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By Mike Spinney, CIPP

Social networking Web sites are getting a lot of attention these days. From Google’s $1.65 billion acquisition of YouTube, to the new television series development deal between FaceBook and Comcast, the popularity of social networking sites is proving lucrative for those properties that have captured significant audiences. The vigor with which people are engaging in these digital communities has investors dreaming of profits as innovators work feverishly on ways to monetize the traffic and rabid loyalty that certain communities generate.

Frequent, long-term participation by a committed community of enthusiasts translates to advertising opportunities. Understand what is motivating the community to join and contribute and it will be relatively easy to deliver a highly targeted marketing message. Right?

The answer isn’t so simple. Advertisers are leery of the connotations that come with interactive and behavioral marketing. A recent legal settlement that affirmed advertiser responsibility for the methods used to deliver the message means more attention paid to how interactive advertising networks and social networking properties conduct their affairs. It means that, even if consumers aren’t paying attention to privacy policies and disclosures, the regulators are.

Social networking sites present an intriguing conundrum for owners and advertisers, however. Social networking works best when participants’ personalities and identities are most clearly defined. Users’ self-published demographic data helps vibrant communities develop within social networking sites, and they are the basis for a growing number of niche sites.

MothersClick.com, a social networking site for new moms is one example. Launched in late 2006, MothersClick boasts a growing community of 10,000 registered members who use the site to find or share advice with their peers, establish and coordinate play groups, and share the unfolding experience of motherhood. Few groups are as protective of their personal information as new mothers, so participating in a safe, secure environment where policies and procedures serve to reinforce the sense of safety is of utmost importance. But the revenue potential of the same audience is not lost on the husband and wife team of MothersClick co-founders, Dietrich von Behren and Andra Davidson.

“Safety and security are really important for us,” von Behren said, describing a multi-level security process that includes investments in technology, well-defined policies and rules of conduct. He added that, while the plan is to eventually generate revenue through advertising or sponsorships, there are strict policies in place to ensure members aren’t harassed. “No list selling, no direct contact, and non-invasive. It must be tasteful. Advertisers know [new mothers are] a huge market, but we need to protect our members.”

MothersClick includes active communities with influential participants and topics of interest to potential users and advertisers. However, while von Behren and Davidson describe their site as “MySpace for moms,” users of MothersClick don’t have publicly viewable profiles with detailed, self-published demographic data that can easily be mined for the purposes of behavioral targeting. It is on such sites where the rules of engagement become hazy.

Alissa Cooper, Policy Analyst with the Center for Democracy and Technology (CDT), said that there are a couple of issues at play for social networking sites. Disclosures and user controls are essential to give participants access to the knowledge they need to make informed decisions and participate at a level at which they are most comfortable. She said it’s important for users to divulge sufficient information in order to build their online social networks, but “the question is whether the data are used for other purposes, if they have the choice to turn off certain features, or if there are sufficient disclosures to allow informed consent.”

Many consumers don’t know the difference between an advertisement served directly by the site or through a third-party, Cooper explained, nor do they understand the implications. She has no specific opinion of particular social networking sites, but said that the CDT works to ensure privacy policies are meaningful and that sites adhere to them.

Consumer awareness and control are the keys for avoiding privacy pitfalls in the realm of social networking, Cooper said, adding that while many users don’t care, it is still important that the information be available to protect everyone’s interests.

FaceBook’s Chief Privacy Officer, Chris Kelly, addressed the issue of privacy, policy, and targeting on social networking sites during the December 6, 2006, IAPP webcast, “FaceBook: What it is, How It Works, Why it Matters to You.”

“People are perfectly happy to see information about people around them, but don’t want a lot of available information about them[selves],” Kelly said, citing a paradox identified by privacy pioneer Alan Westin that is especially relevant to social networking site operators.

Kelly went on to explain that it is this dynamic that makes the “feel” of privacy as important as the policies, making it important to aggressively communicate a site’s policies. That doesn’t mean that site operators have carte blanche to take advantage of the social networking phenomenon. What it does mean is that the operator has a responsibility to make clear how information will be used and to give the subscriber ample notice. The subscriber, on the other hand, has the responsibility to know the rules before engaging with a social networking site.

“Setting rules. . . and articulating them very well makes a big difference. But you have to be super aggressive and proactive in expressing those rules,” Kelly said, adding FaceBook’s rules allow for the targeting based on the “quasi-public” information subscribers provide. Targeting is “fair game,” he said, “as long as we’re not sharing personally identifiable information.”

Mike Spinney, CIPP, is a communications and privacy consultant from Townsend, Massachusetts. Follow Mike’s blog, Private Communications, at http://w ww.privatecomms.blogspot.com or email him at mike@sixweight.com.

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