Webware

This post was updated at 8:02 a.m. PT with comment from Facebook.

Facebook is making the advertisements on its site "smarter" and more interactive, Forrester Research analyst Jeremiah Owyang wrote on his blog Thursday. Owyang had been briefed by Facebook monetization director Tim Kendall on a Facebook initiative called "Engagement Ads" that is slated to launch later on Thursday.

Facebook confirmed the program to CNET News later on Thursday morning. "Facebook is conducting a trial of Engagement Ads over the next few months as part of its continual development of additional advertising concepts," a statement from the company read. "The initial three versions of Engagement Ads will allow users to make a comment, give a virtual gift or become a fan of a brand's Facebook Page directly within the ad. People also can view recent friends who made comments, gave a gift or became a fan both within the ad and as those actions are shared through News Feed."

The social network has already made it clear that it wants its ads to be more than just display ads. Users can give a thumbs-up or thumbs-down to an ad and then tell Facebook why they did so. The company's targeted Social Ads are also getting deeper: putting "pizza" in a status message can instantly turn up an ad for online-ordering company Seamless Web accompanied by a photo of a pizza.

Engagement Ads are different, though. Members can leave comments on ads that then show up in their friends' News Feeds, sign up as a "fan" of a product through Facebook's "Pages" feature, and use an ad as a way to send a brand-related virtual gift to a friend (if the brand signs up for this). The Engagement Ads module will show up on the home page next to the News Feed--it won't be replacing the display ads on profiles or Facebook's other Social Ads.

"To combat dismal click-through rates of traditional (social network) advertisements, these features emulate widgets and encourage users to increase member adoption, viral growth, and brand interaction," Owyang explained in his blog post. "Brands will only succeed with these 'WidgetAds' if they create content that puts community first, lean on new interactions, integrate with other tools, plan for the long haul, and change how they measure success--traditional Internet advertising tactics won't apply."

Facebook's history with advertising has been spotty, at best. Like most social networks, it relies on ad dollars, but its revenues remain low because social sites traditionally don't attract the click-through rates of, say, search advertising. When it launched its 'Social Ads' initiative last November, one major component--the allegedly intrusive "Beacon"--was met with so much negative publicity that Facebook's executives modified the program and apologized.

But Beacon hasn't gone away. Just last week, it spurred a class action lawsuit; while the suit's claims are shaky at best, it does show that audiences don't necessarily take too kindly to unfamiliar forms of advertising.

Maybe they were pulled voluntarily due to embarrassing content, or involuntarily due to inappropriate material--either way, sometimes social-networking profiles get deleted. And a recent controversy in the U.K. has left some Web users wondering exactly what happens to them.

Here's how it started. A few Facebook members pointed out that the site keeps profile data intact after users delete their accounts so that they can be subsequently "un-deleted" if the addictiveness factor of Facebook proves to be too much. But what if they don't come back? We all know by now that Social Ads, the advertising program that the company launched last year, makes extensive use of the information that users put into their profiles. Deleted profile information could presumably be kept on hand as well.

The U.K.'s Information Commissioner's Office (ICO) has reportedly taken this up as a major privacy concern and plans to investigate it further. Dave Evans, the ICO's senior data protection practice manager, spoke to the BBC about the issue, according to The Telegraph, and hinted that the agency believes the current process of Facebook profile deletion is too complicated and not permanent enough. He's concerned that if Facebook holds onto the information contained in profiles that users have opted to erase, it may be in violation of the U.K.'s data protection laws.

Facebook, meanwhile, has put out a statement saying that the company is "committed to working with the ICO to maintain a trusted environment for all Facebook users and ensure compliance with the U.K. law," and representatives did not return requests for further comment.

But while Facebook is still the poster child for social networks, there are plenty of others with millions of users and extensive personal data at their disposal. CNET News.com also contacted representatives from a number of other popular social-networking sites asking if they could clarify their own sites' policies for content from deleted profiles; we're still waiting to hear what they have to say, too.

Most of Facebook's reported 50 million users might be mostly ordinary people, but the site's latest legal issue involves celebrity law.

Earlier this month, shortly after the social networking site announced its Social Ads initiative, University of Minnesota law professor William McGeveran argued in a blog post that the new program might violate a number of privacy laws.

