Consider this ad that appeared in the left-hand ad space on friend Jeremiah Owyang‘s profile page, which he then sent to me:

Yes, about a month ago I did sign up as a fan of Blockbuster’s Facebook page. Yet I never told Blockbuster that it could use me to endorse its ads. I’m not a user of Blockbuster Total Access. In fact, as I write this, I’m home sick, I don’t have any good Netflix movies here, and there’s nothing but garbage on pay-per-view On-Demand or HBO On-Demand, so I even looked up Blockbuster to see if there’s one near my apartment, and the closest is ten blocks away (others that were closer have shut down since I last checked). If anything, I’m a little pissy with Blockbuster right now, so I’m surely not going to provide a testimonial for their ad campaign.

So what’s the next logical step? I tried to opt out of the advertising. Of course, I can’t. The only setting I can change says, "Allow Blockbuster to send Updates to the Updates tab of my Facebook Inbox" – in other words, I can opt in or out of Blockbuster messaging through Facebook. How come I can’t opt into or out of its ad campaign? Here’s the screen shot of the settings on Blockbuster:

This doesn’t just revolve around pages. Jan Van den Bergh also sent me a screenshot of how I provided this kind of endorsement for an application being advertised, and not even one of the apps I’m particularly fond of. I wonder what else I’m endorsing. Facebook, this isn’t over.

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William McGeveran, a professor at the University of Minnesota Law School says that the New York privacy law was created to protect individuals from having their names and images used for advertisements without their consent. The law requires written consent from an individual before their name or likeness can be used for advertising purposes.

McGeveran says that Facebook users are only asked in general if they want to share information and not if they want their name and picture to be used in an ad for a product.

On his blog he writes, "I don’t see how broad general consent to share one’s information translates into the specific written consent necessary for advertisers to use one’s name (and often picture) under this law. And the introduction of Facebook’s sales pitch about the program to advertisers leaves little doubt that individual users’ identities will be appropriated for the benefit of Facebook and advertisers alike."

Chris Kelly, the chief privacy officer of Facebook says that McGeveran’s interpretation of the law was too broad. He said the advertisements are a representation of the actions users have taken such as deciding to tie themselves to a product.

"We are fairly confident that our operation is well presented to users and that they can make their own choices about whether they want to affiliate with brands that put up Facebook pages," Mr. Kelly told the New York Times.

Facebook Welcomes Users To The Social (Ads)

Facebook’s disclosure of its Social Ads received plenty of attention from the tech world, spanning blogs to the tippity-top of mainstream media. The simple summary of what Facebook wants to do came from the company’s product manager for Facebook Ads, Leah Pearlman, who blogged about it:

Here’s what is changing:

•  You now have a way to connect with products, businesses, bands, celebrities and more on Facebook.
•  Ads should be getting more relevant and more meaningful to you.
•  You now have the option to share actions you take on other sites with your friends on Facebook.

The sharing outside actions inside Facebook aspect of their Social Ads involves websites affiliated with Facebook. Pearlman gave the example of someone dropping Buffy The Vampire Slayer into their Blockbuster queue, where the person would be prompted to drop that information into their Facebook News Feed.

Reactions to the new platform have arrived fast and furious on the Internet. Nick Carr called it “the social graft,” a play on the social graph meme Facebook uses to describe its network of people and how they connect:

Facebook, which distinguished itself by being the anti-MySpace, is now determined to out-MySpace MySpace. It’s a nifty system: First you get your users to entrust their personal data to you, and then you not only sell that data to advertisers but you get the users to be the vector for the ads.

Lots of big-name brands, slavering over the prospects of a captive young audience that has fled their TV advertising, will be part of the Social Ads. Deep-pocketed Facebook investor Microsoft stands alongside Coca-Cola, Sony, Verizon, and others.

Now Facebook just has to hope people will continue to trust their friends as they start making recommendations from these affiliated advertisers. 50 million people might not leave overnight, but Facebook isn’t immune to a similar site coming along, using the old .edu email address membership requirement Facebook used to have, and pulling in the kinds of members Facebook assumes it will continue to draw.