Facebook Beacon: Brands Guilty by Association?

It's been less than a month since Mark Zuckerberg unveiled a new ad system, partly powered by Beacon, that allows companies to use Facebook's social graph to develop ads that are highly targeted to users. Om Malik at GigaOM wrote a very detailed account of the launch putting the question -- is Facebook Beacon a privacy nightmare?

The way Beacon works is by aggregating (I remember when aggregation used to be a good word) data from 44 web destination or partner sites -- among them the NYTimes (NYT), Sony Online, Blockbuster (BBI), Bluefly.com, TripAdvisor, Travel Ticker, TypePad, viagogo, Vox, Yelp, WeddingChannel.com and Zappos.com. It then mashes up the data on users as gathered there with its own database.

Then, whether you'd like your friends to see it or not, Facebook collects that information about your preferences to then sell it to advertisers. In other words, they store that information about you even when you opt-out. That is what had privacy advocates up in arms. It took some pressure from groups like MoveOn for Facebook to announce it may revamp Beacon and change its policy of sharing users' Web buying and activities.

Apparently Zuckerberg & Co. had this brilliant idea that people could be used to provide testimonials and referrals to brands -- gone would be the days of asking your customers to participate, they can work to opt-out, if so inclined. The question is not if marketers are your friends, rather are your friends marketing to you? Can a viral campaign be engineered? This is every marketer's wet dream, and a dream it remains.

It Was Bound to Happen

With click through rates as low as 0.04%, the ads on Facebook were not going to make the online advertising hall of fame any time soon (avg. rate is 0.2%). The pressure to justify the $15 billion valuation of the company after the $240 million spend for the 1.6% stake by Microsoft (MSFT) is being felt. The irony of things is that when Zuckerberg's privacy was violated recently, Facebook unleashed a massive legal attack. Exactly, what privacy issues?

This is a wake up call for the investors' community and for advertisers -- many of them blue-chip companies like Coca-Cola (KO), Sony Pictures (SNE) and Verizon (VZ) -- your brand may be tainted by association. The most valuable asset in todays' brands is "trust". Although it is an intangible, it weighs more in brands valuations than hard assets. The perception that information manipulation may violate someone's privacy leads to loss of trust. I see this as a problem for "brand you" as well.

Tell me how eager you'd be to date someone who shared your private information with all their friends. Do you really expect that he will unless you tell him he shouldn't? When put to the test, Facebook Beacon failed and it seems the public was not trusted enough to handle the truth. For this reason, Coca-cola has since taken a "wait and see" approach to the Beacon issue. Overstock.com has also since quit Beacon.

Facebook has since announced that it dimmed the Beacon spotlight. The changes are too weak and the damage may already be done. And in case you were wondering, those helpful email messages from Facebook about your friends' activities are just eyeball bait to get you to the site and generate impressions. What we have here is still mass media being pushed at people, not conversation.

Let me spell it out for you: if you push a recommendation unknowingly (you are being broadcast), or are being compensated to give it, is not the same as sharing a review because you are passionate about a product or service and they exceeded your expectations. I think we can do better than that. The true holy grail is one that will manage to help market and sell products and services and at the same time respect that the people it seeks to engage can think for themselves.

[hat tip to Tony Hung]

Related:

• Jeremiah Owyang wrote a pretty comprehensive post on hyper targeting, social ads and the rise of the "fan-sumer". I would be very curious to see what Jeremiah has cooking as a follow up given the recent developments after he published his story.
• Shel Holtz has a balanced review of Firebrand: TV commercial as entertainment. Has anyone forwarded Firebrand's ads to a friend?
• Aaron Brazell shared this how to block Beacon on Twitter today. UPDATE: Aaron also says The Only Answer to Facebook Beacon is a Deleted Account and Companies Using Beacon will Undoubtedly be Sued.
  
• How Mark Zuckerberg Turned Facebook Into the Web's Hottest Platform, Wired magazine.

Comments

[Jarrod]

Okay, maybe I'm missing something here. Marketing has always been about trust, our current culture doesn't trust most marketing because it has proven itself to be untrustworthy and unethical. So what's the big surprise here? Facebook is manipulating personal info to gain advertising? What a shock!

I actually asked several Facbook officienados (sp?) about those ads -- nobody pays attention to them.

You can't fake trust, and that's what so many companies are trying to do. They think they can fool the consumer, but most consumers aren't buying. (At this moment, I'm very proud of Coca-Cola, my favorite soft drink; and, they will continue to be because I trust them.)

[Valeria Maltoni]

Maybe we could say that marketing should have always been about trust. In what I can affect, I focus on being about that.

The big surprise here was using a medium that by definition is about connecting with friends and exchanging information at a peer level, with transparency, to manipulate those contacts and relationships. Why not disclose how it would work? Better yet, why not test the concept?

People live in the here and now. Those folks who got hassled with identity thefts in the UK as their information was taken from Facebook and MySpace probably care a lot more about what happens to their data now. It's human nature to pay attention to things in order of personal importance and relevance.

