The Private Role of Facebook’s Public Offering

A Jan. 31 story in the New York Times about Facebook’s recent initial public offering calls to center stage what the social network is actually selling to its prospective shareholders: personal data.

As the story puts it, Facebook is more than the sum of its users, it is “a fast-churning data machine” capturing every activity on its platform.

“Every time a person shares a link, listens to a song, clicks on one of Facebook’s ubiquitous ‘like’ buttons, or changes a relationship status to ‘engaged,’ a morsel of data is added to Facebook’s vast library,” the story states. “It is a siren to advertisers hoping to leverage that information to match their ads with the right audience.”

With 800 million Facebook members around the world, it is little wonder that the social network is expected to raise $5 billion.

But I have to question whether simple target advertising will fully optimize, and therefore operationalize, how Facebook’s preference data could be used. Think about it: To what extent does a fleeting “like” actually reflect the consumer’s true profile? How many people do you know who spend hours a day on Facebook as part of their job, “liking” specific client brands or services? Any responding ads are likely to be lost on these members.

Couple that with the fact that Facebook has had several missteps regarding member privacy, and it could have significant issues to overcome – such as when it used consumer “likes” as advertising testimonials without consent. In November 2010, Facebook settled with the Federal Trade Commission following claims that it had deceived members about its privacy settings.

As evidenced by Google, a more transparent and clear approach to your marketing motives will make it easier for your customers to genuinely buy in to the entire value proposition, opening the door to richer, collaborative and more profitable interactions.

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