Facebook Finagling: Getting You to Push the “Like” Button and Opt-In to Third Party Apps, Marketers, and Data Collection

As Facebook builds a larger online marketing and data collection infrastructure around the world, in the U.S.,  India, and in the EU, it’s important regulators, researchers, privacy and consumer protection advocates investigate how it operates its social media marketing business.  Facebook prefers to keep its interactive “marketing to the social graph” ad approach largely out of public view.  For example, last week, noted Inside Facebook, there was this change [our bold]:

“Open Graph-enabled third-party websites can now include Like buttons that create a connection with a Page, not just share an object. Page Likes can be more valuable because they opt a user into receiving updates about the Page in their news feed, and displaying the connection on their profile. Developers don’t need to include any description of what the Like button actually points to, meaning users may be unaware that their click is in fact subscribing and connecting them. The change will help developers convert one-time visitors into members of their Page’s community.

This is a good illustration of how Facebook (and others) zeal in promoting third party data and financial relationships threatens to further undermine privacy and related consumer protection concerns.

Facebook Promotes its “Virtual” Currency–and its data tracking–via Cancer Charity

When big advertising and media companies want to introduce a new or expanded form of marketing, they generally found some non-profit cause.  Who can complain about the techniques used–say for mobile ads, data collection, online games–when the funds are earmarked for a worthy charity?  It’s a time honored tactic, done by the Ad Council, initiatives such as Pepsi Refresh and now Facebook.  AllFacebook reports that “Stand Up to Cancer” is asking supporters to donate using “Facebook Credits.”  It explains that:

Facebook has been making great progress in its goal of making Credits the main or exclusive virtual currency on the site, with Zynga the latest social game company to agree to an exclusive deal. Facebook makes a 30% cut when users spend Credits on virtual goods in social games such as Farmville or Mob Wars… Facebook does gain in other ways from the collaboration, besides feeling good about helping cancer research. The fundraising event will help promote Facebook Credits as a payment system, both on the site through user activity and potentially also through the hour-long celebrity fundraising telethon on ABC, CBS, Fox, NBC and some cable channels …

On the Facebook “Stand Up to Cancer” page, one can learn that “Facebook Credits are the safe and easy way to make payments on Facebook. You can buy Facebook Credits using PayPal, your credit card, or mobile phone. Please keep in mind if your donation includes Facebook Credits that you received for free, the value of your donation will be reduced by those free credits. Also, your donation may not be tax deductible, so please consult a tax professional. For this event, Facebook is waiving its processing fees and 100% of your donations go to Stand Up To Cancer.”

Facebook has ambitious plans for its Credit initiative: it “wants Credits to be the universal currency in social games on its platform.”  The social network is using Credits with a Target stores partnership.  Earlier this month, Facebook took “a step closer to establishing Credits as the exclusive payment system for virtual goods on the social networking site, wrapping up a deal with the biggest social game company, Zynga…Facebook gets a 30% cut from the game developer for all transactions via Credits.” Virtual goods, as its called, is already a major business–estimated with $1 billion sales this year.

But there are questions around Facebook Credits and other virtual currencies–on privacy, consumer protection rules, and digital marketing.  Charities and others should be more cautious when endorsing such schemes.  The FTC, EU and other regulators need to place digital currencies on a real–not virtual–policy radar.

New Google Exec Rohit Khare has warned: “our social networks have traded away our privacy for mere “privacy theater”

Google just acquired Angstro and hired its co-founder Rohit Khare. Khare will help Google create its new social network.  Last December, Khare warned about the growing lack of privacy online [excerpt]: “When RockYou can stash 32 million passwords in the clear; when RapLeaf can index 600 million email accounts; and when Intelius can go public by buying 100 million profile pages; then our social networks have traded away our privacy for mere “privacy theater.”…none of the social networks that we’ve integrated with has an API for reading email addresses — but all of them have no problem asking you to “Invite your friends!”  After all, most social networks remain hypocritical enough to phish passwords to other social networks themselves as soon as they ask you to “Invite your friends” for their own viral growth!
Putting aside the hypocrisy of phishing passwords to scrape those friends’ email addresses in the first place, the subtler flaw is that social networks are more than happy to search their member database for those addresses to share a list of suggested friends. That’s how a Rapleaf could take a mailing list, pretend that those are all friends of theirs, and slowly accumulate a “reverse phonebook” that maps emails to social network profiles.”

Given Google’s own problems addressing consumer privacy, we will be watching closely to see if Khare’s concerns are reflected in what “Google Me” (or whatever their social network gets called) really addresses the problem.  That will need to include enabling users to control the data used for digital marketing and advertising, as far as we’re concerned.

