The social-networking company is collecting and analyzing consumer data on an unprecedented scale.
Facebook recently introduced its Timeline interface to its 850 million monthly active users. The interface is designed to make it easy to navigate much of the immense amount of information that the social network has gathered about each of its users—and to prompt them to add and share even more in a way that's easy to analyze.
Facebook's motivation is to better target the advertisements that are responsible for 85 percent of its revenue. In part, successful targeting is a numbers game. If reported trends have held steady, Facebook's data warehouse was adding 625,000 terabytes of compressed data daily by last January. Timeline's new features are bound to boost that number dramatically, potentially providing Facebook with more personal data than any other ad seller online can access.
In the past, much of the data that users contributed to Facebook was in the form of unstructured status updates. The addition of a "Like" button, and the ability to link that button to third-party websites (see "TR10: Social Indexing," May/June 2011), provided somewhat more fine-grained information that could be used for targeting ads. Timeline goes well beyond that, prompting users to add an extensive array of metadata to their updates, which makes mining value much easier. And by design, it encourages users to revisit and add more information to old updates, or retroactively add completely new biographical information.
One way Timeline gets users to add marketable meaning is by asking them to categorize their updates under a broad collection of "Life Events," which includes tags for actions like buying a home or vehicle. A user who notes a vehicle purchase is prompted to specify details such as the type, make, and model year of the car, along with when and where the purchase was made and whom the user was with at the time. Connecting the dots, Facebook may determine the gender, income bracket, educational level, and profession of the kind of person likely to buy a specific car.
This growing trove of data is a bonanza to marketers, but it's also a challenge for Facebook, which must keep up with the flood of bits. Approximately 10 percent of Facebook's revenue is devoted to R&D, including efforts to improve the speed, efficiency, and scalability of its infrastructure. If previous spending patterns hold true, much of the company's 2012 capital-expense allocation—more than $1.6 billion—is likely to be devoted to servers and storage devices.
Timeline is making real the concept of the "permanent record," in the form of a computer-assisted autobiography—a searchable multimedia diary of our lives that hovers in the cloud. But it may also have an unintended effect of calling users' attention to just how much Facebook knows about them. Normally, "when people share information about themselves, they see a snapshot," says Deirdre Mulligan, a professor at the UC Berkeley School of Information. "When people see Timeline, they become aware that all those bits and pieces are more than the sum of the parts. They suddenly understand the bigness of their own data."