TechCrunch has uncovered part of what Facebook will be announcing next week at ad:tech in New York. "Project Beacon" is an internal project that will allow Facebook to gather buying information about its users on third party ecommerce sites, in exchange for free advertising in the news feed from those third parties.
The way it works, according to a leaked document obtained by TechCrunch, is that participating partner sites would give buyers the option of sending purchase information to their Facebook news feed (i.e., "Username bought a product at Partner Site"). Third party sites don't receive any monetary compensation for participation in Beacon, but in return they get free advertising in the Facebook news feed. On their end, Facebook gets highly valuable user data, which they can use to better target ads, and they get increased brand awareness (on those retailer web sites).
Image from TechCrunch.
As with most things involving the news feed, Facebook users will have finely tuned controls over which participating ecommerce sites can send purchase information to their news feed, and can choose to send all data, send no data, or ask after every purchase on a site by site bases (or, users will reportedly be able to make those settings global).
Beacon, at least as it exists in the leaked document that TechCrunch reported on, is a good idea. If Facebook can get just a handful of major retailers that have a lot of reach on the Internet to participate, they'll be able to get a large amount of very valuable data on their users. Imagine buying a playpen on Amazon and then getting ads for baby toys on Facebook -- that's very powerful stuff. Further, I think if the privacy controls are done well, people won't look at this as an invasion of privacy because shopping is already such a social activity for so many people (just take a trip to your local mall to see what I mean). As long as you can easily leave embarrassing purchases off the news feed (or purchases that are made as presents for friends who might read said news feed), this should fly with users.
What do you think about Facebook's planned tie-in with third party ecommerce sites? Leave your thoughts in the comments below.