Facebook: Marketers Are Your 'Friends'

The social network's new ad system delivers everything you say, do, and buy to marketers—with no opt out

by Catherine Holahan

Mark Zuckerberg isn't friends with everyone on Facebook. But the founder of the popular social network does have access to valuable information posted by the 50-million-plus people who use his site to communicate with their friends. And he's planning to share it with marketers.

On Nov. 6, Zuckerberg unveiled the details of a new advertising system that will let marketers deliver ads to individual Facebook users based on the details they share with friends on the site. Those tidbits include not only the kinds of data commonly available to marketers, such as age, gender, and general location, but also more personal information such as work history, relationship status, and political leanings. In all, more than a dozen categories are available to help marketers pinpoint the users they most want to reach. "This is some really powerful stuff," Zuckerberg said at a presentation in New York.

Smile, You're a Brand Ambassador

Under the new system, marketers also will be able to create brand pages where users can view related media, review products or services, add items they like to their personal pages, and become friends, or "fans," of the brand—and even make purchases. Every interaction a user has with a brand can then be turned into an advertisement—complete with a user's picture, what they did, and an image of the brand—and fed to that person's Facebook friends via news feeds that update members on friends' recent activities.

In essence, these Social Ad feeds turn users into brand ambassadors. Users are continually promoting what they like and what they've bought to their online connections, who, ideally, value their opinions and may even share their interests. "I've never seen anything so viral," says Sarah Chubb, president of CondéNet, a Facebook advertising partner and a publisher of online food, style, fashion, and travel magazines. "Things spread through those connections."

Hijacked

But users may not react kindly to Facebook handing over their personal contacts to promote products. Facebook has run afoul of users before (BusinessWeek.com, 9/8/06), when it initially launched the news-feed features 14 months ago. Hundreds of thousands of Facebook users complained that those feeds, which simply highlighted information they supplied on their personal pages, were an invasion of privacy. Thousands of people e-mailed the company. They formed groups. Zuckerberg & Co. were unprepared for the backlash and responded by adding privacy controls.

It's too early to tell whether Facebook users will respond to the ads with similar fury. But privacy advocates already are cautioning that Facebook and other networks are giving advertisers too much access to profile information, especially on young people who may not realize how much information they're divulging. The Center for Digital Democracy, a Washington group that advocates for more stringent privacy rules, has asked the Federal Trade Commission to investigate Facebook's and MySpace's advertising efforts. "Facebook and MySpace are walking on a privacy fault line," says CDD Executive Director Jeff Chester. "You just can't treat America's youth as one big advertising channel."

Facebook's Zuckerberg doesn't appear to be anticipating a backlash. The company hasn't even provided a way for users to opt out of the Social Ad feeds, though Zuckerberg says the company will watch users' reactions.

Another element of the new advertising system, Beacon, tracks the actions Facebook users take on partner sites—say, renting a movie from Blockbuster (BBI)—and then shares that information with Facebook contacts. With Beacon, users will be given the option not to share some of their actions.