As you say, one cannot fake trust. Cutting corners is often a slippery slope. You trust the people who manage a brand when they decide to do the right thing. Maybe I missed it, but did anyone actually explain in layman terms how this Beacon-powered program was going to follow people online?

It is really quite simple for brands (personal brands count too) -- keep your promises. Do what you say you will do. I did not see any write up about my information being used or shared or stored anywhere when I signed up. Nor did I receive a follow up on changes so I could opt out before the program was implemented. Thank you for being passionate about the topic.

[mvellandi]

What a great way of putting it. Sharing is something that should be natural - a critical aspect of volition and authenticity. If Facebook and its 3rd party applications allow me to decide what to share in the common update feed, it's quite a step to automatically publish activity without permission; AND then only offer opt-out, one service/vendor at a time.

I feel wary of Facebook now. Even though I sparingly use it as a connection/personal interest repository anyway, it seems to me that the size (features, notifications, groups, etc.) of Facebook is growing to a massive weight that's becoming more of a distraction to me, than something that's unique and valuable.

[Phil Barrett]

From my perspective, beacon + social ads = adding SPAM to word of mouth marketing.

That can't taste very good.

[Dennis McDonald]

Despite all the publicity Beacon has gotten in the blogosphere and even in some mainstream media outlets, I really wonder how many people care about this. Facebook's behavior is just the tip of the iceberg when it comes to the buying and selling of personal information. Maybe their misfortune was just that they happen to have gotten caught.

[Carolyn Ann]

Ah, privacy. A mightily misunderstood concept. The American conservatives assert there isn't any such right (except when it's convenient), and so many others think there is. And then these social websites trot into the picture.

I'm not exactly sure how the Facebook staff - let's not to be too eager to single out any one scapegoat - figured how they could justify this feature. They probably didn't even think about it, enthusiasm for the "new" being more important. Not to mention justifying that stratospheric evaluation for the firm! (Who thought that dot-com giddiness was dead? Me, for one...)

One thing they didn't do was think about how people relate to their friends and family. We don't always want our family to know all about us, let alone our friends!

Who are the Facebook people to determine what we can't keep private?

Carolyn Ann

[Valeria Maltoni]

@Mario -- in reading the Wired article I saw the progression Facebook followed, it looks pretty deliberate to me. The push engine seems to have been designed into it. Get more members, get more developers, mix, then get companies in to window shop for targets. Yet, volition and authenticity are still golden to make a social engine work.

@Phil -- well, I don't eat meat so it would not taste good to me ;-) Maybe as Carolyn Ann stated, someone did not think this thing through... yet many of us would have. I don't have an inside view of what was discussed to arrive at the decision to launch the Beacon-powered engine.

@Dennis -- I see that you also posted some thoughts on Beacon as a lesson to learn to manage our own data. I am cautious by nature and from experience and was not too eager to divulge too much on Facebook from the get-go. AS you say in your post, Google already has a lot of data on people anyway. It would be only fair to be compensated personally for leasing that data. Instead, there are companies out there who make money out of information on you.

@Carolyn Ann -- well, the focus has been on Zuckerberg because of many inconsistencies in his story about the past. If he's at the helm, clearly he is more accountable, yes? Great insight on family and friends' dynamics!

[Geoff Livingston]

What bad timing, too. During the holidays when everyone is online shopping and focused on this issue.

For me this comes down to leadership. Having a 24 year old run a company without any pragmatic business sense is hurting Facebook.

[CK]

Per Carolyn's "They probably didn't even think about it, enthusiasm for the "new" being more important."

Carolyn--I hear ya, but I need to get you the link to the Fast Co. article from last month--they hired a new marketing person in the last 90 days.

His aim? Targeted marketing. This was fully thought out and intentional. They got arrogant. Targeting is good. Privacy violation is bad. So bad that trust is wiped out.

@Geoff: This was intended for holiday sales. The marketing guy is much older than 24. (and companies with far older leadership do bad things all the time ;-). This is not an age issue so much as one of arrogance. An age-old problem, actually. Great convo, Valeria.

[CK]

Here's that link, folks:
http://www.fastcompany.com/magazine/120/facebook-is-the-it-company-of-2007.html

The sad thing is, I even saved this article because it's a great study in "opening" networks (read the article and you'll see). The problem? Here's the omen right from the mouth of their new marketer:

"It is only day 67 for Palihapitiya at his new job when we sit down to talk, but he already sounds like a true believer. While cagey about details, he isn't shy about the potential he sees for targeted ads to fill Facebook's coffers. He madly sketches on a notepad, drawing a fine distinction between demand fulfillment (I want a cheap ticket to Hawaii. Now!), which the Internet has become quite good at, and demand generation, the shape-shifting set of marketing messages that conspire to get a consumer to want something. That, he says, is where he sees serious money on the table. "Facebook users are more engaged with each other," he says. "Aren't you more likely to be interested in what your friends are doing?" Google, which focuses by and large on demand fulfillment, is a $160 billion company. "For every dollar that goes into fulfillment, there are hundreds that are spent on generation," he says, particularly by the big brands. So what could Facebook be worth? Five times Google? Ten times? "Could be," he smiles."

