We hate to be the bearers of obvious news, but Facebook is making money off of your profile. Yes, even the new and improved and so far sort of confusing Timeline edition. How much money, you wonder? Lots of money.
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In a lengthy guest post topped with an "Exclusive" alert and filled with bold-face type, an anonymous BetaBeat contributor described as "a former CTO who now does tech consulting for other start-up ventures and was briefed on Facebook's advertising strategy" offers what appears to be a very sensational claim: Facebook designed the Timeline not for you to tell your life story better but for advertisers to inject their brand messaging more aggressively into your life story for all your friends to see. The nut graf with BetaBeat's emphasis preserved:
What most users don’t know is that the new features being introduced are all centered around increasing the value of Facebook to advertisers, to the point where Facebook representatives have been selling the idea that Timeline is actually about re-conceptualizing users around their consumer preferences, or as they put it, "brands are now an essential part of people’s identities."
We contacted Facebook to clarify exactly what revelations were to be had in BetaBeat's scoop, and they denied that there was any real news in it. Yes, Facebook is introducing new ad products that help brands better connect with Facebook users. No, they're not trying to hide anything. "Timeline doesn't change anything for advertisers because we don't share anyone's personally identifiable information with advertisers," a Facebook spokesperson told The Atlantic Wire. "Like with all products, we try to help advertisers understand how they work, but this is nothing new.”
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The BetaBeat piece is pegged to this new announcement from Facebook that explains how Facebook ads work. The company admits, "Facebook makes most of its money through ads -- here's a quick example to show you how it works." Go ahead and click through; there's a 90-second video that explains how "last year, it cost over a billion dollars" to run Facebook but thanks to advertisers, it's free for you to use. "The ads and promotions you see on Facebook are designed to be useful, not disrupt your experience," the nice-looking lady in the video explains. If you don't want to go watch Facebook's video, here's a 3-second visual summary:
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How simple is that!? Well, it's obviously not that simple, and as Anonymous Former CTO explains at BetaBeat, Facebook will soon be complicating the ad delivery system quite a bit with something called "Sponsored Stories." (The name reminds us of Twitter's fairly innovative ad product, Sponsored Tweets, but that's beside the point.) Unsurprisingly, these stories will show up in your Timeline. Anonymous Former CTO writes, emphasis preserved:
The name itself is cleverly designed to conceal the fact that your profile no longer arranges information chronologically. Yes, things are laid out by year and by month. But, when it comes to what’s displayed to your social circle at any given time, other metrics, including direct payments to Facebook itself, will now influence the ranking and placement of stories. This payola will be a crucial part of the graph rank, the new metric for placement that the social network uses to determine what appears on your profile.
Terms like "graph rank" are pretty shop-talky so we'll translate: Facebook has a formula that targets ads for maximum impact. This is how they charge advertisers bajillions of dollars to reach Facebook users, and this is why advertisers seem thrilled to pay up. It makes total sense for everybody involved, right? Privacy concerns aside -- we'll get to that in a second -- targeted ads can be a good thing. They give marketing teams hope that they will leave a more lasting, more positive impression of the product or service advertised. Targeted ads also provide the consumer with greater utility. If we're into riding bikes and we see that our local bike shop is having a sale on our favorite kind of tires, we'd find it useful to know that. It's better than being prodded constantly by blaring banner ads telling us to get our teeth cleaned.
So about those privacy concerns. Facebook has a pretty crumby record of explaining how things work to its users. One of the social network's earliest ad products, the now notorious Beacon program, created a collective uproar among users and civil rights groups alike for selling into people's personal details to advertisers without giving the user much of a choice. As CNET's Caroline McCarthy pointed out a couple years ago in a useful post-mortem on Beacon's many failures, the program eventually created the foundation for Facebook Connect which later led to the Facebook Open Graph which comes together in the highly designed interface that is Facebook Timeline. We're tempted to believe that BetaBeat's Anonymous Former CTO is reminding us of Beacon's potentially illegal invasions of privacy, closing out his post with a dooming observation: "How long users will tolerate this is unclear." He points to one of Facebook's many, privacy-related lawsuits. We mentioned recently that Facebook seems to be doing a better job of explaining things, but time will tell.
We'll leave it to you either to get upset about Facebook's new more relevant but potentially more invasive advertising strategy. You might also be stoked to learn about great deals on bike tires (those things are expensive!) But remember one thing: you don't have to participate in Facebook.