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Facebook: The Black Sheep of Online Behavioral Advertising
Will dubious user data-sharing practices hurt the industry?
For the rest of the January 2011 issue of CRM magazine please click here
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When Facebook makes news, it’s typically for another unprecedented increase in adoption (the company has more than 500 million users). But, recently, the social network received its share of bad press because of its allegedly shady information-sharing practices.

As reported in The Wall Street Journal, many Facebook apps have been transmitting identifying information to advertising and Internet-tracking companies without informing Facebook users. “The issue affects tens of millions of Facebook app users,” the report says, “including people who set their profiles to Facebook’s strictest privacy settings.” In a climate where negativity surrounding online behavioral advertising is gaining momentum, what do marketing industry insiders think of Facebook’s latest gaffe?

“[The Facebook situation is] a great example of two things: the user isn’t clear on what information they’re sharing, and the value exchange isn’t articulated,” says Jay Henderson, director of product marketing at Unica. He speculates that users didn’t understand that when they clicked on a fan page or downloaded apps, they were allowing access to personal information. He argues the brands collecting this information didn’t return value based on the information collected, which would have eased users’ concerns.

“Facebook customers are concerned that Facebook knows their hometown and other information and that Facebook is going to sell this information to advertisers. This is different than an individual company saying ‘If you’re my fan on Facebook, I can now better target you with various promotions based on the fact that I know your age, gender, and interests.’ The challenge for sites like Facebook is to expose data collection in a meaningful way to users so that users understand what information is being shared rather than by [drafting unnecessarily long privacy agreements that users] click on by default.”

Mike Zaneis, vice president of public policy at IAB, cautions consumers to not lump Facebook and its data collection practices with typical third-party information gatherers. “Facebook has a totally different business model,” Zaneis says. “You cannot apply their model and their data practices to the rest of the industry.” Zaneis admonishes Facebook for not being part of the industry self-regulation program.
DMA Executive Vice President of Government Affairs Linda Woolley says Facebook would have been the perfect place for the AOI icon to appear.

“Quite frankly,” Woolley says, “if Facebook were paying attention to what is going on in the industry, [they would have realized] this situation is one where the icon is warranted. I think it’s unfortunate that Facebook has not been paying attention.”

Alex Coleman, director of privacy certification at eTRUST, is also careful to mention that Facebook’s practices should not be confused with run-of-the-mill data collection because Facebook advertisements aren’t necessarily based on behavior but, rather, on the information users submit to the site. But Coleman argues that what Facebook is doing could cause problems for marketers in years to come because media outlets will sensationalize the potential for dangerous information leaks.

“Facebook has a tremendous amount of information and relatively weak privacy controls,” Coleman says, “which means that there are likely to be more sensational media stories in the coming months and years.”

But Coleman ultimately doesn’t think the Facebook controversy will hurt behavioral advertisers. While he acknowledges “some vocal opposition” to what Facebook is doing, he says people expect data to be collected and shared and, thus, won’t be shocked when future stories of this ilk are reported.


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