Unless you have been asleep on the moon for the past couple of months, you can’t have missed a financial news story big enough to squeeze in past the latest Spanish banking headlines: Facebook is now a publicly traded company, having sold $16bn in equity via their initial public offering on the stock market in May.
So, what does this mean for us as Facebook users? Well, you can only answer that from the point of view of Facebook’s business model, which most of us don’t want to think about. We love Facebook because it gives us all this stuff to share with, and helps us keep in touch with our friends and make new ones – we’d rather not look to closely at the financial facts, which is that Facebook now more than ever needs to make money out of us.
No, they are not going to start charging us for use of their platform, that would be a suicidal U-turn. Their approach has always been to encourage us to use the site more and more and in new and different ways… because the more we do so, the more Facebook knows about us, the more value that information has to them for sale to advertisers. Everything we share on the platform is a commodity for Facebook, in the same way that Google uses our search profiles to sell the most targeted adspace in the world.
Of course, you have read all the Costa Connected articles about how to manage your Facebook privacy settings – and don’t worry, because those settings have not been amended, Facebook is not going to start revealing your personal stuff to anyone. But they will use you in any other way that they can. And the way things work on Facebook is all about word of mouth sharing and recommendation – that is where I think we can expect to see changes coming.
Because Facebook needs to generate revenue fast, their income streams are just not as good as their initial investors had hoped – indeed, some are trying to prove legally that they were mislead on that. Some big advertisers like General Motors in theUS, are jumping ship, taking huge amounts of budget with them. Traditional Facebook ads just aren’t very noticeable, in fact a recent training seminar I conducted for intermediate users who were setting up business pages, there were people who could not point to where on the Facebook page ads appeared! I think we tend to go blind to them in the same way we do to Google ads (which are also losing money).
So, as shareholders demand Facebook make its ads work better to so as to squeeze some dividends out of us poor users, what can we expect?
Well, to get more effective, ads are going to have to become more prominent. But without annoying users and ‘doing a Myspace’. They cannot afford to frustrate us cash-cows into quitting, in fact they want to encourage us all to share more – frictionless apps to feed what we are reading, where we are running, the music we are listening to, all create more valuable marketing content for them to sell – not naming us individually in ways that would breach our privacy, but in aggregate whether as research trends or to help marketers target us better.
Look out for changes in terms of sponsored stories, and more attempts to use your name and photo and your Facebook actions to try and push sales to your friends – you’ve already seen these on ‘Like’ boxes: ‘Joe Bloggs and 2700 other people Like this’, when you’re not even logged in to the site.
Also, promoted posts are now on offer to a growing number of Facebook Page owners. Most of us set up Facebook Pages with the understanding that content you post there reaches the news feeds of those who have Liked your Page, but a close look at the analytics reveals that the penetration is actually far lower, maybe around 10%… and definitely falling. But now, Facebook will SELL you the chance to promote your post more highly in the newsfeeds of your followers, for a quick fixed fee that is far easier to understand than the Gordian Knot of pricing for bids on CPM display ads…
So, to recap – nothing has changed in Facebook’s complicated but effective privacy agreements with you as a user. But, watch out for them trying various innovative ways to reach around those agreements to find new ways to make some money out of you!
If you are worried, read the Terms of Service in full (or re-read them, as you obviously read them on sign-up, right?) – but above all make sure your privacy settings are watertight and correct and that you don’t give away too many rights to third party apps. Check what each thing is asking permission to access and share, opt out of anything inappropriate, and you will be fine.
Published in Costa Blanca News, 15th June 2012