Facebook's PR Blunder Opens Up Trust Gap

Attempt to Play Hardball With Google Won't Help Convince Consumers and Congress it Can Be Trusted With Data

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Facebook joined the ranks of the Burson-Marsteller crisis club elite -- a group that includes firms such as FoxConn, Blackwater, and AIG -- when it hired the PR firm to generate press alleging privacy breaches in Google's Social Circle tool.

And even though Facebook parted ways with Burson in the wake of the botched PR campaign, the implications of its relationship with this PR shop in particular are symbolic of the social network outgrowing its startup roots, and ironically, exhibiting increasingly buttoned-up, corporate behavior.

Hiring an issues and reputation firm like Burson -- which is more than 50 years old, owned by WPP and has global revenues of $385 million, per Ad Age 's Datacenter -- is a far cry from Facebook's current and long-term relationship with mid-size PR shop OutCast Communications. To put it simply: Burson-Marsteller doesn't exactly evoke the image of young hoodie-wearing coders a la The Social Network.

Josh Bernoff, SVP of Idea Development at Forrester Research, said working with a firm like Burson is one way that "real companies that are not startups compete in a real world," adding, "but secretly trying to get stories placed about competitors doesn't play well in Silicon Valley."

Earlier this week, USA Today published the pitch that recent Burson appointee Jim Goldman sent to privacy advocate and blogger Christopher Seghoian. A day later, the Daily Beast reported that the undisclosed client behind the campaign was in fact Facebook, which has since parted ways with the firm.

The agency responded by confirming the assignment and client: "The client requested that its name be withheld on the grounds that it was merely asking to bring publicly available information to light and such information could then be independently and easily replicated by any media."

Facebook's response: "No 'smear' campaign was authorized or intended. Instead, we wanted third parties to verify that people did not approve of the collection and use of information from their accounts on Facebook and other services for inclusion in Google Social Circles -- just as Facebook did not approve of use or collection for this purpose."

The initial lack of disclosure also marks an ironic moment for the more than 500 million-strong social network, whose CEO Mark Zuckerberg once said, "The age of privacy is over."

While the social network that has struggled with its own privacy concerns (hence the campaign), it's also largely responsible for consumers' abandoning their fear of sharing photographs, personal information and all the mundane details of their life online.

The brouhaha comes as Facebook is preparing for an IPO and it's slated to generate $4.05 billion in ad revenue, up from $1.86 billion last year, according to eMarketer.

For Burson's part, PR professionals say that the firm will move on relatively unscathed. Rosanna Fiske, CEO of the Public Relations Society of America, told Advertising Age that Facebook will recover despite ongoing regulatory and privacy issues: "It'll recover even though this whole PR story probably brought to light more of a regulation issue related to regulatory agencies, privacy, and data scraping."

As a result of unethical behavior and potentially tighter regulation, Mr. Bernoff suggested, "Facebook is going to have a difficult time trying to convince Congress they can be trusted with consumer data."

This campaign puts Facebook in the ring with the rest of corporate America, despite its lobbying spend, which according to opensecrets.org, was between $300,000 and $400,000 in 2010, compared to that of Google, which was a little over $5 million. But along with a shift in the way in which consumers and marketers perceive Facebook, the social network's spend will likely grow.

Noted Mr. Bernoff: "It's a heck of a lot cheaper if you start from a position of trust."

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