Facebook Places & Data: “Every single action people take…becomes an object in Facebook’s database.” $1.7 billion in ad revenues in 2011

From eMarketer on The Advertising Opportunity in Facebook Places [excerpt]: Facebook’s value as a business comes from all the bits of information it gleans about its users from their daily activities. Every single action people take—whether it’s writing a status update, posting a photo, commenting on a friend’s post, liking a marketer’s message or playing a game—becomes an object in Facebook’s database. Location is a type of data that is very compelling because it provides additional context for the actions people take on Facebook…If ads can be pushed to people in the moment they are engaged with something, rather than waiting until they take action and start a search, the ads become very very powerful.  Location will give Facebook a new way to target and sell advertising… By offering ways for marketers to target Facebook users not only on the online service but also when they are on the go and using Facebook on their mobile phones, it opens up all-new avenues for interaction.

“Tipping Point for Geo-Marketing”—Facebook Places (and what the Like Button already tells marketers)

You have to follow your data [and your friends and networks]–that’s how the money is generated in online marketing.  This article via DM News explains that:“…Facebook continues to gather more information about what people do and where they are – critical data for marketers. “What I find interesting is where people check in says even more about what they like. Now we’re actually looking at their real-world behavior, instead of just a button they click on a website,” he said [Augie Ray, senior analyst at Forrester Research]. “I think this really will continue to help Facebook offer much better targeting and permit marketers to do a better job of understanding their consumers and targeting ads at those consumers.  The very scale that Facebook Places creates is a welcome event for marketers, said industry professionals.  “I would say this is a tipping point for geo-marketing,” said Lawrence Kimmel, CEO of the Direct Marketing Association…Maria Mandel, VP of marketing and media innovation at AT&T Advanced Ad Solutions, agreed that the service makes geo-marketing much more mainstream. “It certainly brings location-based social media to the mass market,” she said. “It validates the relevance of the location-based check-ins and may offer substantial new opportunities for advertisers.”  Leveraging location may prompt innovative promotional campaigns, such as scavenger hunt contests, Mandel noted. There is also the scope to build long-term loyalty programs by rewarding people for checking in at certain locations to build toward prizes, offers or discounts, she said.

source:  Marketers See Potential in Facebook Places.  Shahnaz Mahmud.  DMNews.  August 20, 2010.

PS:  One social media marketing company writes that:  “…Facebook already provides marketers with a comprehensive list of your interests and favorite things with the integration of the Like button. Retailers, like Amazon, have already begun to leverage this information to create purchase suggestions for you and your Facebook friends…Now, with Facebook Places…[M]arketers can (and should) use this invaluable information to direct promotions and advertisements to consumers…This information is highly valuable as social media once again allows businesses to gain access to the exact niche of consumers they are striving to reach.”

Facebook Places, Brands, Ads & Data

We have been raising concerns about privacy and location data collection and targeting–including with our colleagues at USPIRG.  Facebook’s new location feature is designed to generate more user data that can be used by Facebook and its affiliates to bolster ad and brand targeting.  I want to excerpt this post from one of Facebook’s developers–Vitrue–which illustrates how soon companies like McDonald’s will work with Facebook to harvest local data and our behaviors:

“…A user will open up their mobile Facebook app and be able to see shops, restaurants, parks, areas, etc. that they are near.  They can then check-in to that location.  If a location doesn’t exist, the user can simply create it.  A story about where that person checked-in will be published to their profile and subsequently their friends’ news feeds…Facebook’s massive user-base is a distinct advantage and is likely to generate location-based activity orders of magnitude greater than other companies already in the space. As the leading social network, Facebook is able to capitalize upon the users existing friends, and use their collected demographic and preference data to show users places that it thinks is relevant to them, instead of just places nearby.

How Will Brands Take Advantage of Facebook Places?

With all of these users checking in to locations, what does that mean for brands?  Well if your brand has brick-and-mortar locations, your brand can claim these digital “Places”, turning the locations into Facebook Place Pages.

Brands can choose to merge a Facebook Place Page with an existing Facebook Page, if one exists, and if prompted– the option may not be widely available yet as Facebook is rolling it out over a period of days…

At this time Facebook does not recommend merging your Places with your Page if you are a national or global marketer with more than one location, like a McDonald’s or GAP.  They recommend managing the Places separately and have stated that a solution that will help these types of brands is planned for the future…Currently, Facebook CEO Mark Zuckerberg says they aren’t looking to monetize Facebook Places right now, but that doesn’t mean that they can’t in the future.   With Facebook collecting all of this location-based data, it seems like Facebook could allow brands to place highly targeted Facebook ads on the Places Facebook pages.  For example, if your brand’s products are sold in grocery stores, you could potentially place your ads on certain grocery stores’ pages to be viewed by people who’ve checked in.”

