Facebook recently went vocal about how its advertising programme works and why it's important to run ads on Facebook.
The company explains that it's ads helping keep Facebook free. "From the beginning, the people who built Facebook wanted it to be free for everyone. It now costs over a billion dollars a year to run Facebook, and delivering ads is how Facebook pays for this", the Facebook micro site says.
Right after the almost shocking revelation of operational costs, Facebook puts more effort to explain ads in details. In particular Facebook addresses the following three questions:
Is it true that Facebook sells my name and contact info to make money?
No. Facebook does not sell your personal information. Instead, Facebook makes its money from showing you ads. Selling your information would actually be bad for Facebook. Here's why: Facebook was created to help you share and connect with the people in your life. If you don't feel like you're in control of who sees what you share, you probably won't use Facebook as much, and you'll share less with your friends. Not only is that bad for Facebook, it's also bad for you. That's why only the people you choose to share with see your stuff.
What's the deal with sponsored stories? How are they different from ads?
Your name or profile picture might appear alongside certain types of ads and sponsored stories:
1. Facebook Ads A business creates an ad to promote its message. If you've liked that business's page, the story about you liking the page (including your name or profile photo) may be paired with the ad your friends see.
2. Sponsored Stories A business pays Facebook to feature existing posts and activity that mention the business. Sponsored stories don't include additional messaging from the sponsor. Like Facebook Ads, they're only visible to friends you've already shared this information with.
I never click on ads, so why do businesses pay Facebook to show them?
Businesses want to get their message in front of the right people. They pay Facebook to deliver ads to people who might be interested – whether or not those people click on the ads.
Facebook has a video online explaining their ad system and how businesses and user can mutually benefit from it. In the meantime, according to rumors Facebook is about to start showing sponsored stories in news ticker and delivering ads on Facebook mobile starting early 2012. Click here to watch the video and learn more about Facebook ads.