The Social

Offerpal Media, one of the companies at the center of a bitter dispute over misleading advertisements on social networks, on Thursday launched a revised policy designed to "forbid any offers that are misleading, deceptive or otherwise objectionable."

Companies like Offerpal are enlisted by many of the big gaming companies built on social networks like Facebook; they help those companies make money by letting game players earn points and virtual goods by completing offers and surveys rather than paying real money.

They make a lot of money doing so. So do the game companies, like Zynga and Playfish (recently acquired by Electronic Arts), which in turn advertise heavily on the likes of Facebook to recruit new players.

But then the negative press started to emerge: many of these "free" offers and surveys actually had hidden costs attached to them that weren't adequately disclosed. Some companies like Zynga started backtracking and going so far as to ban offers altogether. Facebook and MySpace, the two biggest social-network platforms, made very public revisions to their policies. But the controversy continued, and both Facebook and Zynga were named as defendants in a federal class-action lawsuit.

Offerpal, which replaced its CEO amid the controversy, has now come out and said that while it's setting a basic standard for advertisement quality, game makers and publishers enlisting Offerpal's services can opt to be even more stringent. "Offerpal will rate all offers by quality and allow its partners to select a quality level of compliance ranging from 'Level 1' for minimal restrictions to 'Level 5' for highly conservative restrictions," a release explained.

Will the new restrictions keep angry bloggers and consumers--not to mention lawmakers--at bay? More importantly, are they going to amount to anything more than smoke and mirrors? We'll see.

For Madison Avenue, Facebook just got a little less free.

Last week, the massive social network announced that brands, advertisers, and marketers that want to run contests or sweepstakes on its platform have to go through an approval process first.

Getting that approval could be a new revenue stream for Facebook: according to multiple sources in the marketing industry, they're being told that running a promotion in a Facebook application or "fan page" requires buying ad space too.

It's pricey. The minimum ad buy is $10,000 for 30 days, using Facebook's self-service advertising system, according to documents seen by CNET, or $30,000 for 30 days of Facebook home page ads. Priority in the approval process will be scaled, based on how much advertising space has been purchased. It's a move that one marketing industry professional called, in perhaps a bit of hyperbole, "a little Death Star-ish."

A Facebook representative declined to confirm and said the company did not have any comment beyond official documents released on its Facebook Marketing Solutions page.

Let's step back. Cracking down on contests and promotions might seem draconian, but it's actually important for Facebook: the U.S. state and federal laws that govern sweepstakes are extremely complicated, and by allowing only approved contests, Facebook is making sure that its bases are covered.

"Any promotion that any brand, product, or company would run has to have a terms of service against it," said Gunter Pfau, CEO of the Stuzo Group, an agency that has developed numerous Facebook contests and sweepstakes for clients. "Also, depending on the prize value, they need to be filed with various state regulatory agencies."

What, exactly, is new for contests? If a brand is running a contest on its fan page, it has to be handled through an embedded, separately developed application--not, for example, in the page's "wall." Promotions also can't involve Facebook users manipulating their user photos or status messages specifically for the contest.

Legal experts agree that this is necessary. "The (new Facebook) guidelines really cover only a narrow subset of promotions, specifically sweepstakes, contests, and similar competitions," explained Thomas Williams, a partner at the Chicago law firm Howrey, who specializes in trademark law. "That type of contest or promotion is governed by a myriad of state and federal regulations, so what I think Facebook is attempting to do here is merely shield itself from liability that arises out of its users' potential violations of these laws."

Williams continued: "I think it's a prudent and reasonable step on Facebook's part. There are lawyers who specialize in sweepstakes law, and there really are a lot of twists and turns to it."

One thing it'll also do, Stuzo Group's Gunter Pfau explained, is keep dishonest campaigns and promotions off the Facebook platform. "I think it's great news for consumers," he said. "I think what Facebook is doing is really laying these guidelines in place for companies to protect consumers more."

But what about the new ad spend requirements? Facebook has historically pitched its developer platform and fan pages as a free way for advertisers and marketers to tap into the power of "the social graph"--its 300 million-plus active users and their connections to one another. And while it's clear that the company sees these free pages and applications as a stepping stone for ad dollars--Chief Operating Officer Sheryl Sandberg, for example, regularly gives Madison Avenue talks about the company's "engagement ads"--it doesn't have a long track record of requiring advertisers to pay for something that used to be free.

