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When Mark Zuckerberg launched Facebook's ill-fated Beacon advertising initiative in New York last year, he stated:

"Once every hundred years media changes."

With that, Beacon was not only supposed to change the financial outlook of a company struggling to monetize its massive audience, it was also supposed to deliver on the social media promise of advertising as conversation.

Facebook's press release quoted Zuckerberg:

"For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation. And they’re going to do this by using the social graph in the same way our users do."

Of course, the next 100 days weren't so kind to Facebook. Consumers, privacy groups and even political organizations lashed out, claiming that Beacon was little more than a means to invade users' privacy.

Some of Facebook's "partners" seemed to share their concerns. Coca-Cola, for instance, touted as one of Facebook's "Landmark Partners," decided to take a "wait and see" approach.

That has turned out to be a smart move. In a class action lawsuit filed in the US District Court in San Jose, plaintiffs allege that between November 7, 2007 and December 5, 2007, Facebook and several of its Beacon partners, including Blockbuster and Overstock.com, violated a number of laws related to privacy and fraud.

Blockbuster, of course, has already been sued for its involvement in Beacon. While Facebook reportedly told advertisers like Coca-Cola that users would need to opt-in to Beacon, this was not the case.

One of the plaintiffs in the lawsuit is Sean Lane, whose purchase of a diamond ring from Overstock.com was displayed on Facebook without his knowledge or consent, ruining the surprise when his wife learned of the purchase through Beacon.

The lawsuit is seeking damages; attorneys' fees; an order that would force Facebook to delete any information collected by Beacon without consent; an order that would force Facebook to never collect the plaintiffs' personal information again without consent; and an audit that would ensure Facebook is complying with these orders.

While MediaPost's Wendy Davis observes that the attorneys for the plaintiffs have some "hurdles" to overcome in applying some of the laws cited to Facebook's actions, I'm most interested not in the legal claims but in the fact that Beacon partners have been pulled into the lawsuit.

While some like to fault advertisers for being conservative when it comes to new "forms" of advertising and new "mediums," the class action against Facebook and its Beacon partners highlights the fact that these new "forms" of advertising and new "mediums" can sometimes pose real risks for advertisers.

Beyond the potential for less-than-desirable ROI or even user backlash against such an Orwellian initiative as a whole, Beacon participants should have considered that Beacon might expose them to legal liabilities.

Legal observers raised concerns about the legality of Beacon right from the start. Ostensibly, the corporate counsels at the companies participating in Beacon should have also raised similar concerns.

After all, even if this class action lawsuit against Facebook and Beacon partners goes nowhere, attorneys for Beacon's partners are supposed to ensure that their companies don't get entangled in legal disputes, let alone high-profile ones involving the sanctity of the data collected from their customers.

The bottom line is that there are common sense rationales for advertisers to be cautious when it comes to getting involved with "innovative" and "forward-thinking" methods for reaching consumers, especially in a day and age where these things often come at the expense of individual privacy.

Entrepreneurs and technologists may lament the fact that advertisers usually don't quickly embrace their creations but as the Beacon fiasco has demonstrated, often there's good reason for that.

For those Beacon partners that failed to give the implications of their participation much thought, perhaps a simple lesson is in order - when a 23 year-old CEO who has probably never sold a single newspaper subscription in his life tells you that he's going to revolutionize advertising, it may be worth making some popcorn, grabbing a soda and sitting on the sidelines.

Unfortunately, defendants such as Blockbuster and Fandago decided that a front row seat in court wasn't close enough. Now they're playing leading roles in Mark Zuckberg's movie as privacy-violating villains.

Drama 2.0

Published 20 August, 2008 by Drama 2.0

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