Digital Destiny

At a discussion on social media in London last week on “Understanding Social Graph Optimisation,” [meaning how to better target and monetize users], one of the topics was whether users should be financially compensated when their data is harvested for commercial exploit (such as for marketing).  What did Facebook’s executive on the panel say?  According to one post covering the event, ”
Trevor Johnson, Head of Strategy and Planning, EMEA at Facebook made it clear that Facebook users get enough value back simply from the user experience gained by being on Facebook.  He described how users gain “egotistical value”.

The top execs at Facebook claim that the social network giant ad targeting apparatus is well understood by its users, and that they have secured their consent.  But I suggest few users understand the complexities of Facebook’s viral marketing and tracking system, let alone the new Facebook/Nielsen “Brandlift” initiative designed to demonstrate Facebook can deliver big for the biggest brands.  According to New Media Age:
More than 70 studies have been done in the US in the FMCG, retail, media and entertainment, telecoms, financial and automotive sectors. Nielsen and Facebook said 97% of these found a significant lift in at least one brand metric, while 85% reported an increase in at least two.  “Starbucks is a heavy advertiser on Facebook,” said [Trevor Johnson, head of strategy and planning EMEA at Facebook] Johnson. “We ran a campaign to get people to buy a muffin on a certain day and measured a 94% uplift in purchase intent.”…Facebook will apply the demographic data it already collects from its users to deliver results tailored to brands’ needs.

We continue to tell both the FTC and EU regulators that the data collected and used by Facebook for its ad targeting system must be under the control of its users.  Facebook is in the process of making its advertising API available to additional marketers (it’s been working with several large global ad agencies in a trial).  Here’s what Facebook says advertisers can target:  countries, cities, regions, genders, college networks, work networks, age minium [”Specify a minimum age to target. If used, this must be 13 or higher.”], age maximum, education status, college years, college majors, political views [”Use 1 for LIBERAL, 2 for MODERATE and 3 for CONSERVATIVE”], relationship status [”Use 1 for SINGLE, 2 for IN_RELATIONSHIP, 3 for MARRIED and 4 for ENGAGED.”], keywords [”Keywords are matched to user profile data to better target ads for example “movies” or “cars” can be used’], interested in, radius, connections [”Connections targeting allows you to target your ads to users who have become a fan of your Page, a member of your Group, RSVP’d to your Event or authorized your Application.”], excluded connections [”Excluded connections targeting allows you to target your ads to users who have not become fans of your Page, members of your Group, RSVP’d to your Event or authorized your Application.”], friends of connections [”An array of Facebook IDs. “Friends of connections” targeting allows you to target friends of your connections. Connections are fans of your Page, users who have RSVP’d Yes or Maybe to your Event, members of your Group, and users who have interacted with your Application.”], user event.

In a December 2009 interview in New Media Age, Facebook’s director for commercial marketing in the EMEA and UK market explained that [excerpt]:  CPMs on our home page are three or four times those of Yahoo’s. On click-through, the engagement levels we’re getting are 10-15 times that. Not 10% more, 10-15 times Yahoo’s click-through rates. This is where we’re selling to P&G and those big brands.  The other side of our business is performance: those little square boxes, ASUs [Ad Space Units], that appear everywhere except the home page. 80% of our inventory is driven through a self-service auction model. We’re on 50bn of them a month in the UK. That’s scale. And big brands are saying they’re getting more volume and lower cost than Google on Facebook right now…The big thing we’re bringing to the market in early Q1 is Nielsen-branded research, which will reveal what people are doing, using awareness consideration and favourability metrics that are important to branded advertising. We’ll be able to quantify this via Nielsen.“

Facebook’s new academic Fellowship program places the social network along with other companies, such as Google, that like to tap into the “academy,” especially students.  Facebook says every day it “confronts among the most complex technical problems and we believe that close relationships with the academy will enable us to address many of these problems at a fundamental level and solve them.”   Among the areas Facebook wants inexpensive help with is “Data Mining and Machine Learning: learning algorithms, feature generation, and evaluation methods to produce effective online and offline models of behavioral signals.”  There are several other areas of interest, including “Internet Economics: auction theory and algorithmic game theory relevant to online advertising auctions.”

In exchange, Facebook offers to pay tuition, a $30k stipend, a travel allowance, and a chance for a paid summer internship.  The pitch must be endorsed by a faculty member that “clearly identifies the area of focus and applicability to Facebook.”   Our suggestion:  students should apply with projects which hold Facebook more accountable for its privacy and data collection practices.

