Users of Blackberry’s with the latest version of the Facebook application installed discovered something new when using their phone – the merging of their phone contacts with their friends on Facebook. As a results, when they called a contact who was also a friend, and vice versa, they would see their Facebook profile thumbnail displayed on the phone. Depending on your views, it’s either quite cool or a little bit creepy. It also opens up the question of what other ways can our social data be used. The answer as we’re finding out is quite a few. The problem with the Facebook application for the Blackberry is that while interesting and presumably a better user experience, it doesn’t make Facebook any money. Not one to miss out, Facebook has over time begun leveraging that same social data for more revenue generating opportunities. Frequent users of the site, or better said, frequent observers of the ads along the sides, will recall seeing not just organic listings for how many of our friends have joined a group or become a fan of a certain page but sponsored listings as well. The difference between seeing an ad promoting a particular fan page and seeing the same ad saying a friend just joined and you can too should not be overlooked or understated. It does exactly what the flogs and fake news sites do – it builds that trust bridge and decreases the friction involved in a particular conversion.
Facebook has the most information about us, but they aren’t the only ones with access to segments of our social graph. Third-party developers whose games have created an entirely new ecosystem in Facebook, both enriching the game developers and increasing the overall use of Facebook, also have access to this data. While not necessary, were Facebook to severely restrict what information developers had access to, it could cripple the success of the apps. Without that data, they wouldn’t have the same viral nature or the same sense of connectedness once engaged in playing. The decision by Facebook to take a relatively open approach has had its downsides and Facebook has curtailed certain access when they perceive the user experience to come under attack. As an example, applications allow and naturally encourage you to invite your friends, but users have a limited number they can invite as opposed to the mass, blast them all ability that came in the very early days of the developers platform. Not surprisingly, developers of apps aren’t the only ones to have discovered the benefits of tapping into the social graph. Advertisers, more specifically, performance-minded advertisers have too. And, perhaps not so surprisingly, similar to the developers (the best of whom are very performance minded), the advertisers have also leveraged the data to the point of potential change. Unfortunately, for certain networks who advertise on the ad space in the applications, it has meant not just a change but being temporarily shut down.
The issues appear to have come to light a little over a week ago when the widely read SocialTimes’ publication AllFaceBook wrote a post titled, “Latest Facebook Ad Quiz Scam Will Cost You $20 A Week.” The image above comes from that post and shows an ad for a mobile subscription service. The difference between this ad and those running elsewhere is that it leverages a user’s social data to make it much more personalized. Fellow ad historians will remember when quiz ads ruled display (P.F. – Pre-flog), and they generally leverage either a celebrity likeness with a quiz score challenging the viewer to beat it or appeal to how one fits in with the general population, e.g., “Are You Smarter Than the Average American?” Both effective strategies but nothing compared to putting pictures of friends in the ads. The problem of course, is exactly what the author of the AllFaceBook piece, Nick O’Neil said, “Typically this news wouldn’t have frustrated me because it is a widely known dirty practice among some of the top advertisers. The ‘How Well Do You Know Me?’ application has over 24 million monthly active users though so I know that thousands of individuals have been impacted by these scams. One of those happened to be my mother who called me up the other day to tell me that she had a $25 fee on her phone that was a result on clicking on one of the application advertisements.”
As AllFaceBook reported in an update, Facebook took notice and began investigating the issue much more heavily, and ultimately took action against two networks early this week, suspending them for violations. AllFacebook posted a copy of an email sent to Facebook applications by one of the networks affected, with InsideFacebook, another very prominent digital publication covering the Facebook ecosystem, reporting on June 8, 2009 as well that, “Major Policy Enforcements Happening on Facebook Platform Ad Networks Tonight.” In regards to the two major networks’ suspension, user data plays a role in both – being used to create ads perceived as misleading and on the landing pages to increase conversion rate through a perceived connection with Facebook. According to author Smith, the two banned networks did receive warnings and an opportunity to modify their practices. Not knowing the actual behind the scenes from the warnings to the requested changes, we can still imagine the decision far from obvious or easy. Regardless, this moment, with two of the leading networks gone, “…developers are scrambling to fill their inventory from other Platform ad networks for the time being.”
The most successful companies can tell you that it’s a fine line to both be compliant and competitive. Perhaps not as intuitively, making too drastic of a change has potentially worse consequences than a shutdown. If you get shut down, you go out with your reputation in tact – as the high paying network. If you make a change, the publishers will just see the results. They won’t see the reasoning, and then they will drop you or lessen the amount of impressions you receive. And, as a result, no truly competitive network wants to be the first to “drop its pants.” In that sense, it’s almost the same as those running the flogs. Everyone wants to run compliant pages. That they don’t isn’t a reflection of their desire to not run it but their hesitation to give up the lead. They might be afraid of the consequences, but it’s like speeding on a highway. To date the chances of getting pulled over every time you speed are simply too low and for the most part it takes a seriously egregious offense to face a punishment that would prevent such action again, such as getting one’s license taken away permanently. And, in the business world, it’s the same, except that taking away the license to drive means stopping a subway line of revenue for certain users without a qualified driver to take the place.
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