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Exclusive: Leaked Details of How Facebook Plans To Sell Your Timeline to Advertisers

fbslide Exclusive: Leaked Details of How Facebook Plans To Sell Your Timeline to Advertisers

Screengrab from an October 2011 presentation "Facebook Updates"

This is a guest post from a former CTO who now does tech consulting for other start-up ventures and was briefed on Facebook’s advertising strategy. The story was edited and checked for accuracy by Betabeat.

If you logged onto Facebook yesterday, perhaps you caught a link at the top of the News Feed that read: “About Ads: Ever wonder how Facebook makes money? Get the details.” The answers provided some context on the news that starting in January, Facebook will start integrating a type of ad, called “sponsored stories,” that display your friends faces next to content they have “liked” in larger-sized ads your News Feed mix. “Facebook makes its money from showing you ads,” the company told consumers yesterday and with the ramp up to its spring 2012 IPO, the social network is getting serious about that endeavor.

In what seemed like an unrelated move, in September, Facebook announced a brand new type of profile called Timeline, where your whole personal history is laid out by month-by-month, all the way back to your birth. At the time, Facebook described it to consumers as a chance to: “Share and highlight your most memorable posts, photos and life events on your timeline. This is where you can tell your story from beginning, to middle, to now.” By the end of this year all 800 million plus Facebook profiles will have been converted to this new interface.

What most users don’t know is that the new features being introduced are all centered around increasing the value of Facebook to advertisers, to the point where Facebook representatives have been selling the idea that Timeline is actually about re-conceptualizing users around their consumer preferences, or as they put it, “brands are now an essential part of people’s identities.”

The name itself is cleverly designed to conceal the fact that your profile no longer arranges information chronologically. Yes, things are laid out by year and by month. But, when it comes to what’s displayed to your social circle at any given time, other metrics, including direct payments to Facebook itself, will now influence the ranking and placement of stories. This payola will be a crucial part of the graph rank, the new metric for placement that the social network uses to determine what appears on your profile.

“Graph Rank” is a complex and non-published algorithm, but we know direct payments to Facebook and app/user popularity are important parts of the ranking. The newest thing is no longer on top. There is a rough month-by-month sort, but within the month it’s graph rank, not chronological order, that determines placement.

For advertisers and social app developers, capturing user tastes (which used to be good enough) is now secondary to knowing what users are doing right now. Your reading habits, music tastes, guilty TV pleasures, holiday gift purchases and so forth are part of stream of information from which Facebook wrings profits and a new advertising channel in and of themselves.

Disguising ads as your friends’ updates is being offered up as an antidote to the dismal click-through rates for traditional web advertising. Sponsored stories in your feed and sidebar ads based on your friends’ likes will become ubiquitous. Indeed in marketing materials, Facebook says these new premium ads are 90 percent accurate, compared to the industry average of 35 percent. “When people hear about you [the brand] from friends, they listen.”

Facebook derives its revenue from advertising–an average of $100 million a month since last January. At this point, many understand that the business model revolves around selling the mountains of personal information people post to Facebook. In the ramp up to its IPO, the company is anxious to show better revenue growth.

As the post from Facebook yesterday morning explained, sponsored stories are different from ads in that a user’s name or profile might appear alongside the ad,  “If you’ve liked that business’s page, the story about you liking the page (including your name or profile photo) may be paired with the ad your friends see.” While sponsored stories don’t include additional messaging from the sponsor, businesses pay Facebook to feature posts and activity that mention their brands. In both cases, these are only visible “to friends you’ve already shared this information with.”

How long users will tolerate this is unclear. There’s already a class-action suit pending in California against Facebook for integrating user’s pictures without their permission in advertising based on “Likes.” Many Spotify listeners and Washington Post readers are no doubt regretting listening to that one good song from that otherwise unpardonable band, or clicking on that salaciously titled article, which then appeared on the screens of everyone they know along with their smiling profile picture.

We have reached out to Facebook for comment and will update when we hear back.

screen shot 2011 12 23 at 10 26 37 am e1324654728184 Exclusive: Leaked Details of How Facebook Plans To Sell Your Timeline to Advertisers

Comments

  1. Mike says:

    This is Disgusting.

    1. Anonymous says:

      OK really people, just like Google, you are not FB’s customers.  Advertisers are customers.  Everything you do on free sites like this is aggregated and sold to advertisers. 

      How is this suprising?

      1. Anonymous says:

        Exactly. If you are not the one forking over the cash, then you are the goods, not the customer. You don’t want your identity sold for cash? Don’t expose your identity to free sites.

  2. Jacob Shea says:

    It’s free service that we opt-in to, what do you except?

