For the latest evidence, consider the massive outcry that erupted over Facebook's much-vaunted Beacon program, hailed as a major ingredient in the advertising program the company launched last month. Facebook last week responded by reining in the system. Facebook users will now have to opt in to participate, instead of the previous, more passive opt-out prompts.
The Beacon system tells a user's friends about a user's actions on sites outside of Facebook. For example, if a user purchases a product on a Beacon-participating site such as Overstock.com, which Forrester Analyst Charlene Li did, it would broadcast that purchase (in Ms. Li's case, a coffee table), to Ms. Li's Facebook network.
"I was pretty surprised to see this because I received no notification while I was on Overstock.com that they had the Facebook Beacon installed on the site. If they had, I would have turned it off," she wrote on her blog, Groundswell.
The experience prompted Ms. Li, and 50,000 other Facebook users, to join a Facebook group opposing Beacon. The group, created by MoveOn.org, was titled "Petition: Facebook, stop invading my privacy!" And it wasn't just regular old consumers who found it to be a breach of privacy and the implicit agreement between themselves and Facebook: a quick scan of the group's members included users from ad agencies Ogilvy and DDB, Facebook investor Microsoft and a marketer at a major package-goods company, who invited Jim Nail, chief strategy and chief marketing officer at Cymfony, to join the group.
"Every media type has that tension between editorial, which is what users really want, the content, and the advertising. But it's more pronounced in social media because the value consumers are looking for are those personal relationships," Mr. Nail said. "In any other kind of content, there's at least some set of advertisers that are relevant."
To hear Facebook explain Beacon, it sounds innocent enough.
"All we're trying to do is make sure anytime there is a trusted word-of-mouth referral that your friend has made about this product, we share that information with you," Chamath Palihapitiya, Facebook's VP-product marketing and operations, said at the launch of Beacon.
Marketers enter conversation
But to look at Beacon's purpose as solely to amplify user recommendations is only part of the story. The other part is, of course, to incorporate commercial conversation into the social network to which Facebook can sell and attach advertising. If a user purchases a pair of Nike running shoes and Beacon alerts his or her friends, Nike could buy an ad to run alongside that alert that would include a link to a website -- a "social ad," if you will.
Facebook's Beacon travails are a lesson in the obvious: that advertising and user interests are often at odds. And in this case, it's not just Facebook's reputation that can be damaged by the perceived breach of trust but the involved marketers' as well.
Facebook executives suggest that users often need time to get used to and find the value in their new services, pointing to the launch of the Facebook news feed in fall 2006. Like with Beacon, users revolted, created protest groups and, soon, Facebook modified the service to give users more control.
People were initially skeptical about the news feed, Mr. Palihapitiya said, but once they started using it, they "were convinced about the power of it." Others suggested it was only a matter of time until a Facebook user accidentally broadcast the purchase of an embarrassing self-help book or porn video. (One commenter on Ms. Li's blog said Beacon had ruined his marriage proposal by broadcasting an Overstock.com purchase of an engagement ring to his entire network -- including his girlfriend.)
Asking for permission
In Ms. Li's scenario, a prompt should have appeared on the Overstock.com site alerting her to Beacon and offering an opt-out opportunity. Additionally, the next time she logged in to Facebook, a second notification should have allowed her to opt out of the Beacon alert. The only trouble is there was no alert on Overstock.com, and the Facebook alert can easily be overlooked -- if a user doesn't see it to opt out, the message will be sent automatically. Under the retooled Beacon system, overlooking the prompt on the Facebook home page will not lead to publication of a story; a user will have to "OK" the notification.
It's unclear how much the added privacy controls could reduce the number of Beacon messages across Facebook, and a request for further comment from the company went unanswered.
Still, while Facebook may have erred in veering too commercial too quickly, Mr. Nail pointed out that Facebook listened and reacted quickly. In the days before social media, it took media companies six months to a year to respond to the uproar over pop-up ads, he said. "Today they're getting immediate feedback, saying 'OK users, we hear you; we'll do the right thing.'"
Added Adam Green of MoveOn.org in a celebratory statement: "If Facebook changes their policy so that no private purchases made on other websites are displayed publicly on Facebook without a user's explicit permission, that would be a huge step in the right direction -- and would say a lot about the ability of everyday internet users to band together to make a difference."