In an Internet-driven world, data matters, and people are willing to pay for data. Round up thousands of people, get some data about them and this data will be worth thousands of dollars, because on the Internet, data sells.
No one exemplifies this statement better than companies like Google or Facebook, who have built world-spanning multi-billion dollar businesses on the data they collect.
They amass billions of users, but that doesn’t get them any money. They earn money by selling the data they glean from these users. The services they offer are just a way to make users use their services, and when they use their services, they generate data, valuable data. They use this data to help advertisers target advertisements, and thus completes the cycle. For Google and Facebook, this data has been their primary revenue stream.
And Facebook, for one, has revenue growing year on year at an unprecedented rate, getting ahead of the analysts’ predictions. It userbase is still growing and sits at around 1.6 billion users, with around 989 million accessing the service daily. But the real star of Facebook’s earnings report is just that, its earnings. In the first quarter of 2016, Facebook raked in $5.4 billion. And whilst that figure itself is commendable, it becomes even more incredible when you compare it to revenues from last year, which is $3.3 bilion.
Facebook’s advertising system is working incredibly well, since it is accessible, affordable and dependable. Anyone can create an ad on Facebook, and its cost per 1000 impressions is the lowest in the industry. Plus with the data it has on its users, it is extremely effective. Often, it is more effective than its competitor, Google Adwords, and that gives Google some cause to worry about. Because while large brands will continue to use both channels, the smaller ones would choose the most affordable and effective one. And right now, that looks like Facebook.
What do you think?