    1. dax mcanear says:

      wow, your typo is pretty poignant. 

    2. When you use Chrome, you don’t except Google to publish your browsing history. When you browse Flickr, you don’t expect a link to Coca Cola when you view a picture that contains a soda can. Of course you can opt-out, but that doesn’t mean we shouldn’t be allowed to criticize what we get. 

      1. Anonymous says:

        Why don’t you expect these things?  How do you expect a free service to be free?

      2. Charging me, not abusing me. Not paying shouldn’t equal bad treatment. They are in their right to do it, the same way I’m on leaving. But it’s stupid for their users, they’ll leave. 

        If the only way of sustaining a service is by abusing you’re user’s trust, you should be rethinking you’re strategy.

      3. Anonymous says:

        Why don’t you expect these things?  How do you expect a free service to be free?

  3. guest says:

    Putting our faces next to advertisements without our permission is hopefully going to be fought against.  If we “like” something, does that mean we are giving permission to use our likeness and endorsement for all future advertising? I doubt if many people realize this.

    1. the FTC is likely going to take action against behavioral targeting by using users data and telling advertisers what users are doing individually. previously the data was aggregated and we were told that teens watched tv most from 5pm to 7pm. now it’s we know that emily the 16 year old likes bikes, disc golf and puppies and she is online from 8-10pm chatting with friends.

      as a marketer that scares the sh** out of me.

    2. I personally don’t care what “brands” my friends like or “suggest”. In online shopping space, it’s all about bargains and the actual $ saved.  I see where perhaps my friend’s Groupon or 1SaleaDay purchase could draw my attention, if I know we were bargain hunting for a same thing (like say a laptop or a tablet).  Or had they PERSONALLY recommended me a movie on Netflix and we also have similar tastes in movies. The point being, there needs to be multiple match in interests, and these highly generic “likes” or this silly “timeline cross-branding” is too crude of  a promotional tool to deliver advertisers any edge over say AdWords campaign. People like to think they are better shoppers than their friends, and why would you want to imitate your friends anyway, you want to be better, right? I understand Facebook’s direction, but I believe it’s a gamble at best, and frankly a desperate one. They need to think outside the box.

    3. I personally don’t care what “brands” my friends like or “suggest”. In online shopping space, it’s all about bargains and the actual $ saved.  I see where perhaps my friend’s Groupon or 1SaleaDay purchase could draw my attention, if I know we were bargain hunting for a same thing (like say a laptop or a tablet).  Or had they PERSONALLY recommended me a movie on Netflix and we also have similar tastes in movies. The point being, there needs to be multiple match in interests, and these highly generic “likes” or this silly “timeline cross-branding” is too crude of  a promotional tool to deliver advertisers any edge over say AdWords campaign. People like to think they are better shoppers than their friends, and why would you want to imitate your friends anyway, you want to be better, right? I understand Facebook’s direction, but I believe it’s a gamble at best, and frankly a desperate one. They need to think outside the box.

  4. DRG says:

    I get that this is how FB is making money. Fine. Annoying, but fine. But how are the companies who are advertising with them making money? I can’t help but think that the average FB user is trying his/her hardest to ignore all these ads. Which leads me to believe that there’s an internet advertising bubble that must, some day, burst, to the demise of all these free websites. What do you think, hive mind?

    1. Anonymous says:

      Agree, hard to prove but I know it is true. Selling tangible goods is the only sustainable business. 
      For example, I would pay fb $3 a year to use it if it didn’t use my info for anything.

    2. Fox Phillip says:

      Try, yes, but they’re so dang good and predicting what you like. Just last month I discovered a site geared toward my profession (music). I subscribed and within two weeks already purchased from them. May have never found them except for the Facebook ad.

    3. Mrobataille says:

      People I know involved in the online ad space tell me that FB ads are exceptionally well-targeted (which implies companies do, in fact, make a lot of money by buying them).

  5. Anonymous says:

    I almost finished using FB! And this story is one reason for that! Use it just for invitations or events, but FB is also full of stupids and kids!

    1. Anonymous says:

      My thoughts precisely. I use Facebook for event invites. To socialize, I call up my buddies and we go for a pub crawl or something. I also prefer to not have internet at home, only at work. A waste of time.

      1. Pub crawl?LOL.How cheap is that..

      2. Anonymous says:

        Depends on yer style, between free and $200, average $50, standard deviation $15.

      3. Sam says:

        “a waste of time” . totally agree, those arabs taking control of their lives was a waste of time. learning about things at the click of a button is a waste of time. knowledge is a waste of time. your mothers pregnancy was a waste of time.

    2. Anonymous says:

      Yeah, Google wouldn’t ever do this to you……………….

