Unit Structures Fred Stutzman’s thoughts about information, social networks and technology.

Perspectives on Facebook’s Beacon

I’m getting a little exhausted covering all of these “social” announcements by my watchlist companies, but Facebook brings us genuinely big news with the launch of Project Beacon and Social Ads. Erick Schoenfeld’s got the summary, here’s my couple-sentence version: SocialAds = deep targeting using your profile and network data, Project Beacon = your friends (and Facebook) know when you buy stuff on other websites.

Facebook has fulfilled its destiny: it is now Adbook. The data you share in Facebook is incredibly rich. Marketers can target based on your interests (You like Dylan? Buy the box set.) or your friends interests (Seven of your friends love Crocs, buy some Crocs.). Take the internal data, and mash it with the external data collected from Beacon - and you’ve got some seriously powerful targeting information.

What do the experts have to say? Doc Searls, who wrote the book on this stuff, is looking at Facebook’s announcements cautiously:

I get that Facebook really wants to understand people, and relationships. That’s a plus. So is any plan that gives Google competition in a category it has defined and all but owned completely over the last few years. Facebook is in a transcendently privileged position here… What we need is to equip demand with better ways of engaging supply. Not just better ways for supply to create and manipulate demand.

When I was at Harvard this summer, I was able to spend some time with Doc talking about his new endeavor, Project VRM. Facebook should listen to Doc; with Beacon and Social Ads, Facebook is trying to turn us all into “lifestyle marketers.” In Facebook’s dream world, I’ll know about every pair of Crocs you buy, in essence constantly barraging me with social purchasing opportunities. But that’s not what it’s about - just because ads are socially targeted, it doesn’t make me want more ads. Rather, Facebook should leverage this extremely powerful social information in my times of need - when I want to purchase something, give me my network’s opinion. As Doc describes it, this is “demand finding supply” rather than supply finding demand. Spamminess is the death of a network, socially targeted or not.

Nick Carr laments Adbook and the culture of peer marketers:

I like the way that Zuckerberg considers “media” and “advertising” to be synonymous. It cuts through the bullshit. It simplifies. Get over your MSM hangups, granddads. Editorial is advertorial. The medium is the message from our sponsor.

Marketing is conversational, says Zuckerberg, and advertising is social. There is no intimacy that is not a branding opportunity, no friendship that can’t be monetized, no kiss that doesn’t carry an exchange of value. The cluetrain has reached its last stop, its terminus, the end of the line.

And since everyone on Techmeme was saying the same thing, I found a blog from Facebook user and skeptic Matt Monihan, who is not clearly not a citizen-marketing Fan-sumer.

So, facebook is now taking a bold step towards pissing me off. Now, I have to think twice before I buy something stupid online. Will my friends be notified that I bought seasons 1 & 2 of project runway? What will they think?

Ahh, the things we have to worry about today. Anyway, this is big news. As I’ve stated, Facebook is on the march, and we can expect its membership to swell to 150-250M users over the next year or two. SocialAds and Beacon, just like Applications, will either improve or horribly break the user experience. Facebook must approach this new turn with caution, this is a critical moment.

Great post!

Do you think the release of Beacon, Insight and SocialAds is the first step in a series of behavioral targeting by other major players in the industry?

I’m sure that all modern SNS has the potential to create similar ad models for their business. I’m especially fearful of Google which controls not only our social information (Orkut, Groups, etc) but also my e-mail habits, subscriptions, searches, etc.

Currently only 8% of ad networks use behavioral ad targeting, specifically because of PII issues, are is Facebook getting away with all of these pretty invasive ad-targeting systems? Is there a possibility of lawsuits on the horizon?

Keep up the great work!

Volde, I believe that any company that has the means will engage in behavioral targeting. Expect Google to purchase or partner with a major data warehouse such as Equifax or Experian. This is only the first volley in a war.

It really is terrifying that this kind of thing is happening. And while Facebook and Google have been around for a while, it still seems too soon.

When will the millions of people just learning of Facebook learn about what Facebook can do with the information they share?

It makes me think of a time I went to a post-office, and in front of me in the queue was an old lady who was posting off her pension money to a blatant scammer who’d told her by sending it she’d stand a chance of winning £10,000.

While targeted marketing is better for the consumer than a contextually bereft barrage, Project Beacon seems sadistic.

If targeted marketers were The Dambusters, Project Beacon is Oppenheimer and Groves. Ugh.

great analysis again.

