Facebook’s Real Value
I’ve seen a lot of debate on Facebook, Twitter, news sites, blogs, comments on message boards/news articles, etc. about the IPO of Facebook. Many people are attacking the company as an over valued tech company and dismiss its future by comparing it to Yahoo. While I have my own issues with Facebook, their security, the constant interface changes, the expansion of the site from college students to the world, etc., I am forced to admit that it provides something far more useful than I imagined.
Facebook is the world’s largest and most comprehensive human behavior laboratory. They have an intimate understanding of 800+ million of the most affluent human beings on the planet and offer a far different product than Google, Apple, or Microsoft.
Apple, Microsoft, and Google has tapped into your internet behavior. They know where you go online. They know what you do. They know what you buy. They know how you buy it. They know when you email, when you call, and when you send messages. They know how you pay your bills. They know what ads you click. They know the things you like. They know where you live. They have all the data…. every last bit of it.
It’s floating data. Not all of your information across the web is connected. Multiple email accounts, different user names, search engine searches can be done without ever logging in, multiple users use the same iTunes in the same household computer, etc. It’s all fragmented. Anyone and everyone can access Google’s/Microsoft’s search engines.
In social networking, none of that data is fragmented. No one uses your Facebook account but you. For the most part, this is true of all users. Even if your Facebook “identity” is not exactly who you are in real life, how you interact with the site and what you chose to share is important.
Facebook knows where you live, where you work, how you log on, and when you log on. They know the types of friends you have. They know which people click on what ads. They know education level. They know age range. They can even determine your approximate income based on where you live, what is your listed education, they could data mine your statuses to figure out your field of work, and how your affluent/educated your friends are. This is beyond knowing favorite musicians, movies, and books. They know your traveling tendencies even if you don’t allow location check ins. They know where you log in, when you log in, and how you log in.
Take a trip… and log into Facebook… they know YOU are in that location. Even if you don’t log into Facebook during a vacation. If you post pictures and caption them, they can data mine and determine from the captions and comments where you were, what you saw, and what you did. If Google’s Shopper app can scan a book cover and tell me a price, Facebook can scan my picture of Whistler’s Mother and know that I was in Musee d’Orsay in Paris. You didn’t really think that Facebook’s security settings was to make sure your account wasn’t hacked was for you, did you? It’s more valuable to them to make sure that it is you.
Even if you don’t list your religious or political views, the news articles you post, comment on, or read goes a long way in showing what your slant is. Again, they can data mine your comments and statuses. Bible passages? Racist comments? ACLU links? Critical comments on politicians? They know all this about you… and all your friends and family.
Who are Facebook users? The base was primarily university educated young people. Who do you think their connections are? Their family and friends of similar education background and socioeconomic status. Who can access Facebook and spend time on it? Not obscenely poor people without internet access. Where is Facebook’s deepest penetration? All the developed countries in the world. What we’re really talking about is 800+ million of the richest human beings on earth.
With nearly a decade of data of 800+ million subject participants, they are sitting on a stockpile of ground breaking sociological, anthropological, and psychological data on modern society’s people with the most discretionary wealth. It has data that would take several generations to study.
If you find Don Draper an advertising genius who knows exactly how to hit the sweet spot, Facebook is Don Draper the Supercomputer. They can sell to the highest bidder an intimate understanding of the majority of the rich people on earth and how to tailor anything to those consumers.
Think of it this way, travel agencies know where you go to, how you go, how long you go, and where you stay. Facebook knows all that, but they also know who you visited, what you visited, what you thought was important enough to share, and pair all that information with your own network… or people of your income level… people of your work place… people of your education level… people of your region. They know more about your travel than any booking agent would ever know.
Facebook may not have any impact on the prices of commodities like oil, natural gas, electricity, precious metals, etc., but it is tapped into every level of human behavior and that information can ultimately be used to target the world’s richest consumers.
Only 12% of Facebook’s revenue comes from gaming giant Zynga. Facebook isn’t Yahoo, Google, Microsoft, or Apple. They aren’t selling services. They aren’t selling product. They are selling the most intimate understanding of human behavior of the richest consumers in the history of mankind to all the corporations of the world.
Information is power. Are you scared yet?
**Edit** Even if you believe half the accounts on Facebook are fake, the sheer number of highly educated wealthy human beings is still breathtakingly large. There is so much data to be gleaned. If interconnectivy wasn’t important… check your Google search history. That’s right. Google Search history. http://www.Google.com/SearchHistory When you’re logged onto your Google Account in any form… unless you opted out… it keeps your search history.