The Praized Blog

While the blogosphere is slowly discovering what Facebook Beacon does, MoveOn.org, a US advocacy group, has launched a campaign against the new advertising system. They’re asking users to sign a petition and join a Facebook group to protest what they call a “huge invasion of privacy”.

With the help of this blog post from Charlene Li (Forrester Research), I’m starting to understand more what the Beacon ad product does. Charline explains that her husband bought a coffee table on OverStock.com and that when she next logged in to Facebook, she saw this mention at the top of her newsfeed.

She explains that “Facebook Beacon is merely a small piece of script that allows the partner site to put a cookie on your browser. So when I bought the table, an Overstock cookie was created, which then transferred the information to Facebook. Facebook then checks to see that the same browser is logged into Facebook, and shows the information.”

Many in the blogosphere are concerned by this new ad product. In response, Chris Kelly, chief privacy officer of Facebook, said in Wednesday’s Wall Street Journal that “Facebook is transparent in communicating to users what it is tracking. When a user visits an outside site and completes an action like buying a movie ticket, a box shows up in the corner of his Internet browser telling that person the outside Web site is sending that information to Facebook. The user can opt out by clicking on text that reads “No, thanks.” If the user doesn’t, the next time they visit Facebook, the user will see a message from Facebook asking for permission to show the information to their friends. If the user declines, the information won’t be sent.”

Phil Windley from ZDNet has a great conclusion to the whole fracas: “Facebook realizes that simply relying on the targeted ads of the past won’t garner much attention and that they have a tremendous asset in the social graph within their system. Facebook Beacon is an attempt to capitalize on that by using the social graph to make advertising more useful for the customer and more profitable for Facebook. Unfortunately, they got it wrong. Instead of advertising, they should have focused on recommendations. No one is going to say “please show me more ads based on what my friends like.” But plenty of people will ask a friend to recommend digital cameras or books to them.”

Update: Peter Kafka (at Silicon Alley Insider) offers Facebook two solutions to resolve the situation. “The short-term solution: Turn off Beacon until you can make it fully opt-in. The long-term solution: Let users sign up for Beacon via Facebook, and give them a reason to do so.”

A new Forrester report (as discussed on NewTeeVee) forecasts online video advertising spending in the U.S. will reach $7.1 billion in 2012, an incredible 72% CAGR for the next 5 years!

NewTeeVee adds: “Forrester analyst Shar VanBoskirk praised the emergence of “customer-centric” ad formats like the overlays used by VideoEgg, YouTube and others, which, rather than forcing an ad in their video streams, allow viewers to decide if and when to pause a video to watch an ad.”

That same report indicates that “spending on social media (…) will grow to $6.9 billion as marketers understand how to use and measure this channel.”

What it means: every time I see reports forecasting the enormous growth of online video ads, I get the feeling that this growth will be mostly driven by the desire of current TV ecosystem stakeholders (networks, media placement firms and advertising agencies) to replicate the existing TV business model. I’m not totally convinced consumers will be well served by that new medium unless precise targeting technologies are developed. Nonetheless, I definitely expect that the two darlings of online advertising in the next five years will be online video ads and social media advertising.

“The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today. Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”

Forrester Research Principal Analyst James McQuivey in their newest report “Paid Video Downloads Give Way To Ad Models”