Digital Destiny

From eMarketer on The Advertising Opportunity in Facebook Places [excerpt]: Facebook’s value as a business comes from all the bits of information it gleans about its users from their daily activities. Every single action people take—whether it’s writing a status update, posting a photo, commenting on a friend’s post, liking a marketer’s message or playing a game—becomes an object in Facebook’s database. Location is a type of data that is very compelling because it provides additional context for the actions people take on Facebook…If ads can be pushed to people in the moment they are engaged with something, rather than waiting until they take action and start a search, the ads become very very powerful.  Location will give Facebook a new way to target and sell advertising… By offering ways for marketers to target Facebook users not only on the online service but also when they are on the go and using Facebook on their mobile phones, it opens up all-new avenues for interaction.

You have to follow your data [and your friends and networks]–that’s how the money is generated in online marketing.  This article via DM News explains that:“…Facebook continues to gather more information about what people do and where they are - critical data for marketers. “What I find interesting is where people check in says even more about what they like. Now we’re actually looking at their real-world behavior, instead of just a button they click on a website,” he said [Augie Ray, senior analyst at Forrester Research]. “I think this really will continue to help Facebook offer much better targeting and permit marketers to do a better job of understanding their consumers and targeting ads at those consumers.  The very scale that Facebook Places creates is a welcome event for marketers, said industry professionals.  “I would say this is a tipping point for geo-marketing,” said Lawrence Kimmel, CEO of the Direct Marketing Association…Maria Mandel, VP of marketing and media innovation at AT&T Advanced Ad Solutions, agreed that the service makes geo-marketing much more mainstream. “It certainly brings location-based social media to the mass market,” she said. “It validates the relevance of the location-based check-ins and may offer substantial new opportunities for advertisers.”  Leveraging location may prompt innovative promotional campaigns, such as scavenger hunt contests, Mandel noted. There is also the scope to build long-term loyalty programs by rewarding people for checking in at certain locations to build toward prizes, offers or discounts, she said.

source:  Marketers See Potential in Facebook Places.  Shahnaz Mahmud.  DMNews.  August 20, 2010.

PS:  One social media marketing company writes that:  “…Facebook already provides marketers with a comprehensive list of your interests and favorite things with the integration of the Like button. Retailers, like Amazon, have already begun to leverage this information to create purchase suggestions for you and your Facebook friends…Now, with Facebook Places…[M]arketers can (and should) use this invaluable information to direct promotions and advertisements to consumers…This information is highly valuable as social media once again allows businesses to gain access to the exact niche of consumers they are striving to reach.”

We have been raising concerns about privacy and location data collection and targeting–including with our colleagues at USPIRG.  Facebook’s new location feature is designed to generate more user data that can be used by Facebook and its affiliates to bolster ad and brand targeting.  I want to excerpt this post from one of Facebook’s developers–Vitrue–which illustrates how soon companies like McDonald’s will work with Facebook to harvest local data and our behaviors:

“…A user will open up their mobile Facebook app and be able to see shops, restaurants, parks, areas, etc. that they are near.  They can then check-in to that location.  If a location doesn’t exist, the user can simply create it.  A story about where that person checked-in will be published to their profile and subsequently their friends’ news feeds…Facebook’s massive user-base is a distinct advantage and is likely to generate location-based activity orders of magnitude greater than other companies already in the space. As the leading social network, Facebook is able to capitalize upon the users existing friends, and use their collected demographic and preference data to show users places that it thinks is relevant to them, instead of just places nearby.

How Will Brands Take Advantage of Facebook Places?

With all of these users checking in to locations, what does that mean for brands?  Well if your brand has brick-and-mortar locations, your brand can claim these digital “Places”, turning the locations into Facebook Place Pages.

Brands can choose to merge a Facebook Place Page with an existing Facebook Page, if one exists, and if prompted– the option may not be widely available yet as Facebook is rolling it out over a period of days…

At this time Facebook does not recommend merging your Places with your Page if you are a national or global marketer with more than one location, like a McDonald’s or GAP.  They recommend managing the Places separately and have stated that a solution that will help these types of brands is planned for the future…Currently, Facebook CEO Mark Zuckerberg says they aren’t looking to monetize Facebook Places right now, but that doesn’t mean that they can’t in the future.   With Facebook collecting all of this location-based data, it seems like Facebook could allow brands to place highly targeted Facebook ads on the Places Facebook pages.  For example, if your brand’s products are sold in grocery stores, you could potentially place your ads on certain grocery stores’ pages to be viewed by people who’ve checked in.”

In another words, in the world of mobile and location ad targeting, our data will provide marketers with real-time sophisticated insights giving them a rich history of where we spend time and what we do [go to the bank, buy at the pharmacy, eat fast food, etc].  Such “360 degree” targeting, as the online marketers call it, require the appropriate privacy safeguards.

