Advertisers Are Complaining That Facebook Doesn't Follow Privacy Standards

Facebook's refusal to get on board with industry-wide privacy standards could start to cost it ad dollars, according to Ad Age.

The social network is not a member of the Digital Advertising Alliance, which sets an ad industry standard for privacy across the web.

Business Insider noted earlier that even though Facebook is a board member of the Interactive Advertising Bureau, it doesn't follow some of that body's rules and standards, either.

Facebook has been adding about $200 million per quarter in new ad sales, so it doesn't appear that lack of compliance is hampering its business. But even so, buyers would prefer that Facebook get with the program. That program includes using the Ad Choices icon in the corner of display ads, which users can click on to find out how they're being tracked, and to turn off that tracking if they want.

The problem is that large advertisers like to see industry standards written into their advertising contracts. They will generally avoid non-standard, or non-compliant media, because of the perceived increased risk. Although Facebook offers users plenty of privacy options, it does so in a way that's different from the legal boilerplate many advertisers prefer to use -- and that may disqualify it from some large advertiser budgets.

Here's what advertisers told Ad Age about Facebook:

• Christian Juhl, president of Razorfish West: "Rolling out full scale, you're going to want to look at it differently. ... Overall [Facebook needs] to be leading from the front, and right now I don't think there's good evidence that that's happening."
• One rep at a large media agency: "Our brands would have a great deal more confidence in Facebook advertising ... We would feel comfortable if they would use this icon. ...That's what we're encouraging them strongly to do."
• Another media agency source: "I frankly don't think Facebook has an appreciation for privacy in the space. ... It just isn't their first or second line of thinking ... they want to stay flexible in product creation and do not want any outside influence to hamper their efforts."

These are the kind of statements that you absolutely do NOT want to hear if you are in the business of ad sales. The stakes are high because the ad industry believes its voluntary compliance keeps FTC regulation at bay. Or worse, new rules from Congress such as the ones being proposed by Sen. Al Franken for mobile apps.

Historically, Facebook has generally regarded itself as different and separate from the rest of the web. It runs its own native format ads, publishes its own rules and its users must sign in to see any ads running on their pages.

But that hasn't stopped buyers from complaining publicly -- something advertisers rarely do unless they're really concerned (the business prefers not to make headlines). Grace Liau is a senior VP for Vivaki, one of the biggest web ad buyers on the planet. Her business buys for Digitas, Razorfish, Starcom MediaVest and Zenith Optimedia. She told Ad Age it can take up to 20 hours of extra work to verify compliance on Facebook and Amazon's non-standard media. "We need the publishers to adopt the industry standard ... We cannot have everyone embrace it in their own flavor."