Nov 02 2009

The Reality Behind Facebook Ads

Micheal Arrington sure knows how to stir up a crap storm.  Saturday he started bringing to light the amount of scamming and dishonest practices behind ads and games on Facebook and MySpace.  I’m pretty sure that the people who think the ads are legitimate are in the minority, but even I was stunned by the sheer magnitude of the money changing hands behind the scenes.  I assume part of why I was unaware of the issue is my own limited of use of Facebook and complete refusal to visit MySpace.  Sure, there are rules that try to limit the scams, but the reality is that the technology allowing scammers to earn big bucks is changing much faster than anything the big social network sites can do.  I wonder if this sort of ecology isn’t exactly why Twitter has never allowed ads?

Today TechCrunch is running a guest blog post by Dennis Yu, an advertiser who knows a lot about the guts of running Facebook scams, since he used to make his money performing the exact sort of scam Arrington is trying to call out.  He claims to be reformed, he claims to feel guilty, but he’s not offering to give any of the money back in an act of contrition.  I guess the best we can hope for is that the information he’s sharing can be used to limit the damage caused by scammers going forward.  And limiting the damage is the best that can be hoped for, since the money being generated by Facebook ads is too tempting to stop all together.

One of the biggest keys to encouraging a user to click on an ad has always been to make it look like it’s coming from a trusted source.  Looking like a legitimate Facebook ad is important, but using personal information from the users profile is even better, according to Mr. Yu.  Which has been one of the things that Facebook has been the leader of providing since it’s inception.  Developers have always had easy and wide ranging access to user data on Facebook, in many cases even data that’s marked as ‘private’.  Facebook’s privacy policy spells this out, but few users ever read the policy when they sign up for Facebook and even fewer read it whenever it’s updated.

It’s no wonder that developers flock to Facebook either; according to Mr. Yu, he was able to earn 40-60 times what Google Adsense could for the same ads.  Not that the ads were actually effective for the advertisers, but the companies were still paying out for ad placement.  The funny thing is that most of the ads didn’t convert to real sales, since a lot of the people using Facebook didn’t have or use credit cards.  In other words, they don’t actually buy things that ads are selling.  But there are a three things that don’t cost end-users money that they’re willing to accept: toolbars, supplying an email address or supplying their phone number.  Toolbars are egregious because they are often nothing more than conduits for spyware.  An email address is obviously useful for spamming, especially if you already have all the other information being supplied by Facebook.  The worst of the three for consumers is giving up a phone number, since this can lead to a reoccurring monthly bill that you might not even realize you have tacked onto your phone.  After all, how many people actually check their phone bills that often?

The bad guys, and even the guys who aren’t bad but want to make a buck, are going to find ways to exploit Facebook, MySpace and other social media spaces as long as there is money to be made.  They’re going to take advantage of weak enforcement and a lack of motivation to stop the scams from happening.  But the social media companies have to decide for themselves if the cost of accepting the ads is worth it in the long run.  Users aren’t stupid, they realize the ads are often scams and many of them are playing the game just as hard as the advertisers, providing false or partially true information to get the rewards for clicking on banners and ads.  Soon Facebook will have to decide if they want to be the premier site on the Internet or be relegated to the backwaters of the Internet, used only by scammers and fools. 

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2 responses so far

2 Responses to “The Reality Behind Facebook Ads”

  1. […] The Reality Behind Facebook Ads – Mckeay […]

  2. Dennis Yuon 07 Nov 2009 at 12:13 am

    Martin,

    I applaud you for a balanced and accurate view of the ecosystem. You might also note that it’s not just the spammers who are guilty– ALL actors in the system are culpable. The carriers are perhaps the “most” guilty, since they take half the mobile revenues. Enforcement should start by tracing how the money flows. The ad networks and game developers made money off this, certainly— but we hear little criticism directed at the phone companies.

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