Facebook Doesn’t Make as Much Money as It Could—On Purpose

… the Facebook auction doesn’t maximize short-term revenue for the company. The goal is to show people only ads they want to see—ads that are just as enjoyable as everything else that shows up in your Facebook News Feed … the goal is creating value for the participants rather than short-term revenue [as] they believe it will maximize revenue in the long term.

“If you’re an advertiser and you’re getting a chance to show your ad, you’re going to take away the opportunity from someone else,” Hegeman explains. “The price can be determined based on how much value is being displaced from those other people. An advertiser will only win this placement if their ad really is the most relevant, if it really is the best ad to show to this person at this point in time.”

Source: Facebook Doesn’t Make as Much Money as It Could—On Purpose | WIRED

Really impressive approach to advertising from Facebook; this can only be done in a true marketplace — I don’t see how someone using an undifferentiated advertising market could do this successfully.



I’m a senior product manager for OpenTable’s consumer products. I focus on major features, including our loyalty program, diner profiles, social integrations, and new business exploration.