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Facebook Ad Network Would Face Privacy Hurdle With Ad Agencies

A Network Means Privacy Concerns for Advertisers

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Facebook may have put its mobile-ad-network test on hold, but marketers continue to relish the thought of a Facebook ad network of some kind. The promise of reaching Facebook users on sites across the web is very appealing, yet one big obstacle stands between a Facebook network and brand advertising budgets: consumer privacy.

The longer Facebook eschews the industry's widely adopted self-regulatory privacy standard in favor of its own internal ad privacy approach, the less confident brand advertisers will be about privacy protections associated with Facebook advertising. The biggest agencies and advertisers have standardized their display ad buys according to their self-regulatory privacy program, administered by the Digital Advertising Alliance.

But Facebook is not a member of the DAA, and while that 's not necessarily a deal-killer, it does mean that it will be more difficult for agencies to allocate big budgets there.

Any type of Facebook ad network would open a new can of privacy worms, stalling spending commitments from media agencies, which could be a reason for Facebook's hesitance in developing a network.

Razorfish, for instance, participated in the mobile ad network test , but a larger-scale buy might require a greater degree of confidence in Facebook's privacy practices. "Rolling out full scale, you're going to want to look at it differently," said Christian Juhl, president of Razorfish West. "Overall [Facebook needs] to be leading from the front, and right now I don't think there's good evidence that that 's happening."

The Ad Choices program centers on the small, blue symbol seen in ads that are targeted using behavioral and other data from third parties, and the back-end system that operates it.

if the Ad Choices icon were used in Facebook ads, "Our brands would have a great deal more confidence in Facebook advertising," said one representative of a large media agency who asked to remain anonymous. "We would feel comfortable if they would use this icon. ...That's what we're encouraging them strongly to do," said the person.

The DAA initiative is intended to satisfy the Federal Trade Commission's calls for prominent notice of behavioral targeting and a clear choice for opting out; it's the industry's attempt at thwarting a comprehensive privacy law. Over 100 ad networks participate in the DAA including those of Yahoo, Google and AOL.

The majority of ads served on Facebook are targeted using first-party data gleaned on Facebook, so even if Facebook joined the DAA, those ads would not require the icon or a similar notification. The company's ad exchange, however, does serve ads targeted using behavioral data on the Facebook site, yet Facebook continues to cling to its proprietary privacy system rather than adopting what's become a ubiquitous standard.

Advertisers were spooked when KIA was outed by the enforcement body behind the self-regulatory program for failure to include the icon in behaviorally-targeted ads. Its media agency, Initiative , also got a wrist-slap. No actual penalties were involved.

"I frankly don't think Facebook has an appreciation for privacy in the space. ... It just isn't their first or second line of thinking," another media agency source told Ad Age , asking not to be named. The source suggested Facebook has not joined the DAA because "they want to stay flexible in product creation and do not want any outside influence to hamper their efforts."

Facebook, of course, always publicly stresses its commitment to consumer privacy. Insiders say Facebook has been in discussions with advertisers, agencies and self-regulators regarding adoption of the standard icon.

Behind closed doors, as much as some are willing to pounce on Facebook for ignoring privacy, other agency execs salivate at the thought of a Facebook network that pairs its robust data with the expansive inventory of the internet. If Facebook were to pick up its mobile network test again, valuable location-based data could be added to the mix -- an ad targeter's dream and privacy counsel's nightmare.

A Facebook ad network could employ data from third parties, in addition to mountains of information about content viewed by users who have visited pages with the Facebook share button. For many media buying agencies, anything less than the standard won't cut it when it comes to significant spending commitments on a network that will be on the radar of self-regulators, lawmakers and the FTC.

Contributing: Cotton Delo

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