Your Data Is Worth Less Than You Think
A few weeks ago, we started an analysis of what our Facebook data is really worth to debate the merits of a decentralized social platform where users got paid for their data. The general hypothesis was that our data isn’t as valuable as we think. Then Cambridge Analytica happened. So we asked 500 Facebook users how they think about their data and found that our data is, in fact, worth less than we think; at the same time, it’s priceless.
What’s Your Facebook Data Worth? In 2017, Facebook generated ~$19.5 billion in US ad revenue across average monthly active users of 237 million. This means that for every active user, Facebook generated $82.21 in ad revenue. That’s roughly what your data is “worth.”
(Note: Facebook would arguably make something on untargeted display ads even without your data, so the true number is something slightly less. We’ll ignore this point for simplicity’s sake). However, it costs Facebook money to make money from our data. Half of the revenue they generate goes to operating costs, then they have to pay taxes and some other costs. Net to Facebook, every US user generated about $29.60 in profit for the company. Let’s arbitrarily assume Facebook pays out 70% of that net profit. That would be $20.72 in value to each US user.
In our survey, we asked consumers what they thought their Facebook data was worth per year. Only 27% answered between $0-25, while 41% said something between $0-100 which would encompass the top line number of $82.21. Almost 44% thought their Facebook data was worth more than $500 per year. The majority of us have a significantly different perspective on what our data is worth compared to reality, but that highlights the fact that it really isn’t about money, it’s about the sanctity of our data and the violation we feel when it’s used against our implied wishes.
Will We Use Data Management Tools? We also asked users on a scale of 1-10 how likely they are to change how they use Facebook because of the data scandal, with 1 being no change to how I use Facebook and 10 being delete my Facebook account. The average score was a 4.9. While we don’t have a comparison to put that into perspective, the data point feels like a directional indicator that Facebook has serious work to do to regain user trust. It seems increasingly likely that Facebook may see some near-term challenges in user engagement.
We also asked users how much time they would spend using a tool from Facebook that gave them better control over their data, which they recently announced. 39% said they wouldn’t spend any time managing their data preferences, while 33% said they’d spend less than 10 minutes and only 10% said they’d spend over 20 minutes. Anecdotally, given the amount of controls in the privacy center now, I spent 5 minutes working on changing controls and didn’t even get through all the apps I had installed nonetheless changed any advertising controls. So despite our displeasure with how our data has been used, the majority of us aren’t interested in spending much more than a few minutes to fix it, if any time at all.
What’s the Solution? Giving us the ability to monetize our data isn’t a panacea because we wouldn’t be happy with what we got for it. Neither is giving us more control over it because most of us won’t do much about it. What users really want is to not have to think about managing their data in the first place. Users want to feel comfortable sharing everything and anything, as encouraged by Facebook, and they don’t want to have their privacy violated. This may seem like an illogical expectation given the desire to share everything, but the human psychology debate around data sharing is irrelevant. People want services that keep their best interests in mind and protect their data for them.
For a long time, Facebook’s most important asset was the network it built. Two billion plus monthly active users is difficult to replicate. Today, that’s no longer true. Facebook’s most important asset now is the trust of its users. The loss of user trust is the only true threat to the network. For Facebook to maintain user trust in the future, the company will likely have to consider changing how it does business. It might have to accept making even less off of our data than they do today.
Our data may not be worth as much as we think, but Facebook needs to protect it like it’s priceless.
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