Facebook is a very valuable tool.  But its effort to harness more of its member data–and cloak it as a “privacy” approach–illustrates how out of touch Facebook is with the fundamental concept of personal privacy.  That’s why the FTC and EU Privacy commissioners have to step in and act as Facebook’s true “privacy wizard.“  Left on its own, with its business interests driving Facebook to make our information available to them and their business partners, the privacy of 100 million US users (and even more globally) are at risk.  Facebook cavalier approach that your “name, gender, current city, networks, Friend List and Pages” is considered by them “publicly available information” illustrates this.  Facebook has framed these changes as beneficial to users, claiming that its “new, simplified privacy settings giver you more control over the information you share.”   Classic PR doublespeak with a Silicon Valley accent.

We have raised concerns about Facebook in the past–especially with Beacon and also with the third party apps (my CDD played a leading role providing information on the data collected by third party applications to the leading Canadian privacy group).   I asked Facebook officials to brief me and other privacy groups on the recent changes: that briefing was on Wednesday.  I wanted Facebook to explain how its new privacy approach allowed its users to control data mined by Facebook and its third party developers used for interactive advertising and marketing. I was so appalled by what Facebook officials said at that meeting that, after some additional research into Facebook’s plans, my Center for Digital Democracy decided to join with EPIC and others in a complaint to the Federal Trade Commission.

I was flabbergasted to hear Facebook officials claim that its new changes actually reflected “Fair Information Principles” for privacy. That in their view the concept of privacy has “evolved,” with users wanting to share all their information via what they call the “social graf.” Facebook officials said that only a few people (implying privacy advocates) wanted to have control over their information. That they didn’t consider allowing users to control the data collected on them for marketing and advertising purposes as part of a privacy regime.  Data used for advertising–even to Minors–is considered outside of what a person should be able to control, in Facebook’s view.   They also suggested that those who didn’t appreciate what they called its privacy “permission” model were out of step.

Nothing was said by Facebook officials about the company’s real motivations for expanding its access to its user data (as if business reasons had nothing to do with Facebook’s approach to member privacy!).  As InsideFacebook recently explained, “Last week, Facebook launched a major initiative geared towards getting users to share more information more openly…However, while many people don’t want to share much information publicly online today, some do. For those people, Facebook’s historical default privacy settings did not make it the right product for them. As a result, Facebook recognized that its default-private model made it vulnerable to other services with default-public models, like Twitter…Facebook’s decision to make the recommended privacy options for profile data like “Family and Relationships” and “Posts I Create” be set to “Everyone” – as well as its move to remove privacy controls for Gender, Current City, and Friends – were pretty aggressive by almost anyone’s standards. In particular, its decision to present users with a binary choice between “Everyone” and “Old Settings” for some privacy preferences was especially confusingly executed…Facebook isn’t satisfied with a mostly-private platform: it wants to be the single place where both sensitive personal information is shared and public memes spread…Facebook has shown, as recently as a few months ago with its launch of the “real-time” stream as the default News Feed, followed by its decision a few months later to go back to the algorithmic News Feed, that it is capable of making suboptimal product decisions due to intense feelings about services like Twitter…”

Relevant too are Facebook’s plans to enable its third party developers to gain access to more of its member data, including their email addresses.  As Facebook explains on its “Roadmap” for developers, “We’re excited to announce that you will soon have the ability to ask users for their primary Facebook email addresses, providing you with a direct channel to communicate with your users.” At our briefing, Facebook officials said they were soon addressing third party apps and their access to data.  But given Facebook’s failure to protect basic user privacy, we have serious doubts it will deal with data access by its developers.

CDD will be working to educate the FTC, EU privacy officials and others.  Facebook is consciously devaluing the notion of privacy for its own interests.  How Facebook deals with user data–including what is used for advertising–will be on the policy agenda.  The complaint from EPIC, Consumer Federation of America, Privacy Rights Clearinghouse, CDD and others opens the door for a serious examination of Facebook’s data collection practices.

“Facebook’s new policy has seriously eroded the privacy rights of its members,” explained Jeff Chester, executive director of the Center for Digital Democracy (CDD).  “The leading social network has not acted responsibly.  It cannot be permitted to deliberately weaken the control its users have over their information,  just because it may boost its bottom line.  We call on the FTC to swiftly act on this complaint to protect the more than 100 million U.S. members of Facebook.”

How we handle our money–including credit, loans and banking–is moving online.  Digital marketing of mortgages, credit cards, student loans and other financial products will become the dominant way we relate to banking and related services.  The CEO of Capital One has already said that ” [A] mobile phone is just a credit card with an antenna.”  So called M-commerce (mobile commerce) will be a crucial avenue where we actually apply for credit on “the fly,” so to speak, with our cell phones themselves used to buy products.   Banks and other financial companies are using Facebook, other social media, online video, Twitter, search engines and interactive online marketing techniques to sell their services to consumers.  They are also using digital media in PR campaigns designed to make consumers forget about their unethical behaviors which led to the current fiscal crisis.

