Facebook cashing in on user data

Facebook’s ad revenues doubled to US$2 billion in 2010, and are expected to double again this year, thanks to the site’s treasure trove of user data, The Slatest reported yesterday. The social networking site is focusing on mining this data, leading many experts to believe this growth rate could continue for at least the next five years.

The site has more than 600 million users, and the average user spends seven hours a month on the site, The Los Angeles Times reported.

All this activity is being tracked by Facebook, which sends targeted ads to users based not only on their interests and demographics, but also on what they type to their friends. Because people share this information freely and often, Facebook could become “one of the most powerful marketing tools ever invented,” the article states.

Facebook says it doesn’t disclose information that would let advertisers identify individuals, but rather filters them by geography, interests, or age. However, privacy advocates say the practice is no different from eavesdropping.

Businesses are experimenting with social media strategies, and aren’t likely to back away from Facebook anytime soon, despite a report earlier this month that found a company’s presence on a social network was less effective than paid search and e-mail marketing.

“Companies are recognizing the power of being able to target ads and, in February, more than one-third of U.S. online display ads appeared on Facebook.,” according to Slatest.

Image: Targeted Facebook ads

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This entry was posted in Advertising, Facebook, Social media, Targeting. Bookmark the permalink.

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