It’s ironic how you assume that their usage will swell, but then bring up the ultimate point about the new programs ‘breaking’ the user experience.

Just in your last post you nailed myspace on their horrible interface, yet you semi-assume that facebook is immune to it.

Their interface has been harmed extremely with the introduction of gawdy, viral apps, and I’m quite sure these new viral ads will have a horrible impact.

I’ve seen full screens of notifications for zombie bites already, and I don’t think it’s too long before I see the same with ‘why don’t you rent all of your favorite videos from blockbuster’.

Both of which people will not pay attention to, and will eventually leave the site.

Pete - We’re comparing short-term vs. long term here. Facebook is going to swell due to network migration; the cascade is on and there’s little Facebook could do to stop that now. People aren’t making decisions based on interfaces anymore.

However, in the longer term, the itnerface is a key element to keeping people around. Newsfeed and application spam have pissed off long-term users - they’re the ones leaving Facebook. Without a sane interface, few applications have long-term potential.

Regardless, Facebook will grow..they must deliver a sane experience to keep users there. Without that, people will leave.

I agree.

Most likely there will be growth. I’m just trying to play devil’s advocate here with imagining a horrible scenario.

The scenario that the interface becomes so horrible that it becomes a barrier for entry. A fair portion of the people who are migrating over are those who were already agitated by the myspace interface. If they see an interface laced with ads and viral campaigns, I feel they’ll have trouble adapting to the network.

I don’t see it as extremely likely, but I think it still is a possible scenario. They must tread lightly.

as a long time user,i miss the good old only college days of facebook. Sometimes it’s best to separate tools from toys.

At first I balked at the facebook statement “You will not see any more ads than you did before this.” (refer to blog). But I have been playing around with Facebook ads all morning as well as testing their ad system through surfing.

I know its early but I have not seen any more ads than before, and only a few targeted ads.

My early results from advertising:

Impression: 154317
Clicks:39
CTR: 0.03
CPC: 0.17
CPM: 0.04
Total spent: 6.62

The amazing thing is..this happened in the first 15 minutes I put up the ad…

Volde, for our readers who might not know - could you give a quick analysis of those numbers?

In response to Fred,

The numbers from Facebook are pretty amazing when compared against similar ads I have placed on Google Adsense.

The exact same campaign I ran on Adsense yields on average a CPC (Cost per Click) of around 1 to 2 dollars as compared to .20 cents on average from facebook.

The CPM (cost per thousand impressions) is open to for interpretation. On the one hand the fact that I’m paying .04 cents per impression is great looking across rates across the internet and on ad networks. On the other hand, the fact that it took almost 150,000 impressions to land 39 clicks (at a .03% click through rate) is abysmal compared to other ad networks.

But this doesn’t necessarily mean that there is a problem with Facebook’s network. Facebook has a huge stockpile of pageview inventory b/c of the nature of user engagement on the site, as a result, it makes sense that even at this high volume of impressions CTR will not really yield as much relevant data as other ad networks.

In fact, from looking at where my clicks are coming from (Google Analytics and site logs), if Facebook simply only isolated ad displays on profiles and not through search, app, and other impression areas they would instantly see a higher click through rates. All but two of my clicks came from individual profile pages.

Hope this clarifies Fred, update us more as you dig :)

Ge

Thank you!

Two impressions, that I leave here, but I could have left them on any of the thousands of posts on the topic:
1. Why does every blog reader seems to think that Mark Zuckerberg (a 23-yo, Harvard grad’ multi-billionnaire, not you usual slacker) and his dozens of employee (the best out of Google, I heard) will make a mistake 5 billions+ people have warn them against? Being an economist, I know too well how irrational people can be——but this still bother me.
2. Assuming the conversion rates of an ad will increase, how many “action” decisions can we take in one day? Two, three? Why should we receive more then 10 ads a day, then? Hasn’t Google proven that you can make a fortune with four ads at the max? Isn’t it a good thing that children don’t have to see lingerie ads, and that I can see funny ones, while alcoholics can avoid beer ads?

Have you seen Coke’s official page on Facebook? It is so lame. It is like the company never promoted a product ever!! Here is the official description of coke: “The Coca-Cola Company engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates and syrups worldwide.”
Yeah I am a big fan of that, how cool is that!
Also, it seems strange that while the presence of product pages has gotten a lot of hype, it is quite hard to actually find them on Facebook. You can’t search for “products” and see what is out there, you just get a list of everyone who has products in their name.