You have to read between the lines to understand what Facebook’s new location feature is really designed to do:  Open you and your friends to be more closely tracked by Facebook and its marketing partners, including major advertisers [Fans are worth money to Facebook and their marketing partners].   On Facebook’s blog post on the new location service [which is written in typical Silicon Valley PRspeak suggesting they are doing this only to bring pleasure into your life], the key telling phrase is: “You may want to share your check-in information with third-party applications that build interesting experiences around location, such as travel planning. Applications you use must receive your permission before getting this information. Your friends will be able to share your check-ins with the applications they use to help create new social experiences with location.”

That really means Facebook already has plans to use location data to expand its marketing business (inc. from thrid part apps), which is expected to help the social network bring in $1 billion this year.  Mobile and location applications require greater safeguards for privacy, as my CDD and USPIRG petitioned the FTC to do last year [as a result the FTC has opened up a “mobile lab” examining data collection and mobile marketing practices]. Companies such as Facebook. Google, Foursquare, and others are keenly aware of the huge ad revenue opportunity from location marketing.  One Google backed location social game start-up [SCVNVR] calls this potential the “social coefficient.”  As Mobile Marketer reported, the “Social Coefficient is a score determined by the number of social interactions at a specific location…The more friends at one place or the more users participating in the challenges over time, the higher the Social Coefficient score for that particular location.”  Facebook and others understand that advertisers are willing to pay more if they can encourage friends to market to other friends. 

McDonald’s is already in discussion with Facebook to use this new service.

The Las Vegas Casino the Golden Nugget has created a social game [take a look] on Facebook where, says DM News, users can “build their own Vegas casinos, including table games such as Blackjack, Video Poker and Roulette. As they earn virtual money, consumers can create their own customized furniture layouts and decorations by purchasing store items, as well as slots, tables and clothing for a consumer’s avatar. Players can also visit their Facebook friends’ casinos and build their avatar.”

It’s also about data collection:  “That is about data collection, as well as rewarding people who are playing the game,” [said a Nugget representative].  The game’s developer explained that it “will examine targeted behavioral gameplay data to help advertisers and to provide consumers with more compelling experiences.”

As Congress debates legislation that would okay online gambling, one of the key issues should be privacy.  What happens when a consumer is identified by a online casino or a Facebook that they gamble?  How does that get used in their online behavioral targeting profile, along with health and financial information?  Should we even permit the behavioral tracking of any user who engages with online casinos?  There are a host of privacy and consumer protection issues about leaving your data in Las vegas–or with online marketers such as Facebook.

Some commentators–and groups funded by online marketers that target teens–are worried that proposals to the FTC and Congress that adolescent privacy be protected will somehow create a system that requires forms of age verification online.  The coalition of leading consumer, child advocacy, health and privacy organizations filing comments at the FTC last week aren’t calling for the parental permission paradigm used by the Children’s Online Privacy Protection Act [COPPA] be extended to teens.  But there are many online commercial services specifically targeting adolescents–that’s their target market.  It’s those sites and services specifically focused on adolescents that we want to have better privacy safeguards.   We want those sites to be governed by an opt-in regime that gives teen users meaningful control of how their information is collected and utilized.  Those sites should be required to engage in the Fair Information Principles known as  “data use minimization.”  Commercial sites targeting adolescents should make its data collection practices fully transparent and under the control by the teen (including a truly accessible privacy policy).  In another words, a privacy safeguard regime that really should be available for everyone.  Teens are ‘ground zero’ for much of digital marketing–for examples see our site: www.digitalads.org [especially the update section].  If you look at the reports on that site, you will see that the most recent scholarly thinking is that brain development in adolescents occurs much later than what was once thought.  They don’t have the ability to effectively understand the intent of highly sophisticated interactive marketing and the corresponding data collection which underlies contemporary digital advertising. That’s why empowering them so they can protect their privacy strengthens their rights.

One of the areas requiring online privacy and consumer safeguards is the health and medical area.  As CDD told the FDA, the use of behavioral data profiling & targeting, immersive multi-media techniques, social marketing [via stealth-like influencer and word-of-mouth tactics, and brand channels, such as on YouTube, raise a host of concerns.  I don’t believe one’s largely private concerns about a health condition or remedy should automatically be fodder for digital marketing.  To see how important the health online marketing is to Google (and others), here’s an excerpt from a “Consumer Packaged Goods or Healthcare Industry Marketing Manager job opening:

Google is at the forefront of a revolution in Marketing - a shift from traditional Marketing tactics to new online, mobile and social strategies. Google’s advertising platforms provide savvy advertisers with multichannel marketing opportunities, linking online marketing to brand impact and offline sales.

Consumer Packaged Goods or Healthcare Industry Marketing Manager position shapes Google’s point of view on the changing advertising landscape. This leader will uncover, understand and explain the impact of evolving online media to industries that have traditionally relied more on offline media, such as healthcare, CPG, restaurants, education and more. This is a unique opportunity to set Google marketing strategy within our Emerging Industries practice and advise Fortune 1000 advertisers on cutting edge marketing strategies. You will arm the Google salesforce with marketing programs that establish fresh thinking in the industry and deepen engagement with clients…

Responsibilities:

• Ideate, develop, and execute marketing campaigns that drive Google’s advertising business.
• Develop thought-leadership materials, client/executive presentations, case studies and other content designed to accelerate our business momentum and better engage Google’s customers.
• Develop compelling positioning and messaging for Google’s advertising solutions targeted to companies in industries relatively new to online marketing, such as healthcare and CPG
• Partner with Google’s market research team to identify, execute and package compelling market research that supports Google’s value proposition to large advertisers in these industries.
• Evangelize Google’s value proposition, best practices and perspectives to our customers and our industry peers via events, webinars, and other direct client communications channels.

