This has been a pretty wild and woolly couple of weeks in the advertising and social networking space:

On the Facebook-can’t-be-stopped front, the social advertising play Facebook outlined (Beacon, Social Ads, corporate ad pages, et al) is a really well thought-out means of making their entrance as a principal into the whole ad ecosystem not just a simple vertical integration of their inventory (how I would typify moves like MySpace’s, before their hyper-targeting announcement), but a front-on attack on the first generation behavioral targeting players and search principals.

On the Privacy-is-an-illusion front, AOL is trying to get out in front of the anticipated consumer backlash around behavioral targeting by announcing their plan to allow an opt-out capability.  Consumers, you can find that opt-out at “www.reallyobscureurlthatwehopeyouneverdiscovery.com”

On the Don’t-forget-your-old-friend-Tom front, MySpace announced two steps to address the intellectual high ground gap they have with Facebook:  They agreed to be part of the OpenSocial consortium with Google, in the hopes of getting the same developer community mojo that Facebook is riding, and they announced their “hyper-targeting” capabilities for advertisers, leveraging the profile information of their members.

And finally, lest they be forgotten, on the $1000-per-share-freight-train front, Google made a great first step in addressing the assault by Facebook with their OpenSocial play.  Without MySpace, it would have been irrelevant.  With MySpace as a part, they are starting escalating the pressure on Facebook on opening access their social graph data.  I don’t see Facebook blinking anytime soon, but each journey begins with a single step, and OpenSocial is off to a good start.  Its long-term success will be determined if and when they show consumers a powerful call-to-action, in terms of a compelling value proposition that resonates with the social networking demographic (that hasn’t happened as of yet – it is still just a standards dialog/battle among the tech principals). I found the fact that it was hacked in its first week of existence to be a serious warning to all that openness relating to consumer data, without the appropriate design and software quality rigour, is a train wreck – hopefully they will learn from their first bloody nose here.

This past week, for me, was all about the privacy entitlements individuals are owed, and how they might effectively administered to the broad base of online consumers.   I see no scenario where consumers’ voices aren’t heard on this issue – it’s too rich of a topic for Washington not to opine on.   Given the initial dialogs on the topic, I see 5 major paths this privacy dialog takes;

Option 1: The FTC implements some form of “do not call registry” for web users.  One challenge:  In the phone world, the issues of identity was easy – it is my phone number.  How on earth do they intend to do it for my web activities?  Today, I roam from site to site without a common identity.  If I now have a privacy policy I want uniformly enforced, I see no easy way to do it, short of a cookie the FTC places on my PC that sites all need to respect/use to understand my “rules”, and I see multiple issues here:

How do you know a site is respecting the policy?

How does that approach work in my multiple PC/kiosks/mobile world?

How long will it take for the FTC to design and implement the solution?

Option 2: The FCC wins its proposal to enforce “anti-spyware” efforts, defines web tracking as a potential “spyware in the cloud” model, and intervenes. If this is like the approach to SPAM fighting, it will take the form of a reactive mechanism to prosecute offenders – not a real solution in my eyes.

Option 3: The industry proposed a solution (led by the majors).  Certainly, this is a proactive approach to the pending backlash, but each player is really conflicted here (hence all the leading with opt-out vs. opt-in proposals).  Nothing other than point solutions by individual players has arisen, and that’s a non-starter for me.

Option 4: Grass roots solutions, in the form of third-party browser extensions, arise.  There are a number of IE and Firefox add-ons that are starts at trying to address the security and privacy issues, but no solution reflects the needs of today’s consumer, who is now facing the increased use of behavioral targeting by each of the majors and the new social network profile-accessing ad schemes relatively unarmed.

Option 5:  The browser manufacturers incorporate more robust privacy controls in the core shipping product that is well beyond the controls they offer today.

To me, the best answer is Option 5: the major browser “manufacturers”: Microsoft, Mozilla, Apple, Opera all need to ship as part of their standard offering (not as add-ons), a simple process to allow consumers to select, in simple terms, the level of personal information they are willing to disclose to web sites / ad networks.

Today, the core browser-based options available to consumers are really blunt instruments:

Enabling/Disabling cookie support – a hugely bad consumer experience here, in terms of ease-of-use of their popular sites

Periodic cookie sweeping – again, a bad experience rarely done by the average consumer

Site-specific cookie blocking - a rarely used feature

Blocking all third-party cookies – again, a buried option rarely used, and one that treats all third party cookies as equals as privacy offenders, which is not the case

Ad blocking tools, an economically unjust solution, in my eyes.

My rationale for developing and shipping enhanced privacy controls in the core browser at the best approach?

1. The current principals in the publishing and networking space are just way too conflicted to come up with the right solution.  All the talk today centers around opt-out schemes, and that is really an intentionally weak scheme – Opt out studies have shown only 15% or less folk elect to opt out, when presented with a default opt in selection.

Past action also indicates future intent.  Look at how Facebook addressed public profiles – it shows they are going to be aggressive in their data usage tactics.  Beacon is just another step (and certainly not their last) in their advertising journey.

MySpace is not much better, just a few chapter behind – hyper-targeting on profile info is just a first step by them.

It’s not like Google is immune from similar criticism.  It started with their archiving of web search history, to their terms of service for Gmail, and will extend to their own plans for targeting in the display ad and mobile space.

I just don’t see any thoughtful answer arising from the monetization players.

2. The browser presents a tool that can implement a near-100% privacy compliance scheme (you still have the issues of multiple PCs and mobile to wrestle with here as well, I’ll acknowledge).  I’d prefer some form of white-list scheme as part of the solution to eliminate the threat of new bad actors – if you haven’t passed the test of respecting my privacy policy, your cookie gets wacked (passing through Newark NJ on the train as I now type, hence the Sopranos term

3. You have a solid means for getting the vast majority of consumers easy access to the control mechanism.  This means the solution can’t be buried in detailed options rarely used – it should be part of the install/upgrade dialog.

4.  You have a possible practical middle ground for consumers and publishers.  The solution might even include an option to share an anonymous ”mini-profile” I am willing to expose (e.g., age/sex/location).

5. It’s a solution that could be developed and broadly deployed quickly (e.g., 6-9 months).

I think this (browser-based control) should be on a short-list of options to consider as we go forward.  The biggest challenge for me (and a reality check)?  The fact that the browser manufacturers themselves are conflicted in coming up with the best answer.  IE’s owner, Microsoft, has made major investments in its ad business, and any approach that dilutes their efforts will get major pushback.

I even worry about Firefox – the income that the Google relationship brings into Mozilla Foundation is addictive – but hopefully the community will rule here and perhaps make privacy an “A list” initiative.  Firefox is the shipping vehicle that I hold out the most hope for – if they do this, and it further helps their install momentum, it can get Microsoft to the table.

I do think there is a practical answer that works for consumers and businesses - I just don’t think I need to trade this much privacy away so quickly.  I wait with baited breath to here the first real pro forma answer to emerge.  It is way too critical a topic for us to let age much more than it already has…