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Ad Age Digital has an article about how 50,000 Facebook users joined a group to protest the new Beacon broadcast advertising service:

Consumers, in case you’ve been living under a rock, are in control.

For the latest evidence, consider the massive outcry that erupted over Facebook’s much-vaunted Beacon program, hailed as a major ingredient in the advertising program the company launched last month. Facebook last week responded by reining in the system. Facebook users will now have to opt in to participate, instead of the previous, more passive opt-out prompts.

The Beacon system tells a user’s friends about a user’s actions on sites outside of Facebook. For example, if a user purchases a product on a Beacon-participating site such as Overstock.com, which Forrester Analyst Charlene Li did, it would broadcast that purchase (in Ms. Li’s case, a coffee table), to Ms. Li’s Facebook network.

Perhaps the Facebook team needs to pick up a copy of the Cluetrain Manifesto? If not, they will have to continue to face the repercussions of the Law of Unintended Consequences:

One commenter on Ms. Li’s blog said Beacon had ruined his marriage proposal by broadcasting an Overstock.com purchase of an engagement ring to his entire network — including his girlfriend.

The Facebook Beacon, and tools for information gathering like it, have massive implications for the future of privacy (we’ll get into this a little more deeply with a book review I have for next week). Will this kind of “Social Advertising” force consumers into creating multiple online personas? What can companies with less-than-honorable intentions do with this technology? And how long before a disgruntled college whiz-kid turns it on its head and does something that no one expects?

At least Facebook is responding quickly, their agility shows that they are paying attention to the conversation - even if they did not think far enough ahead to anticipate the response to this sort of breach of trust. “Opt-out” is the default position that all advertisers should take in order to avoid these scandals. That is called Permission Marketing. (Yes, the link is to an article that is 9 years old. That means no one has an excuse for not seeing this coming! And I am sure that Seth Godin will have more to say on this soon.)

“Opt-in” as the default is called Spam. And there is an entire industry devoted to defeating it. Facebook is a creative new idea, one that has not reached its full potential yet. The big question is, do they see their potential as making money by becoming an advertising giant, or making money because they have become a social networking giant?

If you found this post useful, please share it with your friends on Twitter using the tinylink http://tinyurl.com/57tbvn. Thanks, I appreciate it! Feel free to comment below, I enjoy discussing these ideas. ~@Stephen