Information Technology Reference
In-Depth Information
more detailed information about consumers (as you read in the discussion of targeted
direct mail in Section 5.4.3).
In November 2007, Facebook announced Beacon, “a core element of the Facebook Ads
system for connecting businesses with users and targeting advertising to the audiences
they want” [58]. Beacon promised to be an important way for Facebook to earn ad-
vertising revenue. Fandango, eBay, and 42 other online businesses paid Facebook to do
“word-of-mouth” advertising of their products and services through Beacon. For exam-
ple, after a Facebook user bought movie tickets on Fandango, Fandango would send this
information to Facebook so that Facebook could broadcast it to that user's friends.
Beacon was based on an opt-out policy, meaning that it was in effect unless a user
explicitly asked to be excluded. That decision was good for Facebook because advertising
revenue depends on the size of the audience. However, the decision to make the system
opt-out upset many Facebook users, who were unaware of Beacon until it revealed
information they thought was private. For example, after Sean Lane purchased what was
supposed to be a surprise Christmas gift, the following news headline was broadcast to
his wife and more than 700 other people in his Facebook network: “Sean Lane bought
14K White Gold 1/5 ct Diamond Eternity Flower Ring from overstock.com” [59].
Beacon soon attracted strong criticism from a variety of sources. A spokesman for
MoveOn.org said, “Sites like Facebook are revolutionizing how we communicate with
one another and organize around issues together in a 21st century democracy. The
question is: Will corporate advertisers get to write the rules of the Internet or will these
new social networks protect our basic rights, like privacy?”[59]. MoveOn.org created an
online group calling for Beacon to require an explicit opt-in from users, and it attracted
the support of more than 50,000 Facebook users. A few weeks later, Facebook decided
to switch to an opt-in policy for Beacon. “I'm not proud of the way we've handled this
situation, and I know we can do better,” said Mark Zuckerberg, CEO of Facebook [60].
Netflix is a popular subscription service for movies and television shows. An important
feature of Netflix is its movie recommendation service. After a subscriber has rated
several movies, Netflix uses a collaborative filtering algorithm to predict how well the
subscriber will like other movies in its collection. It then recommends to the subscriber
movies the subscriber is likely to enjoy.
In 2006 Netflix offered a $1 million prize to any group that could come up with a
collaborative filtering algorithm that was at least 10 percent better than Netflix's own
algorithm at predicting user ratings for movies. Netflix released more than 100 million
movie ratings from nearly half a million customers, stripped of private information in
an attempt to make the records anonymous. Each movie rating consisted of four pieces
of information—subscriber, movie, date of grade, and grade—where each subscriber
was represented by an integer.
