Facebook’s IPO has put it under intense pressure to produce profits that could justify the $100 billion valuation. Well, this one might be its first “killer app.”
Notice your friends’ faces and “likes” starting to pop up on the right sidebar reserved for ads (under the Sponsored label)? They’re there because your friends have “liked” these brands at some point. It’s just now the “likes” are surfacing at an increasing rate because the businesses behind them have figured out something that eluded them with Facebook advertising for a long time: that people do not pay attention to ads on Facebook. However, if there’s a familiar face or name endorsing a product, brand, or page, those ads are much more valuable in terms of engagement. So, they’ve paid Facebook to turn your friends’ innocent “likes” into ads.
[The image above is actually from my Facebook News Feed. The identities of my friends have been removed to protect their innocence.]
What’s the problem then?
For some people, not a thing. To them, that’s just the nature of the beast. Your information and preferences are the currencies with which you can exchange for the free usage of much of what the Internet has to offer. Facebook allows you to connect to and keep track of friends and families, any time, anywhere — for free! All you need is a computer or mobile device and an Internet connection. In exchange, you’ve agreed to allow Facebook and its advertisers to use your information to entice your friends and families to buy things. That’s the grand bargain between you and Facebook.
After the IPO, however, the drive to increase profit is no longer just an option for Facebook. It’s Facebook’s duty to make money for its shareholders. Where should the line be drawn, then? Should all your “likes” become ads at some point? Should everything you do on Facebook become ads at some point? Will Facebook become one giant network designed to compel you to buy more stuff?
The key to all this is realizing that there’s no such thing as a free lunch. You’re paying for everything you do on the Internet one way or another. The only remaining question is determining the price for your personal information.
[On the other hand, brands and advertisers now have a very effective tool to reach customers. I hope they don't abuse it.]