The profiles of users are a gold mine of incredibly valuable data for Facebook and other social media sites.

Facebook earns an average of NZ$5.31 quarterly from each of its 1.65 billion regular users by sharing their information with third parties, particularly alcohol companies. That’s how other social media platforms work too. Check out the ways Facebook generates revenue from its users.

In short, Facebook collects every bit of data from you it can through your profile, likes and online activity and uses that data to target ads at you.  If you would prefer that Facebook, and the brands it sells your information to, don’t know what you’re into, you can easily remove interests and other personal info from your profile. You can also change your settings so your info and activity doesn’t get passed on to companies. A 2016 article in the Independent explains how Facebook makes money from the information it collects about you.

Couple with $ on shirts

Users are worth a fortune to Facebook.

Globally, the average user earns Facebook NZ$21.24 a year in advertising and other fees. A user’s dollar value depends on their geographical location - those in the US and Canada are worth the most to Facebook, each netting the company NZ$85.06 per year (Facebook).

Alcohol companies make millions of dollars of profit by targeting young adults on social media sites. Recent years have seen exponential growth in alcohol brands advertising on digital platforms. For example, 25% of Heineken’s marketing spend is on digital, while the brand’s marketers work in partnership with platforms such as Facebook and Twitter “to build mini profiles of users to target its ads against” (Johnson, 2015).

Diageo (an alcohol multinational that owns Smirnoff and Johnny Walker among many other brands) is another company that has embraced marketing via Facebook, with individual pages for each of its 30 brands. Companies such as Diageo send their marketing executives to Facebook’s social marketing bootcamps because it is incredibly lucrative for them to do so (Schulz, 2011).

You can read about how Diageo have “forged a particularly close bond with Facebook” in order to promote their products to ever growing numbers of young people.

Intense marketing via social media has helped net Diageo billions of dollars in profit (more than NZ$6 billion in 2011). “Facebook is now just a central part of all our campaigns” says Diageo’s chief marketing officer (cited in Nhean et al., 2014). Their marketing executive, Andy Fennell explains that targeting Facebook users saves Diageo millions in ‘traditional’ media costs, such as television ads. He uses the example of a recent advertisement “which had 250,000 views on Facebook before we'd even launched it on TV. Bang. Drove sales. Drove equity. Andy’s happy” (Hall, 2012).

References:

Hall, E. (2011). How Facebook Became a ‘Central Part’ of All Diageo’s Campaigns.  Advertising Age. http://adage.com/article/cmo-interviews/facebook-a-central-part-diageo-s-campaigns/236491/

Johnson, L. (2015). With Better Targeting, Alcohol Brands Bet Big on Digital. Adweek. http://www.adweek.com/news/technology/better-targeting-alcohol-brands-bet-big-digital-165357

Nhean, S., Nyborn, J., Hinchey, D., Valerio, H., Kinzel, K., Siegel, M. & Jernigan, D. H. (2014). The frequency of company-sponsored alcohol brand-related sites on Facebook™ –2012. Substance Use & Misuse, 49(7), 779-782. https://jhu.pure.elsevier.com/en/publications/the-frequency-of-company-sponsored-alcohol-brand-related-sites-on-3

Schulz, E.J. (2011). Diageo chases fans’ loyalty with help from Facebook. Advertising Age. http://adage.com/article/special-report-social-media-guide/diageo-chases-fans-loyalty-facebook/229821/