Social Ads, which have already begun to appear on the site, are designed to boost Facebook's lukewarm revenues by targeting ads directly toward the members in question. They allow Facebook members to sign up as "fans" of an advertiser and then have their names and profile photos displayed alongside the marketer's ads on their friends' Facebook pages. Problem is, that potentially violates a New York privacy law that protects peoples' names and likenesses from being used without written permission, according to McGeveran.

"It's not just a New York law. Most states have statutes that protect this. Sometimes it's called a right of publicity, sometimes it's called commercial appropriation, sometimes it's a right to privacy," said Brian Murphy, a partner at Frankfurt Kurnit Klein & Selz, a New York-based media and entertainment law firm. "It's essentially that area of law that protects all of us, but in particular celebrities, from having their likenesses used without their permission."

The real problem facing Facebook, however, isn't that Social Ads are illegal. Social media, including Facebook, is an uncharted territory for the American legal system, and old laws are being applied to a new concept. The New York privacy law that McGeveran cited, indeed, has its roots "more than a hundred years years ago by some bigwigs back in the late 1890s who were tired of having their private lives splashed across the equivalent of Page Six," said Murphy.

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Move over, iPhone: The cool system to "jailbreak" these days is Facebook's new advertising initiative.

Two aspects of Facebook Ads--the "Beacon" and friend-recommendation-equipped "Social Ads"--have already garnered some skepticism around the Web for being potentially invasive, annoying, or both. Many Facebook users, myself included, haven't even seen these advertisements yet, but code-savvy developers like Nathan Weiner of The Idea Shower have already decided that we might want out.

Blocking the Beacon, Weiner wrote, is remarkably easy. All that's required, according to a set of instructions, is a site-blocking Firefox plugin, and then the Beacon application can't send Facebook any information about what you've been doing on partners' sites. Valleywag theorizes that the Social Ads program may be the next target.

Facebook has plenty of smart engineers on board, and they'll likely find a way to "un-jailbreak" the company's advertising platform; think about how Apple has repeatedly released software updates for the iPhone that (among other things) prevent clever users from unlocking them and installing third-party software.

But this should be a heads-up for Facebook: when people are hard at work on workarounds, it's a sign that they might not be too happy with the concept.

Facebook executives have recently been quoted as saying they want to take over the world, but something might already be getting in their way: the law.

The New York Times' Saul Hansell has linked to a blog post from William McGeveran, a professor at the University of Minnesota Law School, in which McGeveran asserts that an obscure, 100-year-old New York privacy law may put a damper on Facebook's new "Social Ads" program, which inserts "endorsements" from your friends on the social-networking site.

Plenty of pundits have already argued that this program could be really annoying, but if McGeveran is right, it also could violate a law that was instituted to protect people from having their names and likenesses used for advertisements without permission. Specific written consent, he underscored, is necessary. True, it's a state law, but the fact that Social Ads are online, and hence displayed on computers in New York, could get in the way.

"I don't see how broad general consent to share one's information translates into the specific written consent necessary for advertisers to use one's name (and often picture) under this law," McGeveran wrote.

According to Hansell's article in the Times, Facebook's chief privacy officer has already said he thinks McGeveran's interpretation of the law is too broad to apply to Facebook's Social Ads.

NEW YORK--When Facebook founder Mark Zuckerberg spoke to a room full of reporters shortly after announcing the company's new Facebook Ads initiative, it became clear that this move is a risky one. Facebook Ads, with its focus on "trusted referrals," is heavily rooted in viral distribution tactics. And it's well-known by now that while a viral phenomenon can reach soaring levels of popularity, it can also become synonymous with in-your-face annoyance.

Zuckerberg was insistent that Facebook users will appreciate the fact that they'll be seeing advertisements that cater specifically to their interests and that showcase recommendations from their friends. "It seems like people prefer targeted ads. They just perform way better," he said. "The point that we're trying to make today is that it's way more organic and natural."

But there are questions--some big ones. One reporter voiced skepticism over the fact that because they're advertisements, the "trusted referrals" will only extend to positive reviews, whereas a major component of real-life recommendations among friends is what not to buy.

