Facebook: Providing a Service to Members or a Platform to Advertisers?

AUTHOR
Stephen Lilley, Ph.D., Frances S. Grodzinsky, Ph.D. and Andra Gumbus, Ed.D.

ABSTRACT

INTRODUCTION

Facebook has over 500 million members (22% of all Internet users) who spend over 500 billion minutes a month on the site each sharing roughly 70 pieces of content a month (Rosen, 2010). With these staggering numbers it is not surprising that Facebook has become a rich venue for advertisers. Critics charge that advertising revenue is generated by exploiting social actors’ proclivity to form and maintain social ties. Facebook counterclaims that we as a society are loosening our standards around privacy and becoming more transparent in our lives as we get used to sharing information about ourselves. Facebook sees itself as “utilitarians that give users the best technology for sharing and get out of their way” (The Economist 1/30/2010). Last year Facebook introduced additional privacy settings that allow users to opt out of sharing information with advertisers. Facebook’s ethical argument is more persuasive if we assume that users agree with transparency as a social goal, know about sharing their information with advertisers, accept this, or make use of privacy settings to restrict it. We conducted a survey of 349 Facebook users to determine to what extent the attitudes and practices of users are consistent or inconsistent with this ideal. This paper will report on our findings.

ADVERTISING VIA FACEBOOK

Fan pages maintained by corporations are attracting more consumers than corporate web sites, making social networking the leading platform for relationship marketing for many brands. (Neff, 2010). Using Facebook as an advertising platform will only increase. The company expects to bring in revenues of $1.4 billion in 2010 (similar to where Google was in 2003) (Stone, 2010). It is important to note that advertisers get this “earned media” benefit for free (Stone, 2010). Mining Facebook data can also help advertisers find potential customers using predictive targeting that allows advertisers to figure out, for example, that the audience for a certain song may also like their ice cream. Facebook added an ad tool called “learned targeting” in 2009 which allows ads to be pitched to friends of existing fans of their product. This is a marketer’s dream because it is based upon reality not intuition. “It’s all about getting, largely through stealth means, a consumer to endorse a product or a brand and to communicate that to their network of friends” (Stone, 2010).

THE EVOLVING NORM OF PRIVACY ON SOCIAL NETWORKING SITES: IS PROFITING FROM FRIENDSHIP ETHICAL?

The social networking business model is based on sharing members’ information with advertisers and marketers. Privacy activists are concerned that users’ rights are superseded by the drive to make a profit. There is a fine balance between alerting users to privacy while encouraging the sharing of data. Under criticism for a recent decision to make more profile data available to anyone on the Internet, Zuckerberg defended Facebook by positioning it as a reflection of a new social reality that accepts sharing and the shifting of the social norm away from privacy to a more open society. He describes the enhanced openness in human interactions as the greatest transformation force in our generation (The Economist 1/30/2010).

METHODOLOGY

We pose the following research questions: To what extent are Facebook members attentive to data sharing policies? Do they favor such policies and the social ideal of transparency? We conducted our survey in December, 2010 on the campus of a private university in the United States. Our purposive sampling of undergraduates yielded 372 students, of which 349 (94% of the sample) had a Facebook account. On average members had an account for four years and used Facebook six days a week, three hours per day. Respondents were asked to self-report on 1) the importance of Facebook to their social activities, 2) the level of their consumer activity on Facebook, 3) their knowledge of Facebook advertiser data sharing practices and their attitude toward such, 4) their use of sharing restrictions and the groups targeted, and 5) their assessment of transparency benefits, reputation risks, and consumer risks.

FINDINGS

In general, members were disinterested and inattentive to Facebook’s consumer/advertising features. Respondents were much more likely to indicate that Facebook is “very important” or “absolutely crucial” to sustaining friendships (56%) than it is for exposure to good things to buy (10%). Three Facebook provisions for sharing profile information with advertisers were described in the questionnaire and approximately one half of the sample admitted not knowing about them. Seventy-two percent of Facebook users have not controlled which of their information is made available to companies that host applications, games, etc., when friends use them. Of the twelve sharing restrictions listed on the questionnaire, respondents reported employing few restrictions, with twice as many utilized to target friends (average of 2.4 restrictions) than for advertisers/marketers (1.1 restrictions).

Most members, however, expressed opposition to Facebook data sharing policies. When prompted to provide their opinions about Facebook’s sharing their data with advertisers, approximately 50% answered “strongly oppose” or “somewhat oppose, “ 40% selected “don’t care,” and only 10% favored this. Asked if it is right or wrong that by selecting “Like” for an advertised product, play games, etc., your Friends’ profile information is made available to host companies, 60% answered “somewhat wrong” or “very wrong,” 26% selected “neutral,” and 14% chose “somewhat right,” or “very right.” Approximately 80% see a reputation risk in using Facebook, 65% see a consumer risk, and 60% believe that a potential transparency benefit is not worth exposure to these risks.

In the full paper, we provide a more detailed analysis of our findings and present our conclusions.

REFERENCES

Neff, Jack. What Happens When Facebook Trumps Your Brand Site? Advertising Age, Vol 81 Issue 30. 8/23/2010 pp 2- 22.

Rosen, Jeffrey. The End of Forgetting NYT July 25, 2010.p. 30 -45

Stone, Brad. Sell Your Friends: How Facebook Plans to leverage Its 550 million Use4rs Into the Greatest Advertising Juggernaut Since Google. Bloomberg Businessweek October 3, 2010.

The Economist. A World of Connections: A Special report on Social Networking January 30, 2010. P. 1- 20

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