Friday, April 30, 2010

Facebook's moves and personalized advertising

It has been widely reported that Facebook has launched Open Graph and Implicit Personalization, which, among other things, give Facebook information about people's movements and what they like on the web. The service was launched opt-out and, even if you do want to opt-out, requires diving into confusing privacy settings to opt-out.

The prolific discussion of this elsewhere has thoroughly exhausted most of what there is to say, but I wanted to emphasize two things about this launch.

First, the fact that Facebook is so aggressively seeking this "treasure trove" of browsing behavior data may signal a major shift in its revenue model. Prior claims aside, the company now may be realizing that it is hard to target advertising to profile information and status updates because there is no commercial intent. This new source of data -- the websites people are visiting and what they like -- contains the purchase intent that Facebook so desperately needs.

Second, as Steve Lohr at the NYT reported today, other companies considering heavy use of personalized advertising have been waiting for someone else to take the first step and bear the brunt of any privacy-related backlash. It will be interesting to see if Facebook's latest move -- which probably is aggressive enough to count as the first step everyone was waiting for -- will result in a backlash or will open the floodgates.


Anonymous said...

I still don't fully understand FB's latest move. Wondering if the following understanding is true: FB will have a knowledge of all my website visits as long as the websites integrate with FB open graph and I am an active FB user who didn't opt out.

Greg Linden said...

As long as you are logged into Facebook at the time you visit those websites, I think that is true.

The idea is that, across the web, people will put Facebook's widget on their page. That widget, in addition to whatever action it allows (e.g. "liking" a page or allowing third parties to know something about your Facebook profile), logs the web page you visited.

So, now, attached to your Facebook profile will be many of the websites you visit. That makes the profile much more useful for targeting advertising because some of those visits will have strong commercial intent (e.g. visit to a product page).

Companies having this kind of website browsing data on individual users isn't new. Google has long had it through its Toolbar, AdSense, and Analytics features (and, now, even more so with the addition of all the DoubleClick data). But having this kind of data is new to Facebook.