While it's a fantastic service and a great way to stay in touch with friends, Facebook is a business, and a growing one at that. Last quarter, Facebook grew its top line 39% on a year-over-year basis, reporting $4 billion in revenue versus $2.9 billion in last year's corresponding quarter, on the back of strong advertising growth.
Facebook's ability to continue to grow its top line at this healthy clip depends on two factors -- the ability to grow total users and the ability to grow average revenue per user (ARPU). There's an outward bound to the former, as there are only so many users in the world with Internet access and the desire to use the site. Last quarter, Facebook reported nearly 1.5 billion monthly active users (MAUs), up 13% from last year's corresponding quarter.
In order to reconcile the two aforementioned growth figures, the latter comes into play: Facebook also grew average revenue per user. And this becomes a trickier proposition for Facebook. It can increase ad loads in order to grow ARPU, but there's a delicate mix that exists between increased ad delivery, and poor user experience (see Myspace).
There's another, more insidious, way to increase ARPU -- and that's where Facebook's newest technology comes into play.
Effective ads are more valuable adsInstead of increasing the ad load, and potentially upsetting users, another way to increase average revenue per user is to charge more per each ad. Of course, Facebook is only one option upon thousands of marketing outlets, so the company can't unilaterally raise prices without bringing some type of added value to this process.
And in marketing, this value is typically measured in increased effectiveness in the form of interaction -- and the easiest way to accomplish this goal is to place ads in front of interested parties, also called targeting, but this requires Facebook to collect as much information as possible about users in order to determine their wants and desires. Every Facebook user knows Facebook is keeping tabs on them, but the latest way Facebook could be trying to collect data on users is a little disturbing.
Facebook's developing a fingerprint for your camera Per Geek.com, Facebook has filed a patent to essentially fingerprint your camera. According to the report, the company is looking to identify pictures uploaded on its site by pixels, lens scratches, faulty pixels, and image bleed to discern the specific device that took the picture. Productive uses of this technology could be to track down fraudulent and secondary accounts -- both are banned under Facebook's terms of service -- and also to reinforce connections.
As a hypothetical, a Facebook user could snap a pic and post it to Twitter, another unrelated user could share the photo on Facebook, and the company would know who actually took the picture because the other photos the original photographer uploaded on Facebook matched the device profile. For privacy advocates, this could come across as quite intrusive, and adds to concerns Facebook knows too much, and is too influential in its users' lives.
Of course, this is simply a patent and may never see the light of day, but other recent Facebook patents have also raised eyebrows. Last month, reports concerning Facebook's patent to allow lenders to use credit scores of a loan applicant's social network in order to make a determination on whether to lend to the potential borrower, regardless of his or her individual score, was not well-received. Facebook's recent patents shows a company aggressive about growing ARPU, which is a good thing, but the company should ensure it balances user privacy in the process.
The article Facebook Move to Link You With All Photos Your Camera Takes Is Disturbing originally appeared on Fool.com.
Jamal Carnetteowns Apple. The Motley Fool owns and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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