Facebook's New Ad Strategy

Greg Benedetto believes in the old adage "the customer comes first." He worked for Canada's HMV record chain for two years as a teenager and, in that time, learned a thing or two about getting people to buy things. "A customer who is treated well probably won't say anything," he says. "But a customer who is treated poorly will tell everyone they know." And that is exactly what Benedetto plans to do if Facebook's new targeted ad campaign gets out of hand. Already Benedetto has invited all 562 of his Facebook friends to join the group Stand Up! Don't Let Facebook Invade Your Social Life With Ads!

Earlier this week the social networking site said it would enable advertisers to utilize its 30.6 million members' profile data to target ads tailored to their hobbies and preferences. Under the new "Social Ads" program, anyone who, for example, lists an interest in travel, will be served up ads for cheaper fares and hotels. On the company's blog, Facebook ads project manager Leah Pearlman defends the application, saying that "engaging with businesses and buying things are part of your everyday life." Pearlman says the new system will work to "make ads more appealing" to members.

But for Benedetto there is nothing appealing about Facebook mining his personal information for marketers. "I understand that it's just a part of life for this generation," says the 22-year-old Toronto native. "Companies want to know what they can sell to a male who is 22 and living in Toronto and reads certain books and listens to certain music. Google ads are much less invasive, because they change all the time. But when it comes to using my identity or my friends' identity to hawk a product, that's crossing the line."

Facebook maintains that it will not sell personal information to marketers. What it will do is compile users' "social actions"—edits they make to their profiles and information on the other sites they visit (which Facebook can now track via Facebook Beacon). The Web site will then sell marketers the option of reaching out to members whose social actions fit certain demographics. Facebook's executives declined to comment personally; they pointed us to an FAQ on its Social Ads program. (Facebook members can access it by clicking here.)

Despite claims that the Web site will not be selling users' personal information, members of groups like Stand Up! Don't Let Facebook Invade Your Social Life With Ads! are still concerned. In a Facebook message to NEWSWEEK, a member of that group who, concerned about privacy, asked not to be identified, wrote, "Personally, if it becomes too annoying, I may leave FB." Benedetto too says he will terminate his account if the ads become too invasive—a bold statement considering that, like most members of the Facebook generation, he uses the site every day.

Emily Riley, a social networking analyst for Jupiter Research, predicts that the number of Facebook members who leave the site as a result of Social Ads "is not going to be too substantial." If anything, Riley says, some members might choose to quit Facebook because all of its new applications, which she argues create the kind of "clutter" generally associated with MySpace. Riley says "Facebook should weigh the reasons why users might be leaving. However, it is an ad-supported site, so if a small group of users chose to leave, Facebook might have to make that sacrifice."

Facebook has a history of surviving outraged threats to quit. After speculation that Facebook would open membership to anyone with an e-mail address, users started a group called I WILL Leave Facebook If It Becomes Public. The site became accessible to users outside of professional and academic networks last fall. The group still has 28 members, all of whom have active profiles.

A similar uproar occurred when Facebook debuted its News Feed application in early September last year. (When members sign on to the site, they are greeted by a list of their friends' recent profile edits.) The group Students Against Facebook News Feed (Official Petition to Facebook) has 240,746 members, while the group Facebook News Feed Sucks has 1,719 members. But many Facebook members have come to embrace the News Feed. "I like the part of Facebook that tells you who broke up with who and what everyone is up to," says Tony Gingrasso, a 27-year-old law student at Hameline University in St. Paul, Minn. Gingrasso thinks Facebook's new targeted ads may very well go the route of the News Feed. "I think that people will eventually accept it as part of the site," he says.

Facebook will be using the News Feed as part of its new Social Ads application. "Social Ads provide advertisements alongside related actions your friends have taken on the site," writes Pearlman in her blog entry. "These actions may be things like 'Leah is now a fan of the Offspring' (if I added the Offspring to my music) or 'Justin wrote a review for Sushi Hut' (If Justin wrote this review on the Sushi Hut page). These actions could then be paired with an ad that either the Offspring or Sushi Hut provides."

Gingrasso has "biking" listed as an interest on his profile, and when asked how he would respond to a targeted Facebook ad from a St. Paul-area bike shop, Gingrasso said he would welcome the information. Blake Lichty agrees. "People of our generation know that things are constantly coming out that are revolutionary and new," says the 25-year-old Bostonian. "If you're browsing a friend's vacation photos on Facebook and all of a sudden an ad comes up for vacations in Cabo, well, people click on that stuff. They see it."

For Lichty the bottom line is that "Facebook is free. No one is forcing you to be a member." And, oh yeah, he adds, "you always have the option of deleting your profile."