Advertising: The Revolution Won't Be Through Friend Requests

from the skip-this-step dept

Wed, Nov 7th 2007 2:46pm — Tom Lee

Yesterday Facebook announced its long-awaited advertising program. This was inevitable: if you're going to justify a valuation just shy of Iceland's GDP, you've got to eventually propose a means of generating revenue. Facebook will no doubt earn quite a bit of money at the ad game. But the initiatives disclosed yesterday are likely to be a mixed bag — and not at all as innovative as founder Mark Zuckerberg would have you to believe.

The most straightforward of the new offerings is Facebook's contextual advertising system. Drawing on the vast amounts of data provided by its users and supplying metrics and query capabilities will no doubt prove to be lucrative. Much has been made of Facebook's particularly rich user data — perhaps too much. Although that data is likely to be better structured and therefore easier to leverage, it's not obvious that Facebook will be able to target ads to its users more precisely than, say, Google does within Gmail. Still, it's hard to imagine these ads being anything less than a huge financial success.

The same can't be said for Facebook Pages, which will provide brands with profiles on Facebook. Facebook has already tried this approach with Wal-Mart, and the results were disastrous. Not only did the nominally back-to-school-oriented page fill up with complaints about the retailer's business practices, but — perhaps more tellingly — many users attacked Wal-Mart and Facebook for bringing corporate shilling to their beloved social network. MySpace's brand profiles have met with a similarly lackluster response: An Inconvenient Truth's MySpace page was something of a marketing coup, but once the novelty wore off the practice failed to produce anything of significance. Although other companies will attract less ire than Wal-Mart, it's hard to imagine users being any more keen to engage with them (except, perhaps, for already-elite brands like Apple or Nike).

The final and most interesting prong of Facebook's strategy is Beacon, a system that will allow partner sites to post users' actions back to Facebook. Having your Amazon purchases or Netflix selections displayed in your mini-feed are the sorts of applications that are being hyped. As you might imagine, Beacon carries privacy concerns, as well as worries that the move will result in a further dilution of Facebook's already annoyingly low signal:noise ratio.

But to my mind the biggest unknown is whether the new data will be considered meaningful by consumers. There's no question that endorsement of a product by a peer is the most effective form of advertising available. Beacon is built with the hope that there are many marginal cases in which users would be willing to recommend the products they're consuming, but can't be bothered to take deliberate action to do so. But does purchasing a product necessarily mean a user wants to endorse it? Or do consumers prefer to curate their public purchases, picking and choosing the brands that they want to use to define their online identity?

It's not clear what the answer is, but I think there's reason to be skeptical of any initiative that attempts to automate individual peer recommendation. After all, genuine human enthusiasm is the sole reason why such recommendations are so effective.

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Filed Under: advertising, brands, endorsements, privacy, social networks
Companies: facebook

9 Comments

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Derek Reed, 7 Nov 2007 @ 4:50pm

I don't think ...
I don't think you've delved very deeply into facebook's current technology. One of the core tenants of their "add ons" is clearly defined rules that are explicitly permissed by the user. For example, when adding a new "bulletin" application, there are several questions facebook will ask you before placing it on your page, such as "Show items below my picture on my profile". I imagine this philosophy will carry forward to applications like cross site advertising, and that before being able to show Nike purchases, the user would have to permiss it with a similar "Show purchases in my profile" approval.
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Max Powers at http://ConsumerFight.com, 7 Nov 2007 @ 5:02pm

Hate the idea
Just because I bought a product it does not necessarily mean I liked the product and would want to endorse it.

Beacon's plan sounds like the ultimate in exploiting consumers privacy. It doesn't even sound legal.
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friday, 7 Nov 2007 @ 5:07pm

I remember when facebook was still young, it was only for college students and didn't have so much crap. I can't say how many annoying new third party features they seem to roll out with on a regular basis. The reason I liked facebook was the fact that it was a simple way to communicate and post pictures with other people. I'm sure this will only add to the bullshit. I just hope they do a decent job with it.
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Anonymous Coward, 7 Nov 2007 @ 5:58pm

Same info as Gmail?
Just how much information do you give to Gmail? Just to give an example of information that goes to Facebook: I am engaged. Gmail doesn't know this fact. My friends should and so Facebook does. It also knows my home city, some quotes I like and some bands movies that I enjoy. Do you really tell Gmail all of that? I want my friends to know that, though.

For the last few days I've been seeing a lot of wedding related advertising and well as some jobs in my local area.
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Harry, 7 Nov 2007 @ 7:02pm

Re: Same info as Gmail?
You tell Gmail whatever your email says. If you mention your "wife" it knows you're married. It's contextually scanning your email to provide a relevant ad. Send yourself an address and you will probably see local results about that address. Send yourself a UPS tracking code and the ad will be a UPS ad to track your package.
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Same AC, 7 Nov 2007 @ 8:11pm

Re: Re: Same info as Gmail?
Now that's just creepy. At least with Facebook I can choose how to present myself.

How would google know the difference between my life partner or my business partner? How does it tell my wife from my friend's wife?
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everysandwich, 8 Nov 2007 @ 5:32am

facebook
I'm so with you on that last point. Just because we buy something doesn't mean we recommend it. In fact, sometimes I'd rather warn against a particular purchase. Facebook got anything for that?
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Tom Lee, 8 Nov 2007 @ 7:17am

Re: I don't think ...
Derek: In fact I am familiar with Facebook's current permissioning system for FB apps. I'm sure that something similar will accompany Beacon. But questions remain to be answered: will all of your purchases on, say, Amazon, be added by default? Will there be a per-purchase opt in? Or will it be opt out? If you accidentally post an embarrassing purchase to your feed, which site do you go to in order to delete it? Can recurring payments (e.g. Flickr membership) post without the user taking deliberate action each time? If each purchase has to be deliberately added, how meaningful is this feature, anyway?

It'd be foolish to think that Facebook isn't considering these issues and taking steps to assuage concerns about privacy. But just because there'll doubtless be some sort of control given to the user doesn't mean that there aren't privacy implications -- witness the furor over the introduction of the mini-feed, which exposed no non-public information but dramatically changed the way user information is provided, detected and consumed by other users.
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Bummer Han, 10 Dec 2007 @ 6:04am

fazed book
As a rank outsider (not being an FB user- yechh...)
The danger of giving Facebook too much power, is that FB becomes a single point of misuse, at least this time arrested early (with egg in Mark's freckled face)...

,ominous of the original Web implosion, you can't declare a value too many rungs above reality -- i think it will be an iminent struggle for Facebook and the other Web2lings to find the real $ to support its presumed $.

what is context ? - it must be the user's intended
well.. google pretty much brings you to the merchant that has paid them the most and optimized to frivolous keywords.
- this is far from 'semantic' closeness

Facebook is going to be a massive web pollution in the making - if not thought through properly.
to me the damage has already been done
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