What's the point of advertising to people who can't afford to pay a few bucks for a social networking site? If they're broke they aren't going to buy anything anyway.
I think this whole train of thought is a logical fallacy. You need people who have more money than sense to believe that not paying is a better option than paying. It's a con.
"What's the point of advertising to people who can't afford to pay a few bucks for a social networking site?"
It depends on what is being "advertised". To give one example, it might be an "issue ad", not for a commercial product/service. The "ad" can be thought of as a general form of persuasion to adopt some mode of thinking and consequently some specific action or inaction.
According to the whistleblower testimony, these were the type of ads being shown in certain third world countries by the companies who utilised the Facebook user data.
You distribute the advertising cost & display across a very large number of users (varying on if we're talking about CPM or CPC), some of which can afford to buy things. Some users can afford to buy things at one point in time but not another, or vice versa. The users that do click and buy, subsidize the 3/4 of users that either could never afford to pay $5 or $10 per month for Facebook (a billion people or more), or would never want to (ie are perfectly fine with advertising). You advertise to a larger group than perfectly ideal (including guaranteed non-buyers) precisely because you don't know every person's exact financial condition and never will.
The minority of people on Facebook that click on ads and buy things, are making it possible for the other 2 billion people to use the service without paying a monthly fee.
This distribution is identical to advertising pretty much everywhere else throughout history.
Everyone that drives by a billboard can't afford to buy what the billboard is selling. That doesn't make it a con. The buyers you do derive, out of the very large number of people that have no interest or can't afford what you're selling, pay for your billboard (hopefully).
Everyone that watches an ad on TV - the past half century - can't afford to buy the thing being sold (a $1,000 workout machine), that doesn't mean the advertising is a con.
The sole difference is the heightened targeting based on information that Facebook or Google know about your habits or interests. In the past, it was far more difficult. A TV advertiser for example, might discover through research and trial & error that TV watchers are more likely to buy that $1,000 workout machine at 1am via an hour long infomercial. The experimentation loop was dramatically slower.
Suggests the 10 most expensive categories to advertise in are dominated by insurance, financial, and legal services.
I suspect when that curve is overlaid with the similar long tail curve of the disposable income of FB's 2 billion users - I suspect it'd be obvious that the vast majority of FBs income comes from super expensive PPC ads shown to people with a (globally) super high disposable income.
If you let the bay area tech crowd who're struggling to find a place to rent on their own because they're "only" making $160k all opt out of getting profiles and shown advertising for $25 or $50 per month, you'd probably make a existential dent in FB's profitability - much more so than if they just turned advertising off altogether for the lowest earning billion and a half people on their platform.
The first part of your point makes sense, the second less so. If you have a pay for no ads model, you would get wealthy users willing to pay for it, and poor users unwilling. Meaning you could ONLY advertise to people without money to buy your products. This is a less than ideal scenario for an advertiser.
Payday lenders, cash for gold, rent to own and many, many other businesses would disagree. Poverty is quite profitable to exploit because your customers often have no choice.
this totally nullifies the purpose of a advertising based business model.
TV channels i pay for them and still they show advertisement.
i can afford and i pay for them and am ok with negligible nonsense here and there, and am only going to switch to other channels when an advertisement seems to begin.
i am sure 70% ppl are capable of going and finding wat they want. and the rest of them wont buy stuff any ways just because they saw an ad.
May b this whole advertisement caters to those 2 or 3 percent of entire population who are cat on the wall.
What's the point of advertising to people who can't afford to pay a few bucks for a social networking site? If they're broke they aren't going to buy anything anyway.
I think this whole train of thought is a logical fallacy. You need people who have more money than sense to believe that not paying is a better option than paying. It's a con.