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How are social networks making money?

Annie Wakefield
Digital Marketing Manager
6 May 2010
Is Social Media making money off you?
Social media platforms such as Facebook, Twitter, Flicker and so on are useful tools. We use them for many reasons, such as keeping in touch and sharing information. But they are also ultimately businesses, and they need to make money.  As a social media user, you are availing yourself of a service. One that somebody has to pay for.
And if you aren’t paying in cash, you could be paying in personal information.
While some people still wonder how Facebook makes money, others reckon the answer is obvious: Facebook’s database is pure marketing gold.
Surely, you think to yourself, Facebook wouldn’t sell my details? The facts unfortunately suggest otherwise.
Facebook has made three attempts to monetise its database. In 2007 Beacon linked commercial sites to Facebook and was presented as a new sharing tool. But it also enabled companies to access users’ personal details. This resulted in a class-action lawsuit and Beacon was shut down in September 2009.
In December last year Facebook changed its privacy settings. Also known as ‘Facebook’s Greatest Betrayal’ it forced previously private information out into the public domain. And then made it hard for casual users to update their privacy settings. If you aren’t a Facebook aficionado, you may want to check your privacy settings now…
Finally, Facebook recently introduced a series of additions called ‘social plug-ins’. Click the “Like” button on whatever website you, well yes: like, and all your friends will know about it. It’s no innocent gimmick though, as it reveals your details to companies that can then target you. With its new ‘like’ feature and ‘community pages’ Facebook will soon access every detail of the likes, dislikes, habits, love lives and shopping preferences of half a billion people. Or: half a billion advertising and marketing targets.
So the price of personalised browsing is exposure to commercial pressure.
Bryan Appleyard of the Times Online reckons if you want to avoid the attentions of data miners, there is only one thing to do: Lie. He says misdirection is the best ways to mess with the system. I’m not quite ready to change my gender, lie about my likes and invent odd interests, but Appleyard insists that “out there on the internet, lying is the new truth”.
But should you really worry about what other people, and brands, know about you? Well, yes. Your gender, address and date of birth are all that is needed to steal your identity. If you aren’t careful those details, and many others, can easily be found by anyone, not just brands looking to make a few quid out of you. Not to mention prospective employers eyeing those embarrassing pics and updates…
How to keep your details private:
- Do not permit children or young teens to use Facebook unsupervised. Educate older teens about the dangers of “oversharing” online.
- Be cautious about what you write and the pictures you post. Would you want a potential employer to see it?
- Avoid posting birthdates or including children’s names in photo captions or tags.
- Create a pseudonym and private email account for contributing to forums where you want to give your opinion or feedback anonymously.
- Check all your privacy settings to ensure you are only sharing what you want to with people that you want to. Stay up to date with privacy changes the application makes to these as time goes by.
- Remove any identifying “tags” from photographs or videos posted by friends of you or your family that you don’t want others to be able to access now or in the future.
- Restrict your friends’ lists on social networks to those you actually know – or reclassify them into different groups, each with their own appropriate privacy settings. Double-check the profile of new contacts or friends asking to join your network.
- Remove any activities, interests or regional data from your profiles that you don’t want people outside your network to know.
- Avoid broadcasting personal details or images that could identify your location or future movements.
- Use strong passwords for accounts to prevent them from being compromised, and switch off the option for your account to be found via a search engine.

Social networks such as Facebook, Twitter, Flicker and so on are useful tools. We use them for many reasons, such as keeping in touch and sharing information. But they are also ultimately businesses, and they need to make money.  As a social media user, you are availing yourself of a service. One that somebody has to pay for.

And if you aren’t paying in cash, you could be paying in personal information.

While some people still wonder how Facebook makes money, others reckon the answer is obvious: Facebook’s database is pure marketing gold.

Surely, you think to yourself, Facebook wouldn’t sell my details? The facts unfortunately suggest otherwise.

Facebook has made three attempts to monetise its database. In 2007 Beacon linked commercial sites to Facebook and was presented as a new sharing tool. But it also enabled companies to access users’ personal details. This resulted in a class-action lawsuit and Beacon was shut down in September 2009.

In December last year Facebook changed its privacy settings. Also known as ‘Facebook’s Greatest Betrayal’ it forced previously private information out into the public domain. And then made it hard for casual users to update their privacy settings. If you aren’t a Facebook aficionado, you may want to check your privacy settings now

Finally, Facebook recently introduced a series of additions called ‘social plug-ins’. Click the “Like” button on whatever website you, well yes, like and all your friends will know about it. It’s no innocent gimmick though, as it reveals your details to companies that can then target you. With its new ‘like’ feature and ‘community pages’ Facebook will soon access many detail of the likes, dislikes, habits, love lives and shopping preferences of half a billion people. Or: half a billion advertising and marketing targets.

So the price of personalised browsing could be exposure to commercial pressure. Doesn’t sound so bad, does it? But for some, privacy is worth more than what they receive in return from social networks.

Bryan Appleyard of the Times Online reckons if you want to avoid the attentions of data miners, there is only one thing to do: Lie. He says misdirection is the best ways to mess with the system. I’m not quite ready to change my gender, lie about my likes and invent odd interests, but Appleyard insists that “out there on the internet, lying is the new truth”.

But should you really worry about what other people, and brands, know about you? Well, yes. Your gender, address and date of birth are all that is needed to steal your identity. If you aren’t careful those details, and many others, can easily be found by anyone, not just brands looking to make a few quid out of you. Not to mention prospective employers eyeing those embarrassing pics and updates…

How to keep your details private:

- Do not permit children or young teens to use social networks unsupervised. Educate older teens about the dangers of “oversharing” online.

- Be cautious about what you write and the pictures you post. Would you want a potential employer to see it?

- Avoid posting birthdates or including children’s names in photo captions or tags.

- Create a pseudonym and private email account for contributing to forums where you want to give your opinion or feedback anonymously.

- Check all your privacy settings to ensure you are only sharing what you want to with people that you want to. Stay up to date with privacy changes the application makes to these as time goes by.

- Remove any identifying “tags” from photographs or videos posted by friends of you or your family that you don’t want others to be able to access now or in the future.

- Restrict your friends’ lists on social networks to those you actually know – or reclassify them into different groups, each with their own appropriate privacy settings. Double-check the profile of new contacts or friends asking to join your network.

- Remove any activities, interests or regional data from your profiles that you don’t want people outside your network to know.

- Avoid broadcasting personal details or images that could identify your location or future movements.

- Use strong passwords for accounts to prevent them from being compromised, and switch off the option for your account to be found via a search engine.

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