[Carolyn Ann]

Thanks for the link, CK.

Oh, isn't he an item? (Zuckerberg, that is!) He's made himself the hero of FaceBook, without realizing that this would also make him the target of complaints. He's clever, but I'm not sure he has much common sense.

Zuckerberg didn't stop to think, and his cohort in crime, Palihapitiya, didn't either. Targeted marketing is all well and good. What they did - misunderstand what friendship is, and misconstrue their relationship with their users - can only be called "idiotic. I'll throw in "facile", "facetious", "arrogant" and "boneheaded", too. But that's me being nice about it! :-)

They forgot to stop and think about their friendships, and relationships. Zuckerberg should have known this application was walking into a maelstrom; it was inevitable! He decided that his company could manage (even some part of) your friendships and the relationships you have with acquaintances? What an arrogant ass!

Does he not know the adventure of of finding out what your friends have been up to? The necessity of not telling Mom all about your personal life? Didn't anyone stop to consider that maybe we don't want to know everything about our friends? That there's a reason we don't live in communal huts, sharing all? We like our privacy!

Alas, there will be many more such misadventures and screw-ups along the way. Until the eager learn to think, that is. Don't hold your breath. And don't wish for it, either!

Carolyn Ann

[Carolyn Ann]

Oops. That last one was a bit awkward. I don't have much time, and I didn't take the time to correct myself. As the saying goes: measure twice, cut once. Sorry!

Carolyn Ann

[Geoff Livingston]

@ck It always goes back to the top. This is Zuckerberg's failure. I guarantee he signed off on this, and he continues to fail to meet the community's questions. He is incapable of running a company.

[Valeria Maltoni]

@CK -- that's what happens when you don't get an issue of a publication you subscribe to, you miss an important article. Thanks you for pointing it out and linking to it.

@Geoff -- I think to CK's point that it was all choreographed to hit just before the holidays. And maybe as Jarrod point out in opening this conversation people would not have noticed. Except for Facebook is a social network and they are now changing tables to business. People signed up to connect with each other, not to be sold to... and yes, the CEO is accountable. As far as I know, nobody has come out and explained, answered questions, etc.

@Carolyn Ann -- one thing that Kevin Roberts had very right with his concept of Lovemarks was the mystery piece. There is value in knowing enough about a person, getting introduced gradually, and there is also tremendous value (and beauty) in never learning about it all. The point is people, individuals should be free to make that decision on their own.

[CK]

@Geoff: I hear you. I just found this to be such an arrogant move--and so against the practices we all promote--that it just burned the "relationship" for me. I've pondered it for a week and come to my decision--I'm off FB, but still very much in the community through blogs and twitter.

@Carolyn Ann: You are so right (and so funny!). What's sad is that a month ago (1 month ago!) when I read that article I sent it to clients showing how much "opening the network flourishes the network". I made everyone read it as the core message is, in fact, valuable.

And then they did Beacon.

Ugh.

So I gotta go back to my clients and say "um, yes, please still open your networks...but don't open up people's privacy!"

Ugh.

They just went too far, so I won't be using that example (well as a "bad case study in what NOT to do" maybe) and I won't be using their platform. I can't support any outfit that has blatant disregard for its customers.

@Valeria: thanks again for holding this convo. I see it as a crucial one as we all learn our way.

[Jonathan Trenn]

One thing that I don't understand about this concept of 'targeted'. If one person buys a couch and a bird cage and jewelry on one the site of one of Facebook's partners, and receive word of this, how is this targeted to me as the 'friend'? This system assumes that I'll have the same needs. Doesn't make sense.

[CK]

@Jonathan: you see things I don't see (I think I've been too busy seeing 'red' ;-). Toad is having "relevancy" issues with this, too.

And you win for best twitter of the night with, "For those that aren't my FB Friends, I just want you to know I bought a quart of milk." So funny I'm still laughing over it.

[Valeria Maltoni]

@Jonathan -- I see that you have written extensively on Beacon. My personal take is that this was a half cooked idea that got implemented because with the technology we have now, we can. However, not enough work and thought was put into figuring out how it would work so everyone would benefit. Bad news for Beacon, I don't do any grocery shopping ;-)

@CK -- I think it's more than alright to require an explanation of the Facebook situation. And yes, when it comes to relationships with friends -- the social part of life -- it is expected that people would inject more passion into it. We have enough sterile work environments where everyone is busy producing ROI *all the time*. To me connections and involvement are perfect examples of results.

[Jonathan Trenn]

@ck Happy to make you laugh. I hesitated before I sent it, but it did get some laughs. And Toad is right...what would happen if we opened our account and got "CK bought four couch pillows" "Valeria bought a spatula" "Toad bought golf balls" This is targeted marketing?

@Valeria As I just mentioned to CK, the system they had isn't targeted to us, the reader. So no user benefits. Extremely poorly planned. And no grocery shoppinng? You must eat out a lot. I like to cook...which gives me an idea for yet another post about Beacon.