What is Facebook targeting exactly and how do they do it
Facebook has 1.71 billion active monthly users – the biggest database of users ever seen on the web. Facebook’s also likely the biggest database of names in the history.
When it comes to the company making money from this massive social network, it’s about gathering user data and figuring out your interests based on your activity on the platform. This is what Facebook does very well and in fact the whole platform itself is well fitted to do this.
Every time you go on the site and like or share a post, Facebook takes that into consideration and adjust your information to display the most relevant ads to you. This is the standard in the online display ads industry and utilized by all of the big tech companies like Google and LinkedIn.
The business case
The reason why Facebook and other companies utilize this sort of method is the fact that they get enormous amounts of page views. Facebook with 1.71 billion active monthly and 1.1 billion active daily users, experiences hundreds of billions of page views every single day.
The best way to monetize them is of course advertisement but unfortunately for Facebook, they don’t have the option of tapping into an existing ads exchange network and so they have to create their own advertisement network. Facebook ads compete very well, they are very cheap and the publishers are seeing nice returns.
For Facebook the page views are essentially infinite and so the profit margins even for these small sums are massive and of course they add up for massive profits. No wonder the market cap of Facebook is 358 billion as of August 2016.
To increase the returns seen by the publishers, Facebook collect the user information to provide highly targeted users to display ads to on this enormous social network and global corporation.