"It makes sense for Facebook, but (it's) a little discouraging to advertisers," commented Alisa Leonard-Hansen, who holds the title of social-media evangelist at digital-marketing firm iCrossing. "Facebook is continually trying to discover new ways to monetize, and they picked up on the trend that advertisers were using their pages to run contests and other promotions. I think Facebook was looking to be able to benefit from this marketing trend."

The ad spend requirements, too, could be considered partial compensation for the new human resources required in Facebook's approval process. Each company running contests on Facebook now has a designated advertising sales representative, and fan pages will continue to have to be policed for potential violations of both advertiser regulations and sweepstakes law.

There might not be a lot of friction as the new regulations go into effect. Companies that don't run contests on their Facebook fan pages or applications won't be affected. Even some that do, especially small-scale fan pages that could easily go unnoticed by Facebook, won't have to change much. "Of course, there are going to be savvy marketers who skirt this and run (contests) under the radar," Alisa Leonard-Hansen said.

It really goes without saying the obvious: this is Facebook's service, and it can do what it wants with it. That doesn't mean marketers will stop grumbling. As one put it in a phone call to CNET, "This is another example of Facebook saying, 'Sorry, eat it, you've got no choice.'"

Facebook head of communications Elliot Schrage posted a company blog entry on Thursday inviting members to review proposed updates to the social network's privacy policy, and much of it deals with what happens to the content of accounts that members have opted to delete.

"Specifically, we've included sections that further explain the privacy setting you can choose to make your content viewable by everyone, the difference between deactivating and deleting your account," and the process of memorializing an account once we've received a report that the account holder is deceased," Schrage wrote. Earlier this week, Facebook detailed the process of "memorializing" an account, which leaves the profile intact to current friends but hides potentially sensitive information.

Now, in the proposed new policy, which members are invited to review and comment on until November 5, Facebook explains to users that they can "deactivate" their account, which hides it but keeps information stored for potential reactivation, or alternately choose to delete it for good.

"Even after you remove information from your profile or delete your account, copies of that information may remain viewable elsewhere to the extent it has been shared with others, it was otherwise distributed pursuant to your privacy settings, or it was copied or stored by other users," the new wording explains. It's referring to content like posts and comments on other members' profile 'walls.' "However, your name will no longer be associated with that information on Facebook."

It's been a long and twisted road for Facebook's privacy regulations. The new policy was put into place after a complaint from the Canadian Privacy Commission called into question what would happen to member profile data if a user deactivated an account.

That fiasco followed outrage over changes to Facebook's terms of service that implied Facebook claimed an "irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license" to member content even if the account had been deleted. One privacy advocacy group readied a federal complaint, and Facebook backed off and returned to its old terms of service.

In July, Facebook cleaned up its user privacy controls as it prepared to open up more of its profile content to public access and search engines.

But the Canadian Privacy Commission had also taken issue with how much Facebook profile information could potentially be shared with third-party developers or advertisers. Facebook made additional modifications to its user privacy controls in August in response to concerns about the developer platform, and in Thursday's post about the new privacy policy Schrage highlighted that the social network does not intend to share personal data with advertisers.

"The information we provide to advertisers is 'anonymized,' meaning that it can't be traced back to you as an individual in any way," Schrage's post explained.

Toilet Cat does not approve of this message.

(Credit: Flickr: Vagabond Shutterbug)

Look what just landed in the department of bad social media campaigns! Toilet paper brand Charmin has put out a casting call for five bloggers who will spend five weeks working as "Charmin Ambassadors" in a pop-up bathroom in New York's Times Square.

I'm going to say it right now: The Procter & Gamble-owned brand has creeped me out for a while with those commercials that feature cartoon bears gallivanting in a forest with rolls of soft and fluffy toilet paper and then sneaking behind trees to do their business. I don't want to think about pooping bears. Sorry. But this new campaign, detailed Tuesday in an article in the Business Courier of Cincinnati, really pushes it to a new level.