  6. Nick ONeill says:

    I feel like this headline is nothing short of misleading.  The content is also a massive twist to try and scare people into sharing this article.  I thought betabeat was above sensationalism but guess not.  

    1. Ben Popper says:

      The headline says: 
      How Facebook Plans To Sell Your Timeline to Advertisers

      What follows are details about how Timeline was designed to privilege ads and how the new layout is being pitched to advertisers. 

      What’s misleading about that? 

  7. Kevin Kleinsmith says:

    Are people shocked that Facebook is pawning your privacy for profit? I am sure every new feature between now and IPO will be about maximizing shareholder value/revenue and less about customer wants/needs. If that was the case, they wouldn’t have done what they just did, because everyone I know hates it, and people just say that you will get used to it.

  8. girl says:

    how does this work in terms of facebook users that never “like” a brand or a product of any sort, including favourite movies, books, etc., or even talk about the things they buy and what brand name they are in comments they post?  there are a lot of people like that, and there will be more people than ever removing their likes/faves because of Timeline, just to keep the adverstisers somewhat at bay.

    1. Anonymous says:

      already done

    2. Kyle says:

      there really aren’t that many people like that, or at least not that many that actually use facebook more than once a month…

      and i’m not even sure what your point really is?  if they don’t specify their preferences, they’ll just get generic ads that aren’t suited to them… or ads that their friends “liked”… really not that complicated to understand

  9. Anonymous says:

    its really a good idea to make money from this technique . But after this, facebook will no more cool .
    Anyone even think its consequences, friends and users will no longer click on true story/link ( published by us ) . Same in our case too .  ultimately people will no longer be social .
     

  10. Brett Rudy says:

    I think you are putting the completely wrong spin on this. I’ve had Timeline for months, and it is awesome. For the first time, pictures and videos are posted to WHEN and WHERE they occur, instead of just being on the top of my newsfeed based on my post date. All of a sudden, my data is relevant, forever.

    What is the problem with what Facebook is doing? Facebook is a private company, offering a service that consumers use free of charge more than any site on the internet. In return for this free service, you have to look at tailored ads. Do you want people on your property for free, or would you charge them?
    Obviously, these ads make Facebook money. Isn’t the American dream to make money? I’m personally glad to see a private company make it big! Good for them. They deserve it. I’m jealous I didnt invent it.These ads will be tailored to the consumer. The difference between “junk mail” and “direct mail” is that users enjoy receiving direct mail, because it is relevant. Ditto is the case in the digital realm. This is a good thing. Great actually. It is about opportunities seeking you out. Isnt that what we want? If you don’t, maybe the internet isn’t for you.

    If you are against capitalism, why don’t you remove the ads from this blog (which seem to be quite tailored, by the way).

    1. Totally agree with you. I actually cannot believe people are complaining about facebook ads when many spend so many hours using it; for free!!  I think it is important to see things in perspective, and if seeing some personalized ads on the sidebar is the small price to pay for keeping in contact with your loved ones, friends and acquaintances then so be it!

      1. Jeff says:

        “is the small price to pay for keeping …”
        It all starts with taking a little bit of privacy from people, just a small bit so we may say “It’s okay, we only sacrifice a little and we get lots for it in return”. After a while you won’t have any left and you’re grown accustomed to it. The thing is they don’t actually give anything in return at all. They don’t ‘fix’ anything or truly add anything unique.

        For example; you want to apply for a new job. Your new employer is able to check up on your background history (all your drama, all your “OMG the doctors told me I have diabetes!”). Do you see the problem here? An employer may never (at least here) ask about your medical history, the good thing is, because of Facebook, he will no longer have to. It has all sorts of implications on life. And yeah, I know a lot people will shout “Make your stuff private”. But come on, be honest, we both know that most people don’t and don’t care (anymore). We’ve grown ignorant.

    2. ivan says:

      Brett Rudy says:

      “In return for this free service, you have to look at tailored ads.”

      Don’t be silly. I don’t have to look at any ads at any time on Facebook or anywhere else, ever. I have blocked all ads ruthlessly and without remorse since ads started appearing on the Web and I will continue to do so.

    3. Slamber5769 says:

      just dont use the “like” button ever…..then they wont know your preferences to advertise to you……i am keeping my profile but i am boycotting the like button

    4. Dennis says:

      If they pair your pictures with something you have liked in the past. This “like” will have you as the unknowing sponsor, or representative, selling a product you endorse based on your 1 time passing fancy “like” click. If I’m trading my information and basic street cred to my friends for Facebook to make a buck, I want half of the money.

