Ello doesn’t need to sell ads and here’s why
The latest Facebook-killer in a long line of Facebook-killers has arrived and its name is Ello.
Ello is—like Facebook—a social network, and the reason why it probably won’t kill Facebook is that it’s got pretty much the same value proposition. If it poses a threat, all Facebook has to do is become a little more Ello-like.
Facebook will die in the end but only because that is how these things go. The current threat to Facebook, as people tell me, is Twitter. Unlike Facebook’s users, Twitter users don’t share a space with their parents. That’s a feature Facebook may be able to tweak on a technological level, but perhaps not on an emotional one.
Ello’s main attraction is that it allows users (for now) to use pseudonyms, allowing people with multiple personae to use the one that fits their role in society best. Facebook on the other hand forces you to use the name on your passport.
Ello is also ad free.
The site claims that it ‘will always remain an “ad-free network.”‘ (Business Insider)
And: “We set out to prove that a social network will survive and thrive that doesn’t have a business model of selling ads to its users,” says CEO and co-founder Paul Budnitz. (IPR)
I want to talk about the no-advertising model for a bit. The articles I’ve read so far seem to suggest that people are tired of being treated like a product and they understand that ads play some sort of key role in this process. The process is understood to work as follows. Facebook sells or gives user data to advertisers who customize their ads to fit Facebook users. The advertisers then sell those advertisements to Facebook to place on the users’ pages.
Since Ello doesn’t do ads, it is assumed that the users are spared from these practices and that users’ privacy is kept intact.
I don’t see how that follows.
In the model above Facebook is both the provider of user data and the manager of the ad network. That is to say, they both own the user data and the advertising space.
There is no reason however why these two should be connected. Ello could easily set itself up as a provider of user data.
How that works is how privacy-busting online advertising has always worked. The owner of the user space places user tracking technology (also called: a cookie) on the computer of the user. It then tells the owner of the advertising space (this could be any website) everything about the user and its cookie. The advertiser reads the cookie and asks Ello or Facebook: “what can you tell me about the person that has this cookie” and adapts its advertisement to the answer.
Food for thought: Ello is currently not making money, that is I doubt it is. The site is probably haemorrhaging money and its backers will soon want to see something more than just losses.