I have been tracking the fuss over Facebook's beacon ad network. The Enterprise Irregulars had a big debate about it.

"The new face of Evil " That is just silly! Facebook tracks your activities. So does Google, Yahoo, MySpace, Microsoft. Actually any company with an ad network.

Facebook is a business. It plans to generate huge revenue from advertising. Thus, Facebook is an ad network. Facebook's hook to generate traffic is social networking and user generated content. Google is an ad network. Google's hook to generate traffic is search.

Facebook has some challenges compared with Google. When users go to Google, they go with intent to leave Google as soon as they have found the link they are looking for. Thus, clicking on a properly targeted ad is as useful to a Google searcher as clicking on the top rated link. In both cases, the search is not 100% certain that the link will give them what they are looking for. This makes it reasonable to consider the ad on par with the search result.

Facebook users, on the other hand, do not go to Facebook to leave. They go there to stay and explore the content. They are thus, less likely to click on ads within Facebook. This only means that the way that Facebook will generate ad revenue will not be identical to Google. This does not mean that there are minimal ad revenue opportunities.

Facebook's Ad Revenue Methods

• On site banners - have lower click through rates than search results. But are great for general targeted brand awareness.
• Brand engagement ads that leverage the Facebook application infrastructure. Great first cut example is Kinzin's Are You Normal.
• Beacon - let's you share your purchases off Facebook with your friends on Facebook. If 8 of your friends all went to see the same movie this weekend, wouldn't you think about seeing it too? Or at least asking them if you should see it.
• More soon. If you want an idea... go check out Lookery .

The negative reaction to Beacon just shows the power and value of Facebook's social network. Some people feel that if Facebook tracks their activities to better target ads, that's one thing, but if Facebook tracks their activities off-site and then shares that with their friends, that's "scary". It's only scary if you do things off Facebook that you want to keep hidden from people on Facebook.

Some bloggers have also complained that Facebook is a walled garden because it does not let users easily move all their data out of Facebook and because the site tends to encourage users to stay on Facebook, rather than go elsewhere.

The ironic this is that the walled garden insulates most users from all the blog based flap. My wife is a huge facebook fan because it helps her to stay in touch with a whole set of friends she normally doesn't see often. My wife doesn't like the idea of Beacon, but I had to explain it to her first. She hadn't heard of it until I told her.

Like most users, she will continue to use and enjoy the site, and ignore the flap over Beacon. While the bloggers gnash their teeth, over on Yahoo!, there is an article entitled "For college students, if it's Facebook, it's love " about two crazy college kids who are madly in love and have announced to all their friends and family on Facebook. That kind of user loyalty isn't damaged by a one-week PR flap.

Facebook gets to experiment with new ideas, piss off some folks, change course and continue on. What more can you ask for. It only took them one week to learn. Most large companies would be delighted to be able to engage their customers so quickly and be able to react and improve both their product and their revenue potential within just one week.

Enterprise Use

As for "no enterprise use", anyone who says that is out to lunch.

Facebook is a goldmine for marketing departments and HR departments.

Companies can and will figure out how to make huge money leveraging the demographic data in Facebook to build brand loyalty, target advertising on non-Facebook sites and hire better people. These are core components of any business. And that means Facebook will have an impact on the enterprise.