Has Facebook gone too far with their last Innovation of Ad strategy? What is the problem with Facebook Beacon?
Facebook has launched a new advertising strategy called Facebook Beacon. It is a spin-off program that takes advantage of its Word of Mouth (WOM) networking to beef up advertising revenues.
So what is the problem? Well, there could be several. First, in some states, if you haven’t solicited to have your name appear as an endorsement for commercial advertising, that could be considered illegal. Second, let’s say you go online and make a purchase in part to keep your confidentiality. More specifically, you didn’t go to a store and buy the product, instead you opt to purchase it online in order to keep your anonymity. If that is the case, you may have just waived for your anonymity without knowing it.
Facebook counters the problem by providing privacy controls. Facebook states that the users of Facebook can opt out from allowing their story to be posted for their friends to see. However each user has to voluntarily choose to opt out. Therefore, if that user doesn’t opt out, Facebook maintains the control in posting that information anyway. Why can’t it be an opt-in program? Why not allow the user to choose to have their story posted? Another issue that arises is clearly addressed by Om Malik, “If you [opt out], your friends won’t see the information, but apparently Facebook still receives it. This means that if you are a Facebook member, Facebook will know what you are doing on each of their partner sites.” This may be yet another privacy violation.
So, the debate comes down to this… as we evolve into a more virtual social era, the users are already knowingly posting private information about themselves for the world to view. They are already waiving their privacy rights, however, those users are maintaining personal control over the information they release. If users allow themselves to be involved in social media forums, what level of control should those users have over the information flowing over the web about them? Should advertisers be able to track those user’s purchases in order to determine behaviorally the most effective ad strategies to employ? Who should have the final say in the information that is released about a person’s buying habits, the social forum or the user?
Microsoft has won the battle with Google and Yahoo to invest in Facebook. The two companies announced on October 24th that Microsoft will invest $240 million for a 1.6% equity stake in Facebook, a price that values the social networking site at $15 billion. Last year, Microsoft started supplying banner ads for Facebook in the United States through 2011. The new deal secures Microsoft as Facebook’s primary advertising partner and expands its reach to Facebook’s international users, while splitting the revenue.
Marketers are expected to spend about $1.2 billion worldwide on social-networking this year and this number could grow to $3.6 billion by 2011. With 50 million active users, Facebook remains second behind MySpace with over 110 million active users, but Facebook’s audience has been growing at a far more rapid clip during the past year. This is in part due to Facebook’s technology, which has enabled it to distinguish itself from rival social networks like MySpace. In May of this year, it began inviting other companies and outside developers to create tools for the site and share in advertising revenues. Thousands of applications have been developed since, which enable users to personalize pages in various ways. It is also believed that the company is building an operating system that exists on the web instead of on hard drives or personal computers.
Social Networking sites allow internet users to connect with friends and share information such as photos, videos and music. Microsoft plans to tap information on Facebook’s users and will have the ability to offer more targeted ads. Social networking provides the advertising world with something beyond basic demographics. It shows how people interact. Facebook is favored by some over MySpace because it is based on who you really are and who your friends really are. Myspace is not based on authentic identities. Marketers want to reach the real you and not the “fantasy you” that lives onMySpace and uses a photo of a model.
Social Media sites have been on Search Marketers’ radar for quite some time now. Initially, they were seen as an opportunity to increase visibility, reinforce branding, acquire links, etc. Now, with Facebook leading the way, they’re evolving to include targeted ads that are based on the interests of their users, as expressed through individual profiles and networks.
In a nutshell, Facebook is looking to capitalize on the fact that they have naturally collected a wealth of information about what their users are interested in. Each time a user blogs about something or joins a new group, they’re providing Facebook with another bit of information that will allow the site to place more targeted ads in front of them. So far Facebook has declined to comment on whether they’re developing this ad system internally or utilizing an existing platform.