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Before the bell: AMR, GOOG, AAPL
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Facebook has had a breakout year -- BloggingStocks probably should have listed the social networking site among our Hot Products of 2007. It sold a small stake to Microsoft for $240 million, and its success with encouraging third-party add-ons forced News Corp (NYSE: NWS)'s MySpace and even the mighty Google (NASDAQ: GOOG) to change tactics. But as Tom Taulli and The Wall Street Journal addressed yesterday, Facebook's stock with privacy advocates is dropping over its über-creepy Beacon targeted advertising method.On Facebook, you're as private as you are modest. You have the option of laying bare your bookshelf, Netflix (NASDAQ: NFLX) queue and purse contents for all your friends and neighbors to pan through, or you can leave all that business blank and keep your fancies as mysterious and enigmatic as you are, you unique snowflake. My profile tells users -- not to mention advertisers -- that I like to put on CNBC and dust my marriage-prohibitive record collection. Consequently, I've got E*Trade (NASDAQ: ETFC) and the occasional ironic t-shirt vendor after me, greeting me with animated ads whenever I log in.
By now, web users have learned to deal with e-tailers and ad-serving scripts tracking their behavior, realizing that oft-maligned cookies effectively just save you the effort of typing your password. This is reasonable targeted marketing: I pay nothing for a service, and in exchange, some vendor imagines it got a little closer to a selling me something.
Where Facebook and all the participating advertisers that sail with her cross the icky line is with Beacon. Beacon goes beyond serving up targeted ads -- it takes my purchase information from participating advertisers and broadcasts it endorsement-style to all my Facebook friends, as well as any others in my network who, for whatever illness or boredom, feel like probing my Facebook essence.
Facebook's advertisers page says such ads "act as a word-of-mouth promotion." The idea is that my friends would be sooo enamored of my consumer choices that they would trod off cash in hand to the exact same vendor (now there's an absurd ad waiting to happen -- "Barry bought a round lot of Intuitive Surgical through E*Trade -- Won't you make the switch today?").
We all get the concept, but I'd rather choose when to actually use my word of mouth to let my friends know, or more crucial, to keep stumm if I'm renting
Users get nothing out of this, mind you. I'd become a de facto pitchman for whatever service chooses to betray my patronage, with no compensation: no store credit, no discount, nothing.
What's more, how effective can this tactic be? Even if one person heads off to buy the same CD I just enjoyed, how many discriminating friends will write off that snitchy sponsor completely? That I so far know of, participating in the Beacon program are Blockbuster and Comcast (NASDAQ: CMCSA)'s Fandango ticket service. Feel free to use the comments area to call out any other Facebook sponsors who want to abuse your support through the Beacon program.
UPDATE: A Facebook press release lists participating advertisers as:
- AllPosters.com
- Blockbuster
- Bluefly.com (NASDAQ: BFLY)
- CBS Interactive (CBSSports.com & Dotspotter) (NYSE: CBS)
- eBay (NASDAQ: EBAY)
- ExpoTV
- Fandango
- Gamefly
- IAC InterActiveCorp. (NASDAQ: IACI) sites (CollegeHumor, Busted Tees, iWon, Citysearch, Pronto.com, echomusic)
- Expedia (NASDAQ: EXPE)'s Hotwire
- Joost
- Kiva
- Kongregate
- LiveJournal
- Live Nation (NYSE: LYV)
- Mercantila
- National Basketball Association
- NYTimes.com (NYSE: NYT)
- Overstock.com (NASDAQ: OSTK)
- (RED)
- Redlight
- SeamlessWeb
- Sony Online Entertainment LLC (NYSE: SNE)
- Sony Pictures (NYSE: SNE)
- STA Travel
- The Knot (NASDAQ: KNOT)
- TripAdvisor
- Travel Ticker
- Travelocity
- TypePad
- viagogo
- Vox
- Yelp
- WeddingChannel.com
- Zappos.com
Reader Comments (Page 1 of 1)
11-26-2007 @ 10:50PM
david istier said...
Bary,
I cannot agree more with your comments. We can ask if Facebook latest move to allow 'social ads' is not pushing the brand too far.
After all, Facebook grew (like many others internet brands like hotmail, myspace, youtube,...) mainly through word of mouth recommendations. I can understand the need for the organisation to get ROI, but doing that via traditional push method such advertising is going against what made it successful in the first place. The cycle of innovation for the ‘social web’ is faster and shorter than ever. I guess the question is can Facebook become more ‘commercial’ without alienating its core base because it has now tipped in the mainstream or will just start slowly but surely put people off…. The jury is out.
David
http://www.gossiponwordofmouth.blogspot.com/
12-06-2007 @ 11:41PM
miladymell said...
As soon as I heard about this Beacon program -- I pulled out of Facebook. Its a bit too "Big Brother" for my tastes. Call me crazy -- but the idea of having most of my internet activity monitored is a necessary evil. To shout it out the to the rest of the world is not.