How Microsoft got their Passport afterall

Categories: Facebook Strategy, Identity, Social NetworkingPosted on October 26th, 2007

A few hundred million is a steal for your identity, they’ve got plenty of money.

Microsoft and Facebook are in partnership, but what’s at stake? Three things:

1) Facebook knows who you are: your name, your gender, where you live, your martial and political status, sexual preference, age, where you work, the list goes on. The funny thing is, you’ve voluntarily given that information up.

2) The Graph: They also know who you connect to, who you talk to, and what you say to them (you don’t own those private message ya know).

3) Gestures: Sure, up to one third of all profile information is bogus, but what about those unsaid gestures: What people do is more important than what they say. What apps you use, how frequent, what and who you click on.

Great, but why does it matter? Because the new partner likely will have access to this very precious data.

[We once rejected Microsoft's Passport identity campaign, but we've potentially and unknowingly just handed it over]

Are they mining this information? With Facebook being a company of about 700 folks, it’s hard to imagine that they will. Their new advertising partner, (experienced pros) have the tools, process, and sophistication to do this.

Does Microsoft have access to all this information in day two after the deal? Not likely. But will they? Here’s a few reasons why it makes sense: Advertisers are all about margins and accuracy, the more accurate the ad, the less waste and more efficient the spend is. If Microsoft can target these ads right down to Jane in Santa Clara who is conservative and likely to buy X gidget then it could work.

How else can the data be used? For Marketers there’s a bunch of clever things they can do, if their community is in Facebook, why would you ever have them sign up for a registration form again? Just friend them or create an event page. What if you had the ability to export your network contact list via CSV?

Google still relevant?
What about Google? The killer in online advertising and search. There are millions of people using Google, and yet the Facebook audience is much smaller, and North America focused (for now). What matters is growth curves, it’s taking off near vertically.

[Google sells ads based on keywords, FaceSoft can now sell ads on something far more accurate: people]

What’s the next generation of online advertising look like?
What will these ads look like? At first, it will be the traditional forms we know, the banners, skyscrapers. Then they’ll move closer to the newspage, then the sponsored groups. The biggest untapped opportunity? Microsoft can bring the big name advertisers to the geeky kid in the garage who created that popular food throwing app. Geeky kids lack the sophistication to manage a big name advertising relationship or negotiation, but MS can.

[Don't be surprised if the popular Food Fight App in Facebook starts to include Chicken McNuggets, Pepsi's latest drink, and 'the Big Meaty' pizza from Domino]

Upside to users
Ads could become very targeted, very relational, and very social, the savvy brands will let go of the ads, and let the control move to the users. We’ll embrace them.

The takeaway
While the internet has rejected ‘forced’ identity systems from big brands, we willingfully (and often unknowingly) hand over incredibly detailed information about our precious identity. We’ve never seen an advertising system as potentially as sophisticated as this one. There’s many opportunities for the web to become more targeted, more accurate, and more relevant, but with that comes the risk of giving up some control.

Update:
Harvard’s Berkman center fellow Doc Searls has responded to this post, and gives a very user-focused perspective. He points out that Facebook’s users are not it’s customers, and that we should review the 7 rules of identity. Great to be all user-focused, there’s got to be way where all parties can work and benefit. Movements happen at the consumer level and most are sheep.

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This entry was posted on Friday, October 26th, 2007 at 5:20 am and is filed under Facebook Strategy, Identity, Social Networking. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

As ras Facebook is concerned, I was born in 1900. Thank goodness I’ve never told them my religious or political preferences…

Posted by Dennis McDonald on October 26th, 2007 at 5:46 am

I wonder how the childhood obesity nonprofit advocates can counter this? Whole Foods fight?

Posted by Beth Kanter on October 26th, 2007 at 5:58 am

jowyang,

This is a perspective that never even crossed my mind. But as I think more about it MSFT really had a winner. They can absolutely traget not only based on profile but even what we say - if i say I wish i had a Iphone as a Christman gift MSFT will know what ads to show mme and my friends I guess every company has to think of ways to make money.

Posted by Shashi Bellamkonda on October 26th, 2007 at 6:02 am

Dennis, I fudged my personal data too, but read points two and three. It doesn’t really matter.

Beth, Please don’t throw a granola tofu wrap at me

Shashi, Yup, it was a steal for MS, think about it.

Posted by jeremiah_owyang on October 26th, 2007 at 6:25 am

@Beth Kanter Unfortunately I don’t think the childhood obesity nonprofit advocates are even at the table when it comes to utilizing social media to counter anything.

Jeremiah- I think as soon as MSFT begins to flex its muscles and FB changes the “super users” (to steal the Will Harris term)will flock elsewhere.