Facebook execs frequently claim they don’t share their users personal information with advertisers.  They also always add that Facebook isn’t really that interested in advertising revenues.  But that’s not correct, as the Facebook Quarterly Business Review: Q1 2010 reflects.  Facebook, now cash positive, was said to earn somewhere between $600-700 million in revenues last year–up dramatically from the $150 million generated in 2007. The Quarterly estimates that Facebook should earn over $1 billion in 2010.  How?  “By growing multiple revenue sources, mostly around advertising,” it explains. Facebook is expected to earn some $350 million alone in 2010 from selling its ad services to big brands, with more growth expected.  In the last year, Facebook has “invested heavily in expanding its brand advertising efforts by opening up offices in Paris, Madrid, Milan, Hamburg, Sydney, Stockholm, Toronto and Los Angeles.”  The report says that Facebook will eventually earn some $20 billion a year, with a huge increase coming from big brand advertisers.

So-called performance advertising on Facebook [from social games, for example] is expected to bring in between $500-600 million this year.  There will also be additional revenues from Facebook’s virtual currency [and soon from mobile and location based marketing as well].

Facebook’s users aren’t informed about the datamining that occurs on what they post and communicate, including to their social networks.  We believe these systems require transparency and mechanisms of user control. And FTC and Congressional action.

Facebook made some positive changes today, but only because of political pressure from policymakers and privacy advocates on both sides of the Atlantic.  Mr. Zuckerberg’s failure to acknowledge the political realities don’t bode well for Facebook’s future approach to privacy.  He appears to be living a Alice in Digital Wonderland fantasy, where changes are made on privacy only because Facebook has the goodwill of its users in mind.  Just last December 9, after all, Facebook made one of its typical self-reverential announcements that it was “rolling out easy-to-use tools to empower people to personalize control over their information.”  These changes triggered a user revolt, letters from Senators, an opinion ordering a reversal from the EU, and concern from the FTC.

There are more simplified and manageable privacy settings, and Facebook has made an important first (or back-tracking!) step.  Unfortunately, Facebook still refuses to give its users control over the data it collects for its targeted advertising products.  The defaults should also be initially set for non-sharing, with the minimization of data collection at the core of Facebook’s approach to privacy.   CDD and other privacy groups will examine these new settings and identify where further changes should be made, including on advertising data.  Meanwhile, we want Congress to hold hearings on social networking privacy, with Mr. Zuckerberg as a star witness.  Mr. Zuckerberg should be asked to explain how Facebook continues to develop new approaches to data collection and privacy–from Beacon to Instant Personalization–that continually lowers the bar–until the company has to do some form of hasty retreat.   Congress needs to examine how Facebook develops its approach to privacy, and what its business plans mean for the future.

CDD will also press the FTC to investigate Facebook, including acting on complaints filed with EPIC and other groups.  It’s time for the FTC to announce guidelines to protect social networking privacy on Facebook and other sites.
Jeffrey Chester
Center for Digital Democracy
jeff@democraticmedia.org

Facebook is becoming a leading marketer for fast-food companies.  When one thinks about Facebook working to weaken privacy, keep in mind they want to better harvest user data to help sell ads and other marketing services to McDonald’s and others.  According to Ad Age [excerpt, sub. may be required]:

Facebook is preparing to launch location-based status updates for its users. But the social network is also planning to offer it to marketers, including McDonald’s. As early as this month, the social-networking site will give users the ability to post their location within a status update. McDonald’s, through digital agency Tribal DDB, Chicago, is building an app with Facebook would allow users to check in at one of its restaurants and have a featured product appear in the post, such as an Angus Quarter Pounder, say executives close to the deal.  Facebook is not directly charging McDonald’s to build the app; Facebook generally does not charge developers to build on its platform. But executives with knowledge say it was negotiated as part of a bigger media buy on Facebook, and McDonald’s will be the first marketer to take advantage of the service.

The fast feeder won’t be alone for long. While McDonald’s is expected to be involved in the rollout in the next few weeks, execs at other digital shops have begun to spec out location-based campaigns in anticipation of Facebook’s impending functionality, which will allow users to include their location in a status update.

…Kevin Colleran, director-national sales at Facebook…noted that Facebook has the world’s largest mobile application, with more than 100 million users each day.
source:  McDonald’s to Use Facebook’s Upcoming Location Feature:  Brands Eager to Build Apps Once Massive Social Network Launches Its Own Foursquare Competitor.  Emily Bryson York. Ad Age.  May 06, 2010