Analysis of IT news

Thursday, December 06, 2007

Facebook's advertising choices

After Microsoft invested $150 million for a mere 1.6% of Facebook, people start talking about the allegedly $15 billion valuation of the company. Not surprisingly, there's been mounting pressure on the site to show it can live up to its hype and show the money (this is Web 2.0, revenue and profit are in again).

So Facebook decided to use its network as an advertising media. There is nothing inherently evil about this. You have consumers on one hand and advertisers on the other hand. There's nothing wrong with playing matchmaker between the two. Now there are two main ways to do it.

Facebook could have chosen the user-friendly way. It could have followed's example and allow users to leave good AND BAD feedback about the products they purchased, transforming the site into a consumer's guide. Of course, vendors wouldn't have liked it. But Facebook could still make some money. Vendors with positive ratings could pay to add a link to their website. Vendors with negative ratings could pay to be able to contact disgruntled customers to get constructive feedback from them. And there are some products like Coke or Pepsi which are neither good or bad but a matter of personal taste. For vendors who sell low-quality products and know it, well, yes, the site wouldn't be for them.

Facebook however chose a different way. The result was the Beacon debacle that we know - tracking what users purchase even when they are not logged on Facebook, no opt-out option, and worst of all, lying about it. But even this set aside (everybody makes mistakes) this episode is revealing of the company's approach: an advertiser-friendly way. Even after founder Mark Zuckerberg profusely apologized and the company revamped the controversial program, it's the advertisers who call the shots. Sure, users now have more control over what gets collected by Facebook. But last I heard, the site still doesn't allow them to tell whether they actually liked the products they purchased.

Now, one can argue that it's the advertisers who bring the money that keeps sites like Facebook alive, so it has to listen to them. Or does it? A lot of vendors sell their wares through Amazon despite potential bad feedbacks. And Google has built an empire on top of the concept of low-intrusive ads, at a time where everybody else was trying make theirs more in the consumer's faces. "Follow the money" they say. If it's true it's the advertisers who fund websites like Facebook, it's the users who pay for the advertisers. Messing with them is just bad business.


Post a Comment

<< Home