• by Steve Smith , Staff Writer @popeyesm, December 7, 2007

"We simply did a bad job," admitted Facebook founder Mark Zuckerberg this week about the mishandling of Beacon, a tool that broadcasts to your social network your purchases (or "endorsements") from partner sites on the Web. In a stumbling response to a privacy outcry, Facebook first turned Beacon from an opt-out to an opt-in model, and then this week finally let users turn off any recording of their off-site activities. To end this week of policy shifts, apologies and finger-wagging, we asked two analysts to weigh in on the lessons learned for behavioral targeting from Facebook's own bad behavior. Debra Aho Williamson is a senior analyst at eMarketer working on an upcoming report on social networking. Karsten Weide is program director, digital media and entertainment, IDC.

Behavioral Insider: Debra, generally you seem to like the Facebook model.  

Debra Aho Williamson: I have to commend Facebook for pushing the envelope of what online advertising can be. That said, I think they pushed the envelope into a giant balloon that is now losing air very rapidly. When I first heard about their entire program, Beacon and social ads, it really took my breath away. They really were thinking big. And sometimes when you think big you are successful, i.e. Google and search advertising. Sometimes you end up having to scale back and think a little bit smaller. I think what Zuckerberg said about trusted referrals being the Holy Grail of advertising is entirely true. What Facebook is doing is, if not perfect, certainly goes a long way towards cracking the code. There was a lot of push back in regards to the Newsfeed when it first launched. Now it is like peoples' daily digest of what is going on with their friends and people live by it. And I think that to the same extent the type of advertising that a program like Beacon offers can be very valuable.

Behavioral Insider: What fallout will we see from this across behavioral targeting?

Williamson: There probably will be more attention put on how BT systems work and what information they gather, when, and how long it is kept. BT on a network has nothing to do with your friends or people you know. So what Facebook is doing is different. It brings what your friends are doing and thinking and saying to bear on your own situation. But in BT there is still that level of anonymity.

Behavioral Insider: How would you assess Facebook's policy changes?

Williamson: There's a lot of control that Facebook is giving back to the consumers. The bigger question is exactly how are people going to react. Is it information overload? How many things do I have to think about before I make a purchase? Now I have to think about whether to tell which Facebook contact about this purchase or that one? That is where it gets really mind-numbing for the consumer.

Behavioral Insider: At the very least Facebook and MySpace are clearly differentiated for media buyers now.

Williamson: True. Facebook is all about the connections you form between yourself and your friends, both online and offline and managing those connections. MySpace is more about personal self-expression and exploring new content and new media.

Behavioral Insider: Karsten, you also praise Facebook's basic attempt at marrying ads with social networking.

Karsten Weide: Facebook's social advertising initiative, not just Beacon, but also their social ads in general, are a great way to leverage the social network of a person to targeted advertising. Social advertising is new. I think it is an elegant idea because it doesn't need any fancy algorithms. It looks at what people are doing and uses the social network to publish this information. The consumer endorses the products and the Web site, which will make this ad much more effective.

Behavioral Insider: What did Facebook do wrong?

Weide: First, they didn't inform their users openly and directly enough. You really do need to send them an email or an informational windows that tells them what is going on and how to opt out of it. Facebook didn't do that and opt-out options were done poorly. If you didn't opt out actively they assumed consent. The irony of it is that now they had to peddle back all the way to having consumers actively opt in. If they had handled it more gingerly they could probably have gotten through with having users opt out.

Behavioral Insider: It seems like a hard sell to convince people to opt-into an ad model because somehow it will be good for them.

Weide: Now in this case for Facebook it is an uphill battle. We considered how many users would actually opt into such a service and I think that 10% is high; it might be 5% or less. And that makes this whole idea stillborn. Whereas if you are more proactive in communicating what good this brings to the consumer I think you could have a much better penetration of this -- around 25% which makes the whole idea really fly.

Behavioral Insider: What are the other lessons learned?

Weide: You can't be sneaky about allowing people to opt-out. Tell them what is going on. And you need global opt-out, which Facebook only provides now. For this kind of service you do need active cooperation from consumers and you need to have their buy-in. Secondly, you are going to collect a lot of sensitive data about consumers and you better make sure that none of this ever goes outside.  

Behavioral Insider: Doesn't this put an unreasonable burden on consumers to manage their identity and control who knows what about them? Why bother, when the payoff is pretty meager?

Weide: There are two parts to this. On practical level I think that the model of a purchase by purchase opt-out is awkward. It means every single time I purchase anything I have to deal with this dialogue box on whether it can be published or not. It is much more practical to have opt-out on a service by service basis or on a global basis.

Also, it is a whole new level of information that is out there about me. One of the big questions that nobody has an answer to yet is, how will people react to this anyway? Will they think it is tolerable or not? On social networks the younger demographic on these services, 25 and under, it is quite mind blowing what people put out about themselves. Is that just because they are young and inexperienced? Or how much is this representing a cultural change that will simply wander up the age pyramid and become a cultural norm? The jury is still out on that.  

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