Posted by Suki Fuller on October 26th, 2007 at 6:25 am

This is just the natural evolution of the Freemium model. It wasn’t a question of “if” but a question of “when” Facebook would cross that chasm.

Everyone who is “disturbed” by an advertiser having detailed profile information on its audience probably doesn’t realize the kind of behavioral targeting and profiling that’s _already_ being done in the marketplace.

Don’t panic. Figure out where your towel is, then figure out how this new phase of Facebook can benefit you, both as a user and as an entrepreneur. There’s money to be made here, for more than just Microsoft …

Posted by Dossy Shiobara on October 26th, 2007 at 6:29 am

[...] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptA few hundred million is a steal for your identity. Microsoft and Facebook are in partnership… and who you click on. [We once rejected Microsoft s Passport identity campaign, but we ve… the tools, process, and sophistication to do this. Does Microsoft have access to all… efficient the spend is. If Microsoft can target these ads right down to Jane in Santa Clara who…, Facebook and Microsoft can now sell ads on something far more accurate, people] What s the next [...]

Posted by Ghillie Suits » How Microsoft got their Passport afterall on October 26th, 2007 at 6:42 am

Thanks Dossy, But what examples do you have of advertising systems that can offer 1) profile information 2) relationships 3) gesture data?

Who else provides this level of granularity?

Posted by jeremiah_owyang on October 26th, 2007 at 6:45 am

Do people want to be sold? I think the tables should turn and put the power in the consumer’s hands. Individuals should own their own data profile. Why do companies have the right to take my profile and blanket market to me? What happens if I don’t want any ads. Can I opt-out? The future should be all opt-in. This will put an end to junk mail, and give advertisers what they want, truly high conversion rates. Using impressions on people who get annoyed with impressions is costly to say the least. I don’t see how FaceBook will translate to really high conversion rates based on their current crowed even with targeted marketing. In fact, it could have the opposite effect.

Posted by TedC on October 26th, 2007 at 7:16 am

Fantastic passport analogy….

Posted by TedC on October 26th, 2007 at 7:21 am

While I’m hardly a fan of the type of data mining that could (and probably will) occur here, I’m not sure how effective Facebook advertising will be, at least if it remains more or less in it’s current form.

I find that I’m even more ad-blind on Facebook than I am on the rest of the web. Can Facebook/Microsoft put highly targeted ads in front of my eyes? Absolutely. Will I even notice them? Unless they change the current model, unlikely.

I am kind of curious to see what sort of ads they’ll serve up for a 20-something, single, heterosexual male Pastafarian.

Posted by Adam Snider on October 26th, 2007 at 7:22 am

TedC Many share your sentiment, but what are you/we going to do about it?

Facebook profile information is all opt-in, we voluntarily did this.

It’s easier to plugin data than to plug out, besides your network is already there.

Adam,

Contextual and relevant ads are certainly a goal here, if done correctly, they could become part of the experience. In fact, if done correctly, YOU will spread it to YOUR network.

You being a Pastafarian means your food fight will certainly be all forms of italian noodles.

Posted by jeremiah_owyang on October 26th, 2007 at 7:39 am

One word: hype
Two words: Internet bubble
Um, three letters: A-O-L

Posted by Terry Heaton on October 26th, 2007 at 7:43 am

Go take a look at my video about Doug Merrill’s (Google VP of Advertising)talk about the future of advertising. Google knows all this, and I think is going to change its advertising strategy as the customer requires. Google’s VP says there is a future of advertising that takes place in three generations:the first is aggregation of information; the second is reviews and testimonials; the third is total immersion in the brand.

Posted by francine hardaway on October 26th, 2007 at 7:52 am

You are worried about Microsoft getting your identity from Facebook? What do you honestly think Microsoft is going to do with the information it gathers from Facebook? I don’t understand the paranoia here.

Let’s say Google had partnered with Facebook, would you be any less paranoid? I think Facebook users are better off with Microsoft having the information over Google since Google already has their teeth in too many places alredy.

Come on, let’s not get a dig in at Microsoft just for the sake of a dig.

Posted by Rob Bazinet on October 26th, 2007 at 8:06 am

Terry, Whatcha talkin bout bud?

Francine, what is the URL?

Rob, Go look back in history about Microsoft Passport, your answers lie there. This is not a dig on MS, (I see from your blog you’re a develop using Microsoft technology) but a dig and a statement about profiles in general.

Posted by jeremiah_owyang on October 26th, 2007 at 8:31 am

Jeremiah, I don’t have conclusive proof, but both eBay and Amazon are in positions to build advertising systems that incorporate profiles, relationships and gesture data.