In another words, in the world of mobile and location ad targeting, our data will provide marketers with real-time sophisticated insights giving them a rich history of where we spend time and what we do [go to the bank, buy at the pharmacy, eat fast food, etc].  Such “360 degree” targeting, as the online marketers call it, require the appropriate privacy safeguards.

Online Advertising and News: How HuffPost Worked with GE

An excerpt from Ad Age’s interview [June 30, 2010] with Greg Coleman, Pres. of Huffington Post.  Coleman described the online news site as a “social media company,” able to “help our marketers beam their messages throughout the internet, across the galaxy, the internet, and the world.”  One of their advertisers is GE.:

Ad Age: Can you give me an example of Huffington Post’s view on social advertising?

Mr. Coleman: One example is a terrific project we did with General Electric, where GE has this whole campaign on “healthymagination.” We allowed them to run advertising on anything tagged “wellness” across our site — they were looking for positive health information. We then created a special share bar for GE, and any time you tweeted that article or retweeted that article or shared it, the ad module would go with it. So when you shared it with your friends on Facebook, the GE ad module would go there. When you retweeted it, [you’d get] the hashtag “GE healthymagination.” … We’re trying to come up with the real metrics, but we believe that the reach of the campaign is far greater off of our site, as a result of the social tools on our site.

Location Privacy for Mobile Marketing: Time for Congress/FTC/States to Protect Consumers

Last year, CDD and USPIRG filed a complaint on mobile marketing, privacy and deceptive practices at the FTC.  We know that it woke up the commission to the issue–but they are acting too slow.  The recent decision by Apple to expand its data gathering for location ad targeting on the iPhone (and do a about-face on the privacy issue, really) is just one example of why safeguards are required immediately.  As Mobile Marketer explained in an article about what Apple is doing:

“Location is an important element that illustrates the promise of mobile and social,” he said. “Look at the way that the mobile environment is developing—proximity marketing is really the direction that we’re headed [Noah Elkin, senior analyst at eMarketer].

“Being able to marry data about a user’s location and data about a user’s likes and dislikes—being able to present a relevant offer—raises the bar in terms of the relevancy of the advertising messages.”…Apple acquired Placebase and Quattro recently, which gives it a mapping platform and an ad network.

“Collecting user positioning data is the next necessary ingredient for ‘location intelligence,’ which will bridge the gap between these two acquisitions and enable them to deliver a really relevant experience based on place and time,” Mr. Goodman said [Alistair Goodman, CEO of 1020 Placecast].

Meanwhile, companies like Loopt that merge social and mobile marketing techniques are extending how they target consumers, inc. data collection.  Loopt explains in its new “mobile rewards” service for marketers that:

Loopt Star offers retailers a virtual loyalty card, allowing them to connect directly with their customers when they’re out and about, driving foot traffic and encouraging repeat visits. It offers retailers and businesses a unique “cost per visit” business model.

“Hyper-local advertising should be about much more than simply clicking on a banner ad—it should be about connecting with brands and getting rewarded for loyalty. Brands want to turn their existing customers into better ones,” said Sam Altman, co-founder and CEO of Loopt. “Loopt Star enables brands to create customized campaigns that reach their customers in a completely targeted, interactive way that rewards the behaviors they want.”

In addition to brand-specific customized rewards, Loopt Star will also allow the person with the most check-ins at a specific place to become the “Boss” of that location. Leaderboards allow users to compete with their Facebook friends to for the most check in points. Dozens of hidden Achievements will also be available to Loopt Star game players at launch — to be won when certain check-in actions are performed.

Loopt Star adds a key social component by being the first mobile location App based purely on Facebook Connect. Users can share their current location in real-time with all of their friends on Facebook, and alert friends via their Facebook News Feed about special offers they see on Loopt Star that are available to anyone. With its close integration into Facebook, Loopt Star allows Facebook friends stay up to date on where friends are and what they’re doing…

Brands can use Loopt Star to create fun, engaging campaigns that deliver foot traffic, connect with customers, build a strong community and increase their Facebook fan base. Customized brand campaigns can specify:

  • The qualifying retail locations
  • The qualifying time of day, day of week, or time span
  • The qualifying number of check in times
  • Whether they need to check in with friends, and the number of friends
  • Which rewards are available to friends through the Facebook newsfeed (for example, “the next person to check into Joe’s Restaurant today gets free dessert” can appear on the newsfeed to all Facebook friends.)
  • Specific and virtual rewards, such as Achievements, special titles, discount coupons, etc. Special titles allow retailers to offer a custom “Boss” title and graphic to the person who checks in the most at an individual location

Loopt is working directly with top brands to customize all aspects of Loopt Star, from the activity needed to earn the reward, to the type of virtual or real-world reward earned.

