• by Augie Ray , April 28, 2010

Last week, Facebook announced changes that expanded the sharing of consumer data with a select set of third-party partners, and it only took a matter of days for lawmakers to press Facebook for changes and government agencies for more oversight. The fact that Washington took note of Facebook's changes isn't at all surprising; in fact, it was inevitable. But what happens next-- and what this means to marketers -- is not inevitable and depends a great deal on how proactive Facebook becomes on education, transparency and cooperation with lawmakers and privacy watchdogs.

Facebook has learned from its past privacy missteps, as evidenced by the way it recently asked for consumer input for proposed privacy policy changes, but it is far from earning its diploma in Public Relations and Politicking. It's been just three-and-a-half years since Facebook broadened its membership from students to the entire population of the planet, and as it has grown from a niche social media site to a ubiquitous form of communications for over 400 million people, so have grown the demands for Facebook to manage the expectations of consumers, voters, lawmakers and marketers. Facebook is still learning how to accomplish this, and it is earning a fair to middling grade.

The company that believes privacy is no longer a social norm is keeping too many secrets, and what people don't know CAN hurt Facebook (and by extension, Facebook partners and advertisers). Take, for example, the diversity of opinions about the recent changes announced at Facebook's f8 conference. Mashable says, "the data collection and overall privacy settings don't differ from what has already been available," while Sen. Charles Schumer of New York says: "They've created here, inadvertently, a gold mine of data for unsolicited ads, spam and even scammers." The wide range of opinion -- from unconcerned to so alarmed that action by Federal authorities is demanded -- demonstrates the extent to which people don't understand Facebook's Open Graph protocol.

The confusion caused by Facebook's lack of transparency with respect to sharing and privacy is also evident at the individual level. Have you registered for Facebook on CNN? I did, but I have to admit I'm unsure to what I've agreed. I logged into Facebook on CNN and was told doing so would "bring your friends and info" into CNN Social and "Publish content to your Wall" on Facebook. Does this mean Facebook will share any page I visit or only the ones I "Like"? Will it capture and store every page that I visit and share this data with advertisers? What data can CNN pull from Facebook about me and my friends? I don't have any idea what personal information is being shared, and perhaps more importantly, what could be shared in the future as a result of the permission I've granted to CNN and Facebook. Also, while I trust CNN, do I have the same trust for every potential partner Facebook may add in the future?

As Facebook and other social sites grow and extend their tendrils across an ever more social Web, questions about data and privacy will inevitably come from consumers, lawmakers and agencies, not just here in the U.S. but also in the European Union and elsewhere. This is not a sign of missteps on the part of Facebook and others, but a normal and expected phase in the maturation of social media. But while user, legal and regulatory concerns may be expected, this doesn't mean there aren't potential dangers for Facebook and for advertisers who partner with Facebook. These dangers range from laws that undermine key aspects of Facebook's sharing protocols to risks of legal action, not just against Facebook but partners as well. After all, Facebook wasn't the only company sued as a result of the ill-fated Beacon venture -- Blockbuster and other Beacon partners also found themselves in court.

The same sort of legal repercussions are not expected with the latest batch of Facebook changes, but the result of any new and future privacy laws or regulations could have an adverse impact on Facebook's future. The company appreciates this and has invited dialog with Schumer and others in Washington. The collaboration and transparency are sure to be welcomed inside the Beltway, but what can marketers do while Facebook works out these issues in Washington and around the globe? Should marketers race to implement Facebook's Social Plugins or wait to see how consumers and lawmakers react? Here are some dos and don'ts:

• Do implement Facebook's Social Plugins: Brands cannot hesitate to leverage the latest tools to engage consumers and activate the groundswell in social media.
• Don't rely on Facebook to explain privacy and sharing to consumers: Facebook's standard privacy tools and login pages do not thoroughly expose what is being shared and when. If consumers permit sharing and are later surprised or disappointed as to what has been shared, their negative emotions won't be directed only at Facebook but also your brand. Protect your brand by explicitly informing consumers as to the data that is shared, under what circumstances consumers' actions will be exposed to Facebook (and not just to Facebook friends), and what personally identifiable information the brand is accessing from Facebook.
• Do tell consumers what's in it for them: Don't assume consumers will see Facebook's "Login with Faces" box on your home page and will innately understand the benefits of bringing Facebook sharing into your brand site. Make a pitch -- sell the value of sharing and how granting permission will improve consumers' experiences.
• Do educate consumers: Rising privacy concerns is both a challenge and an opportunity. Brands that embrace transparency and make the effort to educate consumers about sharing will gain both trust and consumers' permission to share information on Facebook on other social channels. It really isn't possible to overeducate consumers about what your brand shares or how consumers can control their own privacy; for example, it may even be advisable to provide instructions such as those found on Mashable as to how a consumer can change their Facebook settings to opt out of specific sites or all sites.
• Do treat Trust as important brand attributes: Great brands are brands that consumers trust, and trust has become an even more vital brand attribute in the age of data collection and social sharing. While that trust is earned over time and in a hundred small ways, it can be lost in one horrible moment. Marketers cannot leave an important issue like trust to third parties, and must consider how trust is gained or lost with every social effort.