All Things Digital

We really need to move the thinking about the social graph. This exists out in the world, and has always existed. We didn’t invent it. How can we ‘own’ it? We’re just trying to map it out. We have a model of the social graph that we’re constructing.”
–Facebook CEO Mark Zuckerberg

We have address books, and the sum of the address books is the social graph.”
–Google CEO Eric Schmidt

Turns out that the “social graph” about which Facebook CEO Mark Zuckerberg so often speaks these days isn’t just a decades-old computer science term, it’s the basis for the monetization platform that will someday justify Facebook’s $15 billion valuation. Or so the theory goes.

On Nov. 6, Facebook will make a major announcement at the ad:tech conference in New York. And ad-industry executives familiar with the company’s plans say it will revolve around an advertising network reportedly called SocialAds. As described in Facebook’s Sept. 24 trademark filing of the term, SocialAds are “advertising and information distribution services, namely, providing advertising space via the global computer network; promoting the goods and services of others over the Internet.”

But–again according to those faceless ad-industry executives–the SocialAds network may be quite a bit more than that. It might use permission-based demographic targeting to deliver ads to users on Facebook–and off, says Altura Ventures’ Lee Lorenzen, who offers this hypothetical breakdown of the service:

• Facebook (with Microsoft’s help) will offer a competitive solution to Google AdSense for non-Facebook Web sites.
• You can think of this service as an open-source AdSense solution where Google can provide ads into it (if they document what the Web site owner will earn) but Google (and any other ad providers) will have to compete with ads that Microsoft can provide that are Facebook-enhanced.
• The innovation here is that Microsoft’s ads will be able to pick up the user’s Facebook cookie (for the 50-million-growing-to- 200-million users who already have a cookied-Facebook account).
• This means advertisers in Microsoft’s adCenter can offer a much higher CPC or CPM payment to the Web publisher because they will know that the user viewing the Web page is actually a Facebook user that, for example, happens to be an 18-year-old male with a birthday in three weeks who mentioned Xbox on his profile page.

If Lorenzen’s right, SocialAds might easily justify Microsoft’s $240 million investment in Facebook.

What an odd bit of coincidence this is. Amid increasing scrutiny of Google’s privacy practices and its planned $3.1 billion purchase of DoubleClick–which some say would concentrate too much consumer data in its hands–Microsoft and Ask.com are calling upon “leading search providers, online advertising companies and privacy advocates” to develop “privacy principles” for the search industry. “We have been thinking deeply about privacy related to search and online advertising and believe it is critical to evolve our privacy principles,” Peter Cullen, Microsoft’s chief privacy strategist, told the Seattle Times. “We’re really focusing on: how do we be more transparent … how do we give customers more control over what they want.”

To that end, Microsoft has promised to make search-query data anonymous after 18 months by permanently removing cookie IDs, the entire IP address and other identifiers from search terms. The company stated it also plans to “develop new user controls that will enhance privacy, such as letting people search and surf its sites without being associated with a personal and unique identifier used for behavioral ad targeting.”

Which is, of course, exactly the sort of opt-out control that Google has so far refused to permit. Now Google has made several positive adjustments to its data-retention policies recently–in fact, it shortened the lifetime of its cookies earlier this month. But you wouldn’t know it from the beginnings of this “industry dialogue” Microsoft and Ask.com have announced. Because Google wasn’t even asked to participate in the prediscussions that created it. “Google learned about this Microsoft/Ask initiative from reading about it in the press,” Peter Fleischer, Google’s global privacy counsel, told Search Engine Land. “We have publicly said that we’d support a process for further industry dialogue on online privacy issues.”

Omitting the industry leader from an effort to create “industry-wide standards” in online marketing and advertising does seem a ham-handed way to develop a common industry approach to privacy issues, doesn’t it? “An industry effort really should start on better terms,” said Search Engine Land’s Danny Sullivan. “Ask, in particular, shouldn’t be playing this game. After being left out of prediscussions on things like nofollow or site maps, excluding Google and Yahoo perhaps might feel like sweet revenge, but privacy is too important for PR games.”