"Job requirements include interacting with hundreds of thousands of bathroom guests, maintaining their own blogs and content on Charmin-branded Web sites and popular social media sites, and sharing family-friendly video from the restroom space and surrounding areas," the Business Courier article explained. I'm afraid this is pretty much validating and encouraging those weirdos who like to post to Twitter about bathroom visits.

The new campaign tag line is "Enjoy the go." GROSS.

The bloggers will be paid $10,000 apiece, which I sincerely hope they will use to invest in a name change and a wardrobe of high-end disguises, because if I were one of them I'd be way too embarrassed to go on through life with my current identity.

But don't worry! Charmin has loads of experience so there's absolutely no way this will look stupid. According to the Business Courier of Cincinnati, "This is not the first year Charmin has hosted a temporary, or pop-up, bathroom in Times Square. In 2008, it kicked off a "Plush Potties for the People" tour that traveled from Santa Monica, Calif., to Times Square, where it settled for the holidays."

Plush Potties for the People. As one of my colleagues put it, "You've got to be s***ting me."

Guess what? Facebook is tweaking its home page design yet again--something that invariably seems to tick off members at first before they realize they actually don't mind that much. The company seems to have been previewing the new look to advertisers, one of whom forwarded the details along to industry blog Mashable.

It doesn't look too different. The biggest change is that Facebook's home page news feed will now be divided up into "top news" and a more real-time "recent activity" view.

The explanation:

"Facebook is simplifying the user experience on the home page by introducing Top News and Recent Activity streams. Now, when users log on to Facebook for the first time in a while, they will see the most important stories that they missed while they were away. From there, users can navigate to the real-time stream and toggle between both views throughout their sessions. In addition to making it easier for users to view content that is most relevant to them, this change also speeds up the time it takes for the home page to load and makes birthday reminders more prominent."

A screenshot from a document that Facebook sent to brand advertisers about an impending redesign.

(Credit: Facebook)

Note the mention of birthday reminders. On a given member's birthday, a pop-up version of Facebook's "gifts" application appears on that user's profile so that friends can purchase virtual gifts to display. The "gifts" feature is also currently the center of the fledgling e-commerce plans that Facebook has been bouncing around for quite some time now: It's currently the hub of its "credits" virtual currency, and advertisers can purchase sponsored gifts that members can give to one another. These have also been tested out with a select number of nonprofits.

For users, it sounds like Facebook is correcting some of the changes that members seemed to complain about the most with its last redesign. "Facebook has also put information back into the stream that people have asked for, including photo tags, friend acceptances, relationships, event RSVPs and group memberships," the explanation obtained by Mashable read. Also in there will be information about what a user's friends do on brands' "fan" pages, potentially increasing the exposure for advertisers and marketers looking to jump on the social-ads bandwagon.

Why so much redesigning? Facebook's executive team likes to pitch the company as a living, evolving product. At an event last week in Palo Alto, Calif., Chief Operating Officer Sheryl Sandberg underscored Facebook's belief in constant "iteration," a term you'll also often hear CEO Mark Zuckerberg using.

"The great thing about Facebook is (that) we are constantly evolving the site and constantly evolving the usage," she said. "People protested the new home page redesign, but engagement went way up and users continued to grow."

The Internet Advertising Bureau has come out against new guidelines proposed by the Federal Trade Commission that would require bloggers to disclose their affiliations with sponsors, marketers, and free giveaways. The reason? The IAB claims that the rules unfairly regulate online media more than offline.

"What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media," IAB president and CEO Randall Rothenberg wrote in an open letter to FTC chairman Jon Leibowitz. "These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered. The practices have long been afforded strong First Amendment protections in traditional media outlets, but the Commission is saying that the same speech deserves fewer Constitutional protections online."

He illustrated it with a personal example:

So there I was last Saturday, about to send out on my Twitter feed--which automatically updates my Facebook page and links to my personal blog--a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, "Delicioso! The Regional Cooking of Spain" by Penelope Casas. But before I could press the 'post' button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.

The FTC has said that the rules, which stipulate that violations may face up to $11,000 in fines, are designed for education rather than punishment. But Rothenberg isn't buying it.

