GWEN IFILL: Judy Woodruff has our Media Unit look at the balance between online information's financial potential and individual privacy.
JUDY WOODRUFF: It's where millions of young people list their favorite hobbies, movies, friends and trends, and now all that information from the two largest social networking sites, Facebook and MySpace, with a combined total of more than 160 million users, will be made increasingly available to advertisers.
Facebook announced today that it will allow companies to show ads to its users, both when they are on and off the site, based on personal information they list online.
Yesterday, MySpace unveiled a self-service advertising tool allowing groups like small businesses, musicians and politicians to post an ad and choose who sees it. They also increased a number of categories that track user preferences by more than tenfold, in order for businesses to better target their products to the much-sought-after 18 to 25-year-old demographic.
This marks a shift from the online advertising model established by Google, where ads are displayed based on the keywords a person searches for. It is the biggest step yet by the social networking sites to try to capitalize on their exploding popularity.
So what does all this mean for advertising and the bounds of online privacy? For that, we turn to Mark Glaser, editor and host of MediaShift, a Web log at PBS.org that looks at the intersection of media and technology.
Mark Glaser, just to be clear, this is all about making money, right?
MARK GLASER, Editor, MediaShift: That's right. All these social networks are very popular when it comes to the amount of people who are going to visit the sites. But as far as revenues go and how much money they're making, that's always been a question mark when it comes to social networks.
JUDY WOODRUFF: What more can you tell us about how these two new advertising initiatives by MySpace and Google are going to work?
MARK GLASER: Well, the MySpace initiative, which is called self-serve -- basically, if you're a band, like let's say you're a reggae band, and you want to reach people who like reggae music, you want to reach people who are a certain age, a certain gender, you know where they live. You can actually target your ads to show up on those people's profile pages on MySpace.
Facebook is doing a similar service, not as self-service, but more for brands that want to reach particular people in demographics. And they're also doing this thing called Beacon, which basically, if you are a member of Facebook and you go out to other sites and buy things, like let's say you buy a book at Amazon, it will actually show up on your news feed of what you're doing, so your friends can see that you bought a book at Amazon.
It's all about that personal recommendation. A lot of people trust the information they get from their friends. So if they see that their friends are buying a particular book or going to see a specific movie, then the marketers believe there's a better chance that they'll go out and do the same thing.
JUDY WOODRUFF: So is anything one of these 160 million users of Facebook and MySpace write on their site on their communications, is that now going to be available to the advertiser?
MARK GLASER: You know, they're going to be able to tap into that, what they call data-mining. They'll be able to get the information on the profiles of a lot of people, but they're not going to know specifically, you know, who it is. It's anonymous information; it's an aggregate.
So, theoretically, they won't know that it's you, but they might know all of your tastes and know how to target the ad to you. That's something that marketers believe is the Holy Grail, to be able to actually target an ad and specifically to your tastes, and not just serve a banner ad that you don't care about, but specifically honed in on what your tastes are.
And if you have a profile page on one of these social networks, you usually put the music that you like, the books that you like, a lot of your tastes, the causes that you follow, the media that you follow. So it makes it a lot easier for the marketers to really target in and serve advertising that was actually relevant to what you care about.
JUDY WOODRUFF: We know that online privacy has been an issue not just, of course, on MySpace and Facebook, but across the Internet. The Federal Trade Commission just last week held hearings on it. What is the concern here?
MARK GLASER: Well, the concern is that a lot of us put information online, and we don't really think about the consequences of what we're putting up online, all of this personal information.
And what the FTC is wondering is that there a lot of these online advertisers are going beyond just serving banners. They're doing what's called behavioral advertising. And that means they're following you through cookies in your computer.
They're following to see what sites you visited so that, let's say, you had gone to a travel site and looked into buying a ticket to go to Jamaica, and then you went on and went to a few other sites, and you were on a social networking site, and you got an ad that actually was offering you a deal on that trip to Jamaica.
So it's a little bit scary when you start to see these very targeted ads. And you wonder, "How did they know that I'm interested in Jamaica? How did they figure that out?"
So there's a lot of information out there that we're giving just by going online, just by going and searching, using the search engines, and also by visiting various sites. And we just aren't necessarily aware of what we're giving out and what the possible consequences of that are.
JUDY WOODRUFF: Cookies being those things that save information in your computer. So is the FTC -- what's your understanding? Are they likely to do something about this?
MARK GLASER: I don't think that the FTC will necessarily do something drastic. I think that they might look into some kind of standards some way. It's really about educating the public. And if they can do something to really help people understand what they're giving away when they put up their profile on MySpace and on Facebook, if they can really educate people, I think that's the key, and show them the options of what they can do to opt out of those networks and to be opt out of being tracked in that way.
That's really the key. There's been talk about a do-not-track database, which is similar to a do-not-call database, where you could actually put your name in and say, "I don't want online advertisers and marketers to track my movements online." But the marketers and the Web site publishers believe that that's not a good solution because it's going to take away from their ways of making money.
JUDY WOODRUFF: Just quickly, as of right now, if you use one of these sites, MySpace or Facebook, and you're concerned about privacy, what can you do about it?
MARK GLASER: Well, first, you should look and see what their privacy -- you know, see if there's ways you can opt out of their tracking. And, second of all, if there is a do-not-track database, you might want to go into that, but basically -- or you can also clear those cookies that are in your computer that are showing all the sites that you've been to.
So those are a lot of steps. So if there's a simple way to kind of opt out of having people track you, that's what makes a lot more sense. And if the FTC, and the businesses, and the consumer groups, and privacy groups can get together and come up with a really simple, elegant solution, that would really help.
JUDY WOODRUFF: Probably something people are going to be paying a lot more attention to now.
All right, Mark Glaser, we appreciate it. Thank you.
MARK GLASER: Thank you.