Social studies

29 March 2010
I can’t bear to read another article about Tiger Woods, let alone write one. So instead I’m going to tell you an embellished (but mainly true) story about Facebook which raises some interesting legal issues for marketers.

In 2007, Facebook had a cunning plan to make money—they called it Beacon. With a select group of partners—including Blockbuster—Facebook launched Beacon to its US members. Beacon worked something like this: you go to Blockbuster’s website to hire a video and you’re asked to enter (among other information) your Facebook account details.

As soon as you’ve hired the movie, the following pops up briefly on your screen:

Hi, we are going to tell your Facebook friends that you hired this movie unless you click here to opt-out.

You start sweating and scramble madly for the mouse. Too late!  Your 10,000 ‘friends’ receive the following Facebook update:

Hi, [Dan Winfield] just hired Debbie Does Dallas at Blockbuster.com. It’s a great movie and he thought you might want to know.

I didn’t want them to know. But can you see where this is going?


Class action

People sued Facebook and Blockbuster in the US claiming that Beacon breached their privacy, falsely suggested they endorsed the movie they’d selected and rode on their reputation with their ‘friends’.

As the backlash grew, Facebook pulled Beacon. It has now launched Beacon II with an ‘opt-in’ function rather than an ‘opt-out’.


Moral of the story

If you’re looking to partner with a social network site, it is important you’re comfortable with the way the marketing will work.  Don’t be seduced by the ‘broad idea’. Beacon was a good idea; the problem was how it worked. Here are a few things to think about before you launch your own cunning plan using a social network:

1. It's against the law here to claim that your product is endorsed by a person when it isn’t. It doesn’t matter if the person is famous or not.  And it doesn’t matter if your claim doesn’t do any damage to the person’s reputation.

2. Use an ‘opt-in’ function to legitimise releasing personal information.  Do not use an ‘opt-out’ function (the fact I hired Debbie Does Dallas was personal information).  While using an opt-in may be less attractive, the backlash f you get it wrong with an opt-out is pretty unattractive too.

3. Remember that you cannot vet a person’s list of friends. This means you need to be particularly careful with how you tap into social networks when you are marketing products such as alcohol, treat foods or therapeutic goods.  There are fairly strict rules here on who you can market these products to and what you can say in that marketing. Often a network of friends will include people overseas as well as here, and restrictions on marketing in the friend’s country may also apply.

4. Famous people expect to be paid for endorsements. So before you mention Tiger Woods in your marketing, ask yourself ‘can we afford the licence fee he would be entitled to?’ (Tiger’s fee may be less since ‘Tigergate’, but it’s still going to be a lot.  And some celebrities actually go up in market value after a scandal—like Kate Moss).

5. Sending unsolicited electronic mail can be against the law here. Members of social networks can send unsolicited mail to their friends because it can be inferred that their friends wanted to hear from them (by accepting ‘friend’ status). But a company tapping into a member’s network of friends is unlikely to be able to rely on the same ‘inferred consent’ defence.


We all know the online marketing spend is growing. Follow a simple mantra of ‘treat people’s private information and reputation as theirs to use’ and 2010 will be one step closer to hassle-free.

An edited version of this article was published in NZ Marketing magazine, March 2010.

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