Perhaps more troubling is the fact that if you sign up as a "fan" of an advertiser group on Facebook--a brand of sneakers, for example--your name will automatically run alongside "Social Ads" for that brand in your friends' profiles, and Zuckerberg said that there's not yet a way to opt out of that.

"This is the first iteration of this," the Facebook founder assured the press as he explained that since Facebook Ads is new, the company could potentially change that no-opt-out policy for being a "fan" of a group. "When we announce a product, we want to also launch it (but) I wouldn't say that what we're launching today is the final version."

He promised that the company would act quickly if any concerns arose.

Forrester Research analyst Jeremiah Owyang emphasized that Facebook is still being very careful. "User backlash should be low for a few reasons," he said. "One, only two Social Ads display per day, (and) two, since users have become fans of a brand (opt in) they personally endorse, they ask for it." Essentially, they're getting what they're paying for, Owyang said in an e-mail interview with CNET News.com. "Since there's already ads on Facebook (flyers, banner ads, and sponsored groups) this is nothing new to a system where the features are free."

To add to Facebook's caution, the launch partners in Facebook Ads are also conscious of the potential for backlash. One of them is Sarah Chubb, president of Conde Nast's CondeNet Web division, which will be debuting tie-ins for its Epicurious and Flip.com brands on Tuesday night. "Anyone who was in that room today who's participating in this thing has probably thought very hard about that," Chubb said of the launch event in an interview with CNET News.com. "What's going to be interesting for anybody who's using the service as an advertiser is figuring out which kind of messages get the best reception--I think any one of us would risk alienating people."

But Chubb is ultimately optimistic. "We're advertising our sites and ultimately probably our magazines as well, and our sites are based on very vertical categories of interest like food and travel. Because those are sort of the things that people like to badge themselves with and share on Facebook anyway," she said, "we think that we don't run much risk."

Speaking with the press, Zuckerberg also answered questions about exactly what Microsoft has to do with Facebook Ads in light of its $240 million stake in the social network. The answer: not much. Redmond will be providing the "non-social" advertisements that will remain on the site.

"Microsoft is the exclusive third-party provider of IAB (Interactive Advertising Bureau) standard ads on Facebook. This program that we're launching, it's just a different format--they're not IAB-standard ads." Zuckerberg added that Facebook had worked the situation out with Microsoft. "We think it's a different kind of advertising."

Forrester analyst Owyang says there's no reason to suspect this wasn't the plan all along. "It's my understanding that Microsoft will continue to do what they do well--sell banner advertising and visual banners on Facebook," he said. "This has little impact to their current relationship, although it would make sense for the Microsoft Sales team to be selling these additional products to their clients. In some cases, expect banner ads to be used in a coordinated method with social ads."

At the conclusion of Zuckerberg's meeting with the press, the question arose about Google's OpenSocial platform, which has been described by some as a "Facebook killer." But the Facebook founder said it hasn't caused them to lose much sleep. "We've been so busy with this launch that we haven't had time to really look at that," he said. "We'll see after it launches."

Zuckerberg paused. "They're working on some issues."

The details of Facebook's "SocialAds" initiative, set to debut on Tuesday, have leaked through enough channels so that we have a pretty good idea of what we'll be hearing. SocialAds will not only serve up uber-targeted ads based on your Facebook profile information, there will allegedly be some sponsored vertical categories involved, as well as e-commerce tie-ins that will tell your friends what you've been buying, preferably with an opt-out clause.

Facebook rival MySpace, meanwhile, has recently introduced "HyperTargeting," a similar advertising strategy.

The debut event itself, intended to be shrouded in mystery, hasn't exactly stayed that way. The previously undisclosed location was unceremoniously leaked by a few bloggers, so it's now beyond common knowledge that Facebook will be taking over the Loft Eleven event space on West 37th Street for pretty much the entire afternoon.

What's on the agenda? It's not quite clear yet, but the day will feature a keynote by Facebook founder Mark Zuckerberg as well as some "panels" and a press Q&A. It's also a big question mark as to who will actually be there, since a formal list of partners has not been released--though an unconfirmed list was leaked several weeks ago.