    5. Dennis says:

      If they pair your pictures with something you have liked in the past. This “like” will have you as the unknowing sponsor, or representative, selling a product you endorse based on your 1 time passing fancy “like” click. If I’m trading my information and basic street cred to my friends for Facebook to make a buck, I want half of the money.

  11. Shane says:

    That may be the case but I actually like the Timeline, it took a day or two to get used to. Anyway I’m actually starting to see alot of websites that design ‘Facbook Covers’, http://www.freefbcoverz.com that’s one of the best i’ve seen so far, anyone know of any others?
    So at least the new chnge is bringing possible jobs to website owners etc. so some people benefit.

  12. Cjbarrett1054 says:

    If you are using me to sell a product, shouldn’t I be reaping some of the benefits?

    1. David Tangye says:

      You are reaping some of the benefits: free use of FB. Isn’t that enough?

      1. Kyle says:

         hahahah exactly, this is what no one seems to understand… each year that passes, people just assume they’re “entitled” to more and more without paying and with no consequences

      2. Jacob says:

        then pay users for the time they spend on facebook creating the information that facebook is selling

  13. BW says:

    I guess I don’t mind it if I can somehow figure out a way to benefit from it too. Like why not create a Facebook page and “like” all kinds of things, collect friends but all the while my profile picture is a an image of a web domain? That way when they use my profile pic, it would just be advertising my website. Which is http://thebitchywaiter.blogspot.com/2011/12/very-bitchy-christmas.html by the way.

    1. Slamber5769 says:

      Thats a great idea….i love it lol

  14. nh says:

    How much did you pay to read this article? Oh wait, advertisers are paying for this. You are the product… Betabeat, pot, kettle, black…

  15. Jinghao Yan says:

    “At this point, many understand that the business model revolves around selling the mountains of personal information people post to Facebook”

    Facebook does not sell personal data. Think about it: It would be stupid to sell its competitive advantage. As you’ve said, it makes money from advertising. Why would it sell the source of the advantage in advertising to potential competitors?

  16. Dean Collins says:

    blah blah blah, stupid article about a stupid idea that desnt really change anything.
    can we have some real reporting please.

    1. no rocket science huh. No products to sell? Your the product they’ll sell. Don’t get the fuss about it. Its the same thing Google does with G+ recommendations. Facebook matches the right content, Google with G+ doesn’t.

  17. KS says:

    Nice one Brett Rudy!

  18. Arlene Tan says:

    Go to our site to support the disable timeline campaign! It’s time to regain our privacy back.
    https://www.facebook.com/delete.timeline

  19. Arlene Tan says:

    Go to our site to support the disable timeline campaign! It’s time to regain our privacy back.
    https://www.facebook.com/delete.timeline

  20. For us, the moral is, and always has been, don’t post the really personal stuff ANYWHERE online. Approach Facebook like a cocktail party with paparazzi and hidden mics.

  21. Uphigrade says:

    any royalties for using my face for your ads?

  22. Bobby Liu says:

    Let’s start at the top. If you didn’t post anything up on Facebook, then no one will see it. We got into Facebook knowing that it’s a social site, and we readily post up info. It’s like saying wearing something in public and not wanting SOME people to see it. That’s not going to happen. If you indicated to something you like, it’s no different from taking a poll, and the results being used by the pollens. Facebook is doing just that, polling and monetizing the polling results.

    Simple rule is, don’t post up on anything you don’t want known in public or a public site like Facebook. Alternatively, block all views to ‘Only Me’ in privacy.

    1. Slamber5769 says:

      Poll are usually confidential….it is aggregated data not linked with your name

  23. Marco says:

    Bitching about it will change little. I actually welcome this new change. If anything, Facebook has always made positive changes since it started. I think people just overreact about privacy and what not. Change. They are there to change things. This is good.

  24. Alex says:

    i want my previous wall profile back…
    how to disable my timeline

  25. I think the CTO/consultant that penned this story misunderstood the presentation Facebook sent him.  Sponsored Stories have been around for months now.  I don’t see anything in this story that describes how those ad units will change because of Timeline.  If anything, the new information available (such as Spotify music interests) will just be used to refine Facebook’s targeting–so that users will see more or less the same ad units, but they will be more relevant to users.

    1. AJo says:

      Just discovered ON my Timeline/Wall last night a giant banner ad under my profile picture, and then more ads (for car insurance and online colleges) listed right in with my posts that are obviously trying to mimic a post that I would actually share…but it wasn’t me that put it there and I cannot remove it. It is absolutely crossing the line now, because anywhere else (YouTube for example) they have to get your permission by contract to make money on the profile – you can either opt out of making money or sign for a cash in. Think about it………if your page is visited more frequently and brings in a certain percentage of raw cash to an advertiser………………what Facebook is doing is AWFUL.

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