Mark Zuckerberg recently testified before the U.S. Senate Committee on Commerce, Science and Transportation regarding the use of personal data by Facebook, which is the world’s largest online social network with more than two billion monthly active users. Those users engage with each other by exchanging messages, sharing news, events, photos and videos.
While Facebook promotes its social media platform as being free of charge to users, the company is no charity or not-for-profit. It is a public corporation listed on the New York Stock Exchange, with a massive market capitalization of $450 billion, annual revenues of $40 billion, and generates net profit of $15 billion. Facebook’s wunderkind Zuckerberg, at only 33 years old, has a net worth of $66 billion!
Facebook makes its money through advertising, which represents 90% of its total revenue. It’s naïve to think social media is not related to advertising. Social media is advertising! Social media is actually a euphemistic way to describe online advertising.
Advertisers pay Facebook over $35 billion a year to advertise, and to promote their products and services. Facebook users freely provide content fodder with their personal information, interests, photos and videos. Most of them do not read the detailed agreement for users; they simply scroll down the text, check the agree box, and hit ‘send.’
While Zuckerberg endured some tough questioning at his hearing, his company has not done anything illegal. Facebook sells information that people willingly provide or agree to release.
What is happening today is that advertisers are transferring their advertising dollars from other traditional forms of media to social media. This sort of thing has happened before. Radio did it to print newspapers years ago, and by the same token, TV did it to radio and cable did it to commercial TV. Now, the online space is doing it to TV.
Virtually any medium can be used for advertising – billboards, signs, shopping carts, popups, even human billboards and skywriting. The attraction of the online world is that advertisers can target their audience with greater accuracy because of personal profiles, preferences, and interests coupled with the ease with which you can place an order online. Impulse buying never felt so gratifying, especially when prodded by such well-sourced advertisers.
The real need today is for regulations and laws to catch up with online advertising. While I am not a fan of regulations, they are needed when the objective is business for profit. There are regulations for almost everything – credit cards, insurance, food and beverage products, direct marketing and telemarketing, and to that we can add employment standards for safety, transportation, and the whole world of taxation. The list is long.
But, it’s high time that regulations are introduced in the online arena to protect a younger generation from abuse, and from being vulnerable to a digital world with a new form of advertising disguised as free. Because, it’s not.