Hovering over the head of it all will undoubtedly be OpenSocial, the social network developer platform code that Google released last week to much fanfare. OpenSocial's debut certainly took some of the spotlight off Facebook, but at the same time, there's no clear path for exactly how it will be a "Facebook killer."

The thing about OpenSocial is that it's provided a set of tools that are potentially very powerful--I mean, hello, it's Google--but the catch is that a whole lot is left up to the "partners" themselves. OpenSocial's uber-openness can make Facebook look closed-off and inaccessible, but at the same time, if people are going to ditch their Facebook profiles, somebody else is going to have to step up to the plate in turn.

I've been playing with the Google-owned Orkut, which many are saying is Facebook's heir apparent. It's impressive, and has a very neat and clean interface, but it asks me for way too much information. Does anyone else find it creepy that a social-networking site asks me what my turn-ons are (Thunderstorms? Skinny-dipping?) and whether I find myself attractive? Not only am I not sure I want to divulge that sort of information about myself, I most certainly don't want to know it about my friends.

So, as far as I'm concerned, Facebook is still on top of the social-networking game. Bt SocialAds had better be good--and not too intrusive. I'm having enough trouble with a news feed full of zombies.

MySpace.com, a high-profile player in Google's new OpenSocial developer project, isn't willing to let Facebook get away with stealing the week's big advertising headlines.

The News Corp.-owned social-networking site announced Monday morning that it has completed the first phase of a new advertising program it calls "HyperTargeting," which uses the information that members put in their profiles to serve up ads they might actually want to see.

MySpace initially began its HyperTargeting program in July, dividing its users into groups of "enthusiasts" in 10 categories (music, movies, personal finance, gaming, consumer electronics, sports, travel, auto, fashion, and fitness) and catering the advertising to those segments. "Performance increases for brands on the HyperTargeting platform were as high as 300 percent compared to demographically targeted campaigns," a statement from MySpace claimed.

Some of the 50-plus advertisers in the first phase of the advertising program have been Procter & Gamble, Microsoft's Xbox, Ford, Toyota, XM Satellite Radio, and film studios Universal Pictures, Lionsgate, and Fox Searchlight.

With the second phase of HyperTargeting, those 10 "enthusiast" categories have been expanded into more than 100 subcategories--so instead of simply singling out "movie fans," the targeting intelligence could use profile information to pick out science-fiction fans. So far, this has only been released on MySpace's U.S. site, but early next year it will expand to its international versions.

"Our mission...was to build an ad platform that translates our massive amounts of self-expressed user data into highly targeted, interest-based segments, enabling us to better serve the exact right ad to the right person at the right time," said Michael Barrett, chief revenue officer for MySpace parent division Fox Interactive Media.

But logging into MySpace, I don't see a whole lot of "targeting." The home page is covered in student credit-card advertisements, which is odd because I don't think my profile provides any indication that I've been a student recently. On my profile, I saw Google advertisements for New York apartments, a Christian dating service, acne medication, and diet pills.

OK, the first one is relevant, but the other three...I'm not so sure about.

If MySpace's HyperTargeting is trying to tell me I need a full-out makeover and a new G-rated romance, um, I'm not listening.

There are just over 24 hours left until the formal announcement of Facebook's new advertising initiative. Is the site experiencing some jitters in preparation?

Late last week, one of my editors IMed me to ask whether Facebook was down. It was, but within five minutes, it was running again. Over the weekend, I noticed that the site was logging me out periodically. I wanted to check out a friend's new profile photo, but I repeatedly got log-in screens instead.

Then, on Monday morning, the site has slowed to a crawl. When I attempted to approve a new friend request, Firefox asked that I save a PHP file to my computer rather than actually opening up a page. Eventually, it allowed me to approve the request, but I'm still getting "page timed out" messages on occasion.

It's not necessarily anything major: in the summer of 2006, both Craigslist and MySpace.com experienced major outages that threw off the sites' operations, for example. And don't even get me started on Second Life. But the Facebook mini-outages and glitches have been noticeable, and that's not good when you're trying to get big ad partners onboard a new project.

There's no official word from Facebook on whether all this is due to server issues, connection issues, or the fact that I used a stupid profile photo of myself in my Halloween costume. (I've since taken it down.)

Has anyone else out there experienced Facebook instability over the past few days?