Sunday, October 16, 2011

Is Facebook Making the Same Mistake Twice?

Facebook's Beacon was ahead of its time
In late 2007, Facebook was embroiled in one of its worst privacy scandals. It had just unveiled “Beacon”, a bit of code that allowed Facebook to share activity its users took on other websites within the Newsfeed. Beacon represented an evolution in how brands could use social media to advertise. It proved Facebook had the technical know-how to create, and audacity to implement software that could marry 3rd party data with users’ Facebook profiles. Beacon, with its 40 launch partners, was supposed to be a watershed moment for Facebook.

The only problem was Facebook forgot to ask its users for permission to participate. This lack of transparency was punctuated by the story of a would-be marriage proposal that was spoiled when the boyfriend purchased a diamond ring on Overstock.com. Because he was logged in to Facebook at the time of the purchase, it appeared in his girlfriend’s Newsfeed before he had the chance to pop the question.

Beacon was a PR disaster, but aside from that, it showed Facebook’s hand. From that point on, it was clear that Facebook’s monetization strategy was predicated on knowing more about you. Facebook wasn’t satisfied with all of those photos, status updates and friends because they didn’t translate into monetization opportunities, at least not lucrative ones.

For Facebook, the challenge was introducing products that goaded users into handing over more data. That’s where Beacon was a colossal failure: it exploited user data without compensating the end user. Even worse, it did so without asking subscribers’ permission to participate. Companies like Netflix, Pandora and Amazon have proven that users will gladly volunteer personal data in exchange for enhanced products. Beacon violated that golden rule of the digital age and was thus doomed.

Facebook seemed to learn from its mistake, introducing “Likes” and “Places”. These products gave Facebook valuable data about its users, but only if they opted in. With Likes and Places, both Facebook and end users benefited.

Fast forward to Facebook’s F8 conference last month when Zuckerberg unveiled “Ticker”. Ticker is the constantly scrolling module at the top right of the Facebook UI (user interface). You know, the place where it shows what your buddy is listening to on Spotify. Pretty soon it will also broadcast what article your friend read on Yahoo, video he watched on Netflix, book he read on Amazon, advertisement he clicked on, etc.  Zuckerberg calls this the “frictionless experience”. Sound familiar? It’s Beacon 2.0.

A Facebook user questions the value of Spotify updates 
We know why Facebook is motivated to know when, how and what media its users consume. But, as we learned with Beacon, it’s hard to see the value that users get in sharing this data. Music seems the most promising out of all of these, yet the relentless Spotfiy updates in my Ticker strike me as clutter. I’ve already trained my eye to avoid the Ticker, and I imagine so have a lot of you. For Facebook, that’s a major red flag.

Maybe Facebook doesn't have the user experience in mind. It’s possible that Ticker’s primary purpose is PR, not UI. At F8, Facebook unveiled a litany of strategic media partnerships, each of which will yield a treasure chest of user data. Because of the legacy of Beacon, it’s paramount that Facebook be seen as transparent in how it handles this data.

Ultimately, Ticker is transparency in the most literal sense: It’s an open window into the vast data collection of Facebook’s back end. As the updates from media partners come streaming in, Ticker displays them in plain view, satisfying Facebook’s need to be transparent. That’s an ingenious PR tactic to stave off privacy watchdogs. The only problem is that transparency is not a product in itself.

The onus is on Facebook to translate its growing stockpile of user data into a useful product, not a revenue stream. And the clock is ticking.

See More:  Epic Fails in Online Advertising

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