"The Guides do allow you to pursue bloggers," he insisted. "They do hold individuals more liable than larger corporations. They do explicitly say online social media have less protection than offline corporate media. They do obstruct online companies' opportunities to drive cultural conversation more than offline companies'. They do threaten with prosecution book publishers, movie producers, and other companies that supply products to individual social media conversationalists."

The bigger problem is that offline media isn't subject to the same restrictions, he explained. And, according to the letter, clamping down on one medium but not another constitutes a First Amendment violation.

The FTC has not yet responded publicly.

Nobody's surprised: Internet-advertising revenues fell slightly in the first half of 2009, according to numbers released Monday by the Interactive Advertising Bureau and PricewaterhouseCoopers.

The trade group found that online-ad revenues dropped 5.3 percent to $10.9 billion year over year, representing a total loss of $610 million. That's an understandable loss, given how much the media business has had the wind knocked out of it, thanks to the recession. But the slide in digital advertising isn't nearly as dire, when compared to the overall ad industry, which fell 15.4 percent.

The IAB also brought up numbers from Nielsen indicating that online advertising is essentially flat--and that the only sector of the ad industry that is growing is cable television.

PwC partner David Silverman called online advertising "a vibrant, sustainable industry," and he reiterated that it's an "industry that really didn't exist more than 12 years ago."

There was not much talk about social-media advertising, which has made somewhat of a breakthrough in recent months: after much criticism that it would never be able to make much money, social ads got a boost from Facebook's announcement that it had reached a cash flow-positive status several quarters earlier than expected.

The social network, which now has more than 300 million active users, has been dipping a toe into virtual-commerce revenue streams but is still supported primarily by advertising.

AOL CEO and former Google sales exec Tim Armstrong.

(Credit: Google)

We get it, Tim Armstrong. We know the still relatively new AOL CEO is all about reinventing the once-mighty online access company into a digital publishing powerhouse. But that didn't stop him from really hammering the point home at The Atlantic's First Draft of History conference on Thursday morning.

"What is the future of the company?" Armstrong, who previously served as a high-profile sales executive at Google, said in his talk, which was streamed live online. "If I had to describe it in one word, I think it's content, and I think it's content because there's an opportunity to marry what the content's already done with what the content can do."

One of his goals at AOL, he said, is to evolve and simplify the display advertising industry in a manner inspired by the success of search advertising. "When you have millions of advertisers that can sign up online in 10 minutes and run a global search campaign," he explained, "the same thing needs to be brought to display."

Armstrong has reason to believe in content. AOL acquired a solid portfolio of blogs when it purchased publishing network Weblogs Inc. in 2005, and the titles it's launched since then have largely been well-received--even though Armstrong promptly did away with the "MediaGlow" branding that had been established for the company's content division soon into his reign as CEO.

AOL has reach: 100 million visitors in the U.S., and 275 million globally. It'll soon be wholly independent from parent company Time Warner. Plus, the traditional print publishing industry is so beleaguered that it's about time a digital power stepped up to the plate.

But there are still plenty of issues at stake. Armstrong said that the ultimate answer to one of the biggest controversies in new-media publishing--do you charge for it or not?--will be that the Web will gravitate toward a mix of free, ad-supported content and paid offerings.

"I think consumers are smart. I think that if the content is really good, people will pay for it," he said. "I do think there's cases where I think if you can add enough value to content, people are going to pay for it. I think The Wall Street Journal's a good example of this."

Meanwhile, Armstrong expects the digital advertising industry to continue to mature, despite the fact that revenue has still been dampened by the recession. "When I came from Google to AOL the first meeting that I did was in Baltimore, at our Advertising.com (offices)," he related, referring to the ad network that AOL acquired in 2004. "One of the employees said, 'How many ad campaigns do you think we should be running?' and I said, I don't know, 500,000, and the audience went blank."

He continued, "The number was a few thousand, and for me that was shocking because I came from a place where we went from having a few hundred customers to having a million customers. And why hasn't AOL thought in that direction and that scale?"

Part of achieving that scale, he explained, involves getting pretty deep into local advertising markets, something that AOL sees as an untapped resource for both audiences and ad dollars. At the Atlantic event, he showed off some visuals from Patch, the local-news start-up that he invested in prior to his arrival at AOL; AOL ultimately acquired it. The start-up is currently restricted to about a dozen towns, mostly in New Jersey, but a gradual expansion is on the road map.

