Beacon a business failure, too
Is it advertising if no one pays for it? In its rush to criticize Facebook's Beacon in last night's segment on the hot social network, 60 Minutes forgot to ask that question. In dramatic tones, correspondent Lesley Stahl ominously noted how "advertisers pulled out" after controversy erupted over the feature, which reports on users' online activities, including purchases. Facebook CEO Mark Zuckerberg defended it to Stahl as the future of advertising, a form of sponsorship less crass than banner ads. If it's the future of advertising, though, it's not a very lucrative one.
Beacon alerts appear in Facebook users' news feeds. That's valuable advertising inventory, where Facebook currently sells ads at a CPM, or cost per thousand impressions, of $5 to $7, or so we hear. Facebook's Beacon partners, however, get that placement for free.
It's understandable that Facebook would be cautious in charging for such a novel advertising medium. But it also displays a lack of confidence in Beacon that belies Zuckerberg's bluster. If he really believed in Beacon, why wouldn't he demand that advertisers pay for it? As it stands, Beacon has generated a ton of bad press for Facebook, the 60 Minutes interview included — and exactly zero million dollars of revenue.