The Cambridge Analytica fiasco in 2018 brought renewed public attention to the data collection practices of Facebook (FB). People began asking questions. Why had Facebook allowed this to happen? It seems like there should be a substantial amount of money at stake for Facebook to risk a public relations disaster. How much is a user’s personal data worth to Facebook? It is difficult to be sure, but we've made our best guesses.
- The data of an average American is worth between $0.20 and $0.40.
- Facebook has about 190 million users in the U.S., so we estimate that Facebook can make between $38 million and $76 million from selling such data points on American users.
- Facebook has over 2.2 billion users outside the U.S., which means its global revenue from selling data could be much higher.
The Financial Times Personal User Data Worth Calculator
In June 2013, the Financial Times built and revealed a unique calculator that allows one to check the worth of an individual’s personal data. It was designed to provide an insight into the multibillion-dollar data brokerage industry. This industry is built around profiting from trading thousands of data points on the personal information of people across the globe. The calculator was last updated in July 2017.
We will explore the estimates provided by the Financial Times personal data calculator. We will use them to estimate how much money Facebook can make from selling such data.
A "Recently divorced" status increases the value of your data by somewhere between 10% and 20%.
For this analysis, we will take essential data points that Facebook users provide voluntarily, such as age, gender, and location. There are other common data points that users willingly fork over while building their profiles on the network. This data is easily extracted from user activity and updates posted on Facebook by users or their connections. These data points include relationship status, family size, shopping preferences, ownership of cars, fitness, travel preferences, and other assets owned.
What Factors Change the Worth of Your Personal Data?
We use this calculator to generate the monetary value of the personal data points of an average person residing in America in a rented apartment. This average person lives a healthy life without any major ailments. She or he works as an Accountant, Beautician, or Health Professional with an average income. This person is recently married with no kids, wants to go on a foreign trip or cruise, and is a fitness buff. The value of the personal data for such an individual comes to around $0.20. Changing the job profile to Company Owner or Banking Executive does not change the data value of the person very much.
However, changing the relationship status from "Recently married" to "Engaged to be married" spikes the data value to more than $0.30. That is a jump of about 50% from the data value in the previous case. Similarly, a “Recently divorced” status increases the value of your data by somewhere between 10% and 20%.
“Having children” only marginally increases what the data is worth. On the other hand, “Expecting a baby” raises the value of data to around $0.28. That makes sense. Such significant events come with the potential for big expenses. These expenses often include buying baby-related products, moving to a larger house, and increased healthcare costs. All this makes the user a big potential customer for various services and products. Social media networks can easily deduce such information through algorithms that work in the background. That happens even when the individual user does not explicitly mention these life milestones on social media.
Health conditions also play an important role in calculating the worth of your data. The data worth of an individual with common lifestyle conditions like diabetes, back pain, headaches, or high cholesterol, shoots up to $0.46. That is a 130% increase. The algorithms of Facebook are reasonably good at estimating the probability that you have such conditions. Cookies from health-related websites that you visit for booking appointments, searching for doctors, and general querying help them.
If you own a home, the value of your data increases by about 30%. The value rises more if your home is larger. If you indicate any plans of moving to a new house through online searches, your data becomes more valuable. You then achieve the elite status of a wealthy customer who can be targeted as a potential buyer of a high-value asset.
The calculator also has a separate section titled “Consumer” that allows one to calculate worth based on recent online searches. Topics include food, cooking, cars, gaming, politics, government, social issues, education, loyalty card programs, and financial products. The more topics one has searched for, the more valuable the data becomes.
The Value of Your Data
Trying out different combinations for a variety of user profiles, browsing habits, and preferences gives you a good idea of the average. The data value of a typical American user is in the range of $0.20 to $0.40.
How Much Does Facebook Potentially Make from User Data?
It is challenging to map the precise value due to Facebook's worldwide reach. However, a few assumptions will allow us to make an estimate. Combining the data worth value derived from the Financial Times calculator with the number of American users of Facebook leads to some interesting conclusions.
The Value of Facebook User Data in America
Statista reports that Facebook had around 190 million users in America in July 2019. Multiplying the number of American users by the Financial Times data value ($0.20 to $0.40 per individual) gives us an estimate. Facebook potentially makes between $38 million and $76 million from selling such data points on American users. This figure looks minuscule compared to Facebook’s November 2019 market cap of around $544 billion. However, there are other points to consider.
The above estimate is only for Facebook users in America. India had 270 million Facebook users, topping the list. The U.S. was second, followed by Indonesia at 130 million users, then Brazil at 120 million. Overall, there were about 2.4 billion Facebook users worldwide in 2019. American users were less than 8% of the total.
The Big Picture
Ad revenues for running such targeted campaigns based on the personal data points of users or the purchase of user data varies across the globe. However, there are more than 12 times as many Facebook users globally as there are in America alone. It is not surprising that personal data is a big industry. Despite these large numbers, implicitly and explicitly selling user data is only one part of how Facebook makes money.
Disclaimer: The above estimates are based on projections available from various online platforms. They are not official numbers from Facebook or other companies.