So much in the online world is free, but ‘free’ comes at price.
If you are not paying to use a product, then you probably ARE the product.
Take Facebook for example.
Firstly, your use of Facebook creates the pages that carry advertising targeted to you. The bigger the pages, the bigger the space to carry ads to reach you on Facebook. (Hmmm…. Could the Facebook Timeline approach be a way of getting you used to having larger pages with more ads? Yep, you can count on it.)
Secondly, Facebook uses the personal information you freely add to enable its advertisers to reach you. Most of us don’t mind that. After all, Facebook is free for us to use.
Who Responds To Facebook Ads?
Do you respond to Facebook advertisements? Do you click on them? comScore’s blog talks about clicks being “a poor measure of performance – particularly for brand advertisers – because focusing on the 0.1% of ads that are clicked ignores the impact of the other 99.9% of exposures.”
Getting advertising messages in front of eyeballs has benefit, even if the response is not immediate. This has been the basis of advertising for years. Turning Consumer Ignorance to Consumer Awareness is the first part of the advertising process, and all the better if it doesn’t cost much – or anything – to reach people, especially fans.
If a business can target its fans, then it can turn those fans into new or higher value repeat customers. That’s the theory.
But here’s another stat from comScore. Friends of fans represent a much larger set of consumers than a brand’s fans – 81 times larger, on average, for the top 1000 brand pages. (You can read more in comScore’s White Paper here.)
Here is a video from comScore that introduces their white paper. It’s well worth a look, especially if you are wondering whether the friends of fans are different to typical internet users.
One of the Action Principles of the Digital Age is ‘leveraging’. You can get plenty of leverage – or amplification – with this 81x multiplier effect. As comScore say, what makes it “truly powerful isn’t just the reach of a brand’s message to friends of fans, but the influence fans have on their friends. Fans are of course more likely than the average consumer to have an affinity to the brand and purchase from it, but our research shows that so too are their friends.”
The Money-Making Business of Likes
Today I came across an interesting story in the New York Times, which explained how in Facebook’s quest to make profits, it is now turning your “Likes” of businesses, brands and products into advertising revenue.
Yep, when you tell Facebook you Like something, Facebook is now using that ‘Like’ to generate automated advertisements for the business you Like – and displaying those ads as Sponsored stories in the news feeds of your friends. (This is of course, only for those businesses who pay for this extra Facebook advertising service.)
Being in the news feeds, these sponsored stories (i.e. ads) also appear in the news feeds for mobile users, many of whom don’t see other ads from Facebook on their mobile devices.
It’s all automated. And users can’t opt out of seeing these ads in their news feed.
As the NYTimes reported, Facebook “has told investors that consumers were 50 percent more likely to recall an ad if it came with a plug from a Facebook friend.” Eric Goldman, an associate professor at the Santa Clara University School of Law, says “Facebook interprets a “like” as a statement of a user’s attitude and a “green light” to create an ad.”
But this advertising approach by Facebook is not Liked by all users. “Users do not always realize that the links and “likes” they post on Facebook can be deployed for marketing purposes. And Facebook has already agreed in principle to settle out of court a class-action lawsuit over the practice in California.” (NYTimes)
Facebook will become increasingly keen (and then desperate) to monetize its users and the information we freely provide. Facebook has a track-record of being very loose with privacy and the personal information it holds, but Facebook’s abuses of privacy will probably be masked by its cleverness in its targeting for advertisers.
1. Facebook will try to win with greater profits.
2. Advertisers will try to win with smarter targeting, especially by amplifying messages to the Friends of Fans. And
3. Consumers will continue to create the products Facebook sells to these advertisers.
We ARE the product, even if we don’t Like it.