Financial services companies are even using so-called neuromarketing–testing messages via fMRIs, for example–to help hone their marketing messages.  Neurofocus, a Nielsen backed company that helps create digital and other ads based on brainwave research, released a study  earlier this year that “dived deep into test subjects subconscious minds to discover their hidden, unspoken beliefs and feelings about financial institution brands.” They “tested consumers in its laboratory to determine exactly what financial brand messages they responded to best, at the deep subconscious level of their minds, where brand perceptions, brand loyalty, and purchase intent are truly formed.”  Financial marketers are also using behavioral targeting online, which stealthily collects data on us for tracking and target marketing. That’s why we keep seeing ads for credit cards and other money-related products.  The information gathered as we fill in forms on the Internet  can be sold as part of the online lead generation business.  Online lead generation played a role in the subprime debacle, as consumers provided marketers with personal information that helped trigger pitches for mortgages and other credit.

Alternet has just published my article on these issues.  It can be found here.

Washington, DC, December 6, 2009 – On Monday December 7, 2009, consumer representatives and privacy experts speaking at the first of three Federal Trade Commission (FTC) Exploring Privacy Roundtable Series will call on the agency to adopt new policies to protect consumer privacy in today’s digitized world. Consumer and privacy groups, as well as academics and policymakers, have increasingly looked to the FTC to ensure that Americans have control over how their information is collected and used.

The groups have asked the Commission to issue a comprehensive set of Fair Information Principles for the digital era, and to abandon its previous notice and choice model, which is not effective for consumer privacy protection.

Specifically, at the Roundtable on Monday, consumer panelists and privacy experts will call on the FTC to stop relying on industry privacy self-regulation because of its long history of failure. Last September, a number of consumer groups provided Congressional leaders and the FTC a detailed blueprint of pro-active measures designed to protect privacy, available at: http://www.democraticmedia.org/release/privacy-release-20090901.

These measures include giving individuals the right to see, have a copy of, and delete any information about them; ensuring that the use of consumer data for any credit, employment, insurance, or governmental purpose or for redlining is prohibited; and ensuring that websites should only initially collect and use data from consumers for a 24-hour period, with the exception of information categorized as sensitive, which should not be collected at all. The groups have also requested that the FTC establish a Do Not Track registry.

Quotes from Monday’s panelists:

Marc Rotenberg, EPIC: “There is an urgent need for the Federal Trade Commission to address the growing threat to consumer privacy.  The Commission must hold accountable those companies that collect and use personal information. Self-regulation has clearly failed.”

Jeff Chester, Center for Digital Democracy: “Consumers increasingly confront a sophisticated and pervasive data collection apparatus that can profile, track and target them online. The Obama FTC must quickly act to protect the privacy of Americans,including information related to their finances, health, and ethnicity.”

Susan Grant, Consumer Federation of America: “It’s time to recognize privacy as a fundamental human right and create a public policy framework that requires that right to be respected,” said Susan Grant, Director of Consumer Protection at Consumer Federation of America. “Rather than stifling innovation, this will spur innovative ways to make the marketplace work better for consumers and businesses.”

Pam Dixon, World Privacy Forum: “Self-regulation of commercial data brokers has been utterly ineffective to protect consumers. It’s not just bad actors who sell personal information ranging from mental health information, medical status, income, religious and ethnic status, and the like. The sale of personal information is a routine business model for many in corporate America, and neither consumers nor policymakers are aware of the amount of trafficking in personal information. It’s time to tame the wild west with laws that incorporate the principles of the Fair Credit Reporting Act to ensure transparency, accountability, and consumer control.”

Written statements and other materials for the roundtable panelists are available at the following links:

CDD/USPIRG: http://www.democraticmedia.org/node/419

WPF: http://www.worldprivacyforum.org/pdf/WPF_Comments_FTC_110609fs.pdf

CFA: http://www.consumerfed.org/elements/www.consumerfed.org/File/5%20Myths%20about%20Online%20Behavioral%20Advertising%2011_12_09.pdf

EPIC: www.epic.org

Facebook is expanding what brands and other marketers can do to target its users.  As InsideFacebook explains, “Facebook has just launched a new way to draw more people to your Facebook Page or application, called “Friends of connections” targeting. Here’s how it works: before today, advertisers could already target any of their “connections,” where connections are defined as:

1. Fans of any of your Pages
2. Users of any of your Applications
3. Members of any of your Groups
4. Attendees of any of your Events

Now, advertisers can target ads specifically to friends of any of these connections as well. When this option is selected, friends of connections who see the ad will also see a message about which of their friends is connected to the advertiser…This feature should lead to increased conversion on Facebook Ads…this is the first time it has allowed advertisers to specifically target just friends of connections…We also spoke directly to Tim Kendall, Facebook’s director of monetization…In many ways we view Social Ads as less surreptitious than many types of behavioral targeting technologies.”