What about AOL? As much as we criticize that walled garden, at one point you had a 30+MM large population of users for whom you had a profile, relationships (buddy list) and gesture data (how they used the service).

Again, the whole Microsoft/Facebook thing is not a big deal. It’s nothing new.

But then again, Web 2.0 means “everything old is new again.”

Posted by Dossy Shiobara on October 26th, 2007 at 9:54 am

Jeremiah,

Yes, I do develop with Microsoft technology but it wasn’t the root of my comment. I often see comments about Microsoft from Microsoft-haters (not implying you are), and never see the same type of comments when it comes to Google.

Sure, Microsoft has been tagged a monopolist and I won’t debate that one but as far as the holder of information, Google has as much if not more than Microsoft.

I think everyone should be concerned about having personal information on the net but I don’t think Microsoft has any worse intentions than any of the others.

Just my 2 cents.

Posted by Rob Bazinet on October 26th, 2007 at 10:27 am

Oops. Forgot the URl to my Google post:
http://blog.stealthmode.com/2007/10/the-world-accor.html

Posted by francine hardaway on October 26th, 2007 at 10:32 am

[...] you are in that camp, I recommend that you read Jeramiah Owyang’s post, “How Microsoft Got Their Passport Afterall“. Facebook currently has 50 million users and a userbase that doubles every 6 months. Those [...]

Posted by What Do You Get For $240Million? « NextUp on October 26th, 2007 at 11:03 am

Rob, thanks, I see your points.

I’ve heard just as much backlash about Google and what they know from searches, plugins, and other data.

I think it’s also safe to say that most of these companies haven’t started to tap into how this information can be used…yet.

Keep on reading, enjoying the comments.

Posted by jeremiah_owyang on October 26th, 2007 at 11:45 am

[...] that scares me the most may be how much Microsoft actually knows about me now. Jeremiah Owyang has the in depth look. Are you afraid of Facebook? Should you [...]

Posted by The Week's Highlights: ESPN, Red Sox, Social Media, Sex.... on October 26th, 2007 at 1:27 pm

i’m sorry…maybe i’m missing something…but this idea of hyper ad targeting based on mining opt-in user data from social networks (lets call them what they are- user-facing, opt-in databases) is not a new concept…why is everyone so up in arms as if this is a novel concept? i understand that now Facebook may be the first to actually leverage this now with the help of its MS partnership…but its not shocking or new. can someone fill me in on why everyone is acting like this is so novel??

Posted by MST 1948 on October 26th, 2007 at 2:12 pm

[...] has some interesting thoughts on his web strategist [...]

Posted by Facebook valued at $15 Billion | ..:: adamhevenor.com ::.. on October 26th, 2007 at 3:34 pm

[...] How Microsoft got their Passport afterall (tags: facebook microsoft) [...]

Posted by Chris Webb on Publishing, Media, and Technology » A Wiley book editor's thoughts on technology, social media, social applications and their effects on publishing on October 26th, 2007 at 5:38 pm

[...] How Microsoft got their Passport afterall [...]

Posted by renaissance chambara | Ged Carroll » Blog Archive » Links for 2007-10-26 [del.icio.us] on October 27th, 2007 at 12:40 pm

Posted by Marc’s Voice » Blog Archive » Blogging from NYC Oct. '07 on October 28th, 2007 at 8:34 pm

[...] junge Nick O’Neill, der in diesem Geschäft vor allem eine Wette auf die Zukunft sieht, sowie Jeremiah Owyang, der jetzt Microsoft gegenüber Google im Vorteil wähnt, weil man mit den personenbezogenen Daten [...]

Posted by bwl zwei null » Facebook, Microsoft und der Deal des Jahres on October 29th, 2007 at 1:02 am

Once you train 50 mil. people to use Passport (now CardSpace) that would create immense pressure on websites to switch all their authentication to the MS system, which uses Active Directory as its back end. And yes, they would like to eliminate the existing standards in the process… I caught one of their systems architects saying that SSL is insecure (and would not supply examples when asked).

If Microsoft had their way, no one would be able to put up an Internet site without buying a Windows Server license. This social networking move is largely about turning the Internet into a typical LAN environment, where non-MS client systems tend to get locked out.

Posted by Burz on November 7th, 2007 at 8:53 am

Back in 1995 on a public list I wrote a message critical of Microsoft.

They used their DevNet developer database to locate a colleague at my place of work through whom they applied pressure at senior management level, i.e. vailed threats to withdraw discounts etc., in an attempt to prevent further criticism from me.

Fortunately, Microsoft’s emails to management actually confirmed everything that I’d said was true. I still have copies with management’s handwritten comments.

At least I’m not paranoid anymore - I know what they’ll do with all that information.