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Facebook’s Growing Stature in the Online Ad Market

Collecting user data and using the information to target online ads to people, is Facebook’s business model. “Data misuse is a feature, not a bug”, Ethan Zuckerman writes for The Atlantic.


After having been criticized for his initial reaction to the Cambridge Analytica affair, in which he acknowledged his company’s responsibility in protecting user data but stopped short of actually apologizing, Facebook’s CEO Mark Zuckerberg took out full-page ads in several major newspapers on Sunday to make up for it. “We have a responsibility to protect your information. If we can’t, we don’t deserve it”, the ad opens, repeating a statement that Zuckerberg had already made last week. Only this time it leads to an actual apology. “This was a breach of trust, and I’m sorry we didn’t do more at the time”, the statement continues, referring to the harvesting of millions of Facebook users’ data in 2014 and the company’s idleness after learning about it.


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While Facebook promises to take better care of its users’ data going forward, many commentators rightfully point out that what happened, collecting user data and using the information to target ads to people, is Facebook’s business model in a nutshell. “Data misuse is a feature, not a bug”, Ethan Zuckerman writes for The Atlantic, only in this case it wasn’t used to sell people the right shoes but to manipulate their political views and stir division.

As the following chart illustrates, Facebook has had tremendous success selling personalized ads over the past few years. In 2017, the company accounted for 20 percent of the global online advertising market, second only to Google, arguably the one company sitting on an even larger trove of personal data. It will be interesting to see how the current debate affects Facebook’s advertising business in the long run. The company’s shareholders are certainly worried: Facebook’s share price dropped nearly 20 percent over the past ten days.

Infographic: Facebook's Growing Stature in the Online Ad Market | Statista You will find more infographics at Statista



Facebook’s Growth Is Fueled by Mobile Ads

Facebook’s strong mobile advertising business helped the social network beat expectations on both the top and the bottom line in the fourth quarter of 2017. Revenue grew 47 percent to $12.97 billion as the company’s profit increased by 20 percent even after accounting for an additional $2.27 billion in income taxes under the 2017 Tax Cuts and Jobs Act.

When Facebook started selling mobile advertising space in 2012, not even the keenest optimists could have predicted how lucrative this decision would turn out to be. Mobile advertising has accounted for more than 90 percent of Facebook’s revenue growth ever since and currently drives 88 percent of the company’s total revenue.

Infographic: Facebook's Growth Is Fueled by Mobile Ads | Statista You will find more infographics at Statista



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