Facebook is the largest social networking site in the
world. Founded in 2004 by Mark Zuckerberg, the site
had over 500 million worldwide users as of October
2010, and has long since surpassed all of its social
networking peers. Facebook allows users to create a
profile and join various types of self-contained
networks, including college-wide, workplace, and
regional networks. The site includes a wide array of
tools that allow users to connect and interact with
other users, including messaging, groups,
photo-sharing, and user-created applications.
Although the site is the leader in social networking,
it has waged a constant struggle to develop
viable methods of generating revenue. Though many
investors are still optimistic regarding Facebook’s
future profitability, it still needs to adjust its business
model to monetize the site traffic and personal
information it has accumulated.
Like many businesses of its kind, Facebook makes
its money through advertising. Facebook represents
a unique opportunity for advertisers to reach highly
targeted audiences based on their demographic
information, hobbies and personal preferences,
geographical regions, and other narrowly specified
criteria in a comfortable and engaging environment.
Businesses both large and small can place advertisements
that are fully integrated into primary features
of the site or create Facebook pages where users can
learn more about and interact with them.
However, many individuals on Facebook aren’t
interested in sharing their personal information with
anyone other than a select group of their friends on
the site. This is a difficult issue for Facebook. The
company needs to provide a level of privacy that
makes their users comfortable, but it’s that very
privacy that prevents it from gathering as much
information as it would like, and the more
information Facebook has, the more money it earns.
Facebook’s goal is to persuade its users to be
comfortable sharing information willingly by
providing an environment that becomes richer and
more entertaining as the amount of information
shared increases. In trying to achieve this goal, the
site has made a number of missteps, but is
improving its handling of users’ privacy rights.
The launch of Facebook’s Beacon advertising
service in 2007 was a lightning rod for criticism of
Facebook’s handling of its private information.