an audience targeting system that allows an advertiser to target you based on your email address, phone numbers and app user IDs? Custom audience targeting is designed to enable an organisation to target you to become a brand fan if they have already established a relationship with you off Facebook.

Facebook suggests it can achieve this without violating user privacy, or spilling personal information, by digitally disguising it.

At the end of the day, the onus is on the user to be aware of the Data Use Policy and the Privacy Policy, as noted in Facebook’s Statement of Rights and Responsibilities:

“For content that is covered by intellectual property rights, like photos and videos (intellectual property content), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any intellectual property content that you post on or in connection with Facebook (Intellectual Property License).”

Facebook’s mission is to ‘give people the power to share and make the world more open and connected’, and yes, it hits the target.

What we need to remember is Facebook gives that power to all kinds of people – supermarkets, car retailers, dating agencies, charities, and now apparently even researchers in universities.


Dr Karen Nelson-Field is a Senior Research Associate with the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia. Author of the book Viral Marketing: The Science of Sharing, Dr Nelson-Field’s current research examines whether existing empirical generalisations in advertising, buyer behaviour and media hold in the social media context.


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