For example, Loopt Star users can check into any bar in the United States with two Facebook friends, and everyone instantly earns five free songs from leading popular music recording artists. (To see the songs available to win, go to http://www.amplified.com/loopt.)


Google says it’s “at the forefront of a revolution in Marketing”– that includes for the health industry.

One of the areas requiring online privacy and consumer safeguards is the health and medical area.  As CDD told the FDA, the use of behavioral data profiling & targeting, immersive multi-media techniques, social marketing [via stealth-like influencer and word-of-mouth tactics, and brand channels, such as on YouTube, raise a host of concerns.  I don’t believe one’s largely private concerns about a health condition or remedy should automatically be fodder for digital marketing.  To see how important the health online marketing is to Google (and others), here’s an excerpt from a “Consumer Packaged Goods or Healthcare Industry Marketing Manager job opening:

Google is at the forefront of a revolution in Marketing – a shift from traditional Marketing tactics to new online, mobile and social strategies. Google’s advertising platforms provide savvy advertisers with multichannel marketing opportunities, linking online marketing to brand impact and offline sales.

Consumer Packaged Goods or Healthcare Industry Marketing Manager position shapes Google’s point of view on the changing advertising landscape. This leader will uncover, understand and explain the impact of evolving online media to industries that have traditionally relied more on offline media, such as healthcare, CPG, restaurants, education and more. This is a unique opportunity to set Google marketing strategy within our Emerging Industries practice and advise Fortune 1000 advertisers on cutting edge marketing strategies. You will arm the Google salesforce with marketing programs that establish fresh thinking in the industry and deepen engagement with clients…


  • Ideate, develop, and execute marketing campaigns that drive Google’s advertising business.
  • Develop thought-leadership materials, client/executive presentations, case studies and other content designed to accelerate our business momentum and better engage Google’s customers.
  • Develop compelling positioning and messaging for Google’s advertising solutions targeted to companies in industries relatively new to online marketing, such as healthcare and CPG
  • Partner with Google’s market research team to identify, execute and package compelling market research that supports Google’s value proposition to large advertisers in these industries.
  • Evangelize Google’s value proposition, best practices and perspectives to our customers and our industry peers via events, webinars, and other direct client communications channels.

CDD Statement on Facebook’s new privacy settings [Digital Deja-vu Dep’t!]

Facebook made some positive changes today, but only because of political pressure from policymakers and privacy advocates on both sides of the Atlantic.  Mr. Zuckerberg’s failure to acknowledge the political realities don’t bode well for Facebook’s future approach to privacy.  He appears to be living a Alice in Digital Wonderland fantasy, where changes are made on privacy only because Facebook has the goodwill of its users in mind.  Just last December 9, after all, Facebook made one of its typical self-reverential announcements that it was “rolling out easy-to-use tools to empower people to personalize control over their information.”  These changes triggered a user revolt, letters from Senators, an opinion ordering a reversal from the EU, and concern from the FTC.

There are more simplified and manageable privacy settings, and Facebook has made an important first (or back-tracking!) step.  Unfortunately, Facebook still refuses to give its users control over the data it collects for its targeted advertising products.  The defaults should also be initially set for non-sharing, with the minimization of data collection at the core of Facebook’s approach to privacy.   CDD and other privacy groups will examine these new settings and identify where further changes should be made, including on advertising data.  Meanwhile, we want Congress to hold hearings on social networking privacy, with Mr. Zuckerberg as a star witness.  Mr. Zuckerberg should be asked to explain how Facebook continues to develop new approaches to data collection and privacy–from Beacon to Instant Personalization–that continually lowers the bar–until the company has to do some form of hasty retreat.   Congress needs to examine how Facebook develops its approach to privacy, and what its business plans mean for the future.

CDD will also press the FTC to investigate Facebook, including acting on complaints filed with EPIC and other groups.  It’s time for the FTC to announce guidelines to protect social networking privacy on Facebook and other sites.
Jeffrey Chester
Center for Digital Democracy