"In the town we're covering every single thing that a consumer in that town should be concerned about," Armstrong said of Patch, which employs a professional journalist in each town as well as aggregates local news from other sources. "The thing you don't see from the surface here is (that) we built a massive structured database underneath this. We've digitized the entire town."

MOUNTAIN VIEW, Calif.--Among the tech industry's up-and-coming, ad-supported business models appear to be out of fashion. Or at least that appears to be the trend among the companies that just graduated from the annual Boulder, Colo.-based incubator program TechStars. Representatives from some of those start-ups convened for an "Investor Day" at a Microsoft-owned auditorium here on Wednesday morning.

Founded by venture capitalists David Cohen and Brad Feld three years ago, TechStars accepts a total of 20 participants in both Boulder and Boston for a summer of development, seminars with industry veterans, and a small amount of seed funding. Thirteen of those 20 companies were advanced enough to earn spots at Wednesday's Investor Day, in which they offered short presentations to more than 100 members of the venture capital community who are actively interested in making early-stage investments.

And not a single one was offering a strictly advertising-supported business model, something that would've been pretty unthinkable not so long ago.

"(These companies) are the future of the entrepreneurial ecosystem as it evolves," Feld said to the audience midway through the morning. "We think these are all very fundable companies. In fact, most of the companies that you're seeing today are either well down the path of closing financing, or have closed financing, but for many of them there's still room."

Unlike the TechCrunch50 start-up pitch event earlier this month, none of these companies were actually launching out of a total stealth mode. Some had already experienced a sort of PR blitz--travelogue site Everlater generated some buzz when people were using it to map their plans for airline JetBlue's "All You Can Jet" promotion, and unofficial Twitter app store OneForty experienced the usual tech-blog mayhem earlier this week when it launched in private alpha and set off a flurry among the early-adopter crowd as people scrambled for invites.

But like TechCrunch50's array of start-ups, most of the TechStars lineup had productivity on the brain. Gaming and entertainment companies were limited to TakeComics, which aims to bring an iTunes-inspired business model to the digitization of comic books, and AccelGolf, a decidedly hardcore set of mobile and Web-based applications for avid golfers.

Business-focused applications were far more commonplace. Retel Technologies has built security-camera software enhanced with data and analytics, NextBigSound tabulates bands and musicians' popularity on social-media and music sites to roll up into a product sold to industry professionals; SendGrid offers e-mail marketing services to businesses at a variety of price points; and HaveMyShift, built by a former Starbucks barista, offers an exchange for hourly employees at major chain stores to swap and pick up shifts.

The companies were a mixed bag, and so were the entrepreneurs behind them: many fell into the young-entrepreneur stereotype of puppy-faced young men who could use a haircut along with that seed funding, but others strayed from the norm. OneForty's Laura Fitton is already a respected Twitter consultant; Raj Aggarwal, CEO of mobile data start-up Localytics, is an Apple veteran who had helped construct the original business model for the iPhone; and the founders of mobile contact management company Sensobi professed to earlier entrepreneurial experience in the chocolate industry.

Of the entire lineup, Everlater--founded by two childhood friends who had quit their Wall Street jobs to found the company--offered the closest thing to the typical ad-supported consumer model that was so ubiquitous in Web 2.0's heyday a few years ago, and even still, the founders plan to sell customized scrapbook and postcard products as well as offer branded packages to travel companies hoping to get their name out there.

A few other TechStars presenters said they hoped to use a free, ad-supported model as an entry point for the subscription services where they plan to make more significant money: video-based language learning system LangoLab, for example, hopes to strike deals with online video hubs like Hulu and then charge for access to lessons based around that "premium" content, and open-source forum software Vanilla charges for the hosted version of its product.

Granted, these business models still have their pratfalls: namely, the fact that they actually have to find individuals or companies who are willing to pay, something that often requires the formation of a solid marketing or sales department before profits can start to roll in. That was why many of them said they were looking to close early-stage funding rounds soon.

But those solicitations for funding were not lofty. Almost all of the TechStars presentations provided a target amount that they were seeking for their angel or Series A rounds (a few had closed rounds already), and the vast majority were south of $1 million--far south, in some cases.