Earlier this month, a company called Ad.ly that was previously paying celebrities to endorse brands through their Facebook Page updates complied with Facebook’s request to stop operating on the social network. At the time it was unclear what policy Ad.ly had specifically broken, but we’ve now learned from Facebook that the company was violating Section 3.1 of the site’s terms of service which dictates “You will not send or otherwise post unauthorized commercial communications (such as spam) on Facebook.”

Ad.ly’s business model, which continues to operate on Twitter, was in direct violation of the term. This case of policy enforcement demonstrates that in order to preserve the user experience, Facebook will not allow for the direct monetization of its communication channels — both closing the door on several potential Facebook Platform business models and helping to preserve the quality of overall communication for users.

The aim of section 3.1 of the TOS is to keep Facebook’s social channels such as the news feed, wall, and messages free of content that degrades the user experience. Facebook has previously disallowed apps that allow users to earn money for charities by posting news feed stories, and worked with Amazon to change a promotion that was incentivizing wall posts with free gift cards. It also changed its policy in 2008 to prevent games from rewarding users for inviting their friends.

Without these policies and enforcement, channels typically filled with updates about friends and branded messages users had opted in to could become polluted with what are essentially advertisements that users hadn’t consented to receive. The dissatisfaction this problem causes could lead to a drop in overall trust and engagement with companies on the platform, harming its long-term potential to make money for third-parties and the site itself. For this reason, Facebook also keeps its own ads unobtrusive and restricted to the sidebar, and aggressively defends the integrity of its social channels.

Ad.ly had also committed a minor policy violation when it created a fake user profile that celebrities could add as an admin to their Pages to allow for publishing of the endorsements. Some speculated this was the reason Ad.ly was asked to cease its practice, but a Facebook spokesperson told us that “monetizing posts on Pages or profiles is against our terms.” Its violation of this term was the real reason Ad.ly had to leave Facebook.

Some might be confused why a brand’s Page can publish promotional materials and product links to the feed, but can’t accept money to promote another brand. The distinction is that when users Like a Page, they authorize it to send them its own content as permitted by Section 3.1 of the TOS, but do not authorize it to publish the content of others.

Facebook tries to present its policies clearly, with its challenge in cases like this being that it can’t conceivably craft a rule for every possibly use of the platform — yet it needs to be as close to perfect as possible to maintain its relationships with developers. In this particular instance, it needed to take action regardless of what it had previously said in order to protect what it considers to be a key value of its business: communication that’s valuable to users.

Update: It’s important to note that some brands and other figures may still be paying celebrities for Page update endorsements, but that these deals may be being negotiated secretly. Without the updates being published through a specific app, it may be difficult for Facebook to monitor or prevent this violation of its policies.

Facebook is testing a new version of the Discover New Games sidebar module introduced last month. Along with showing friends who play a certain game, this version asks users if they want to hear about games more or less often.

How much game content to serve to non-gamers and how to determine who is a gamer have been two long standing questions for Facebook. Now the site looks to be asking users directly, rather than deduce the answer from their behavior. At a press event in September 2010, CEO Mark Zuckerberg explained the issue presented by the rift between gamers and non-gamers. “One of the biggest drivers of negative experiences has been games. There’s all these people who want to play games, and all these people who don’t want to play, who view it as spam. Two hundred million people or more are playing games on the site. When you poll users, one of the top 5 things they like is games, and one of the top 5 things they don’t like is games.”

Up until then stories generated by the in-game actions of friends had clogged the news feeds of people who didn’t play games. Facebook then altered the feed such that users would only see App Discovery stories about friends installing games, and stories from friends about in-game actions of games they’ve already installed. This significantly reduced the virality of many games to the dismay of developers.

Some developers complained that there was no way to acquire new users without paying for advertisements, so Facebook introduced the Discover New Games module. However, those who’ve never or only occasionally installed a game might find the module useless.

This tested interface asks “How often would you like to see ‘Discover New Games’?” with buttons to respond “More Often” or “Less Often”. This allows users to inform Facebook of their preference so it can show them different modules such as “Friends’ Photo Albums” or “Unread Messages“.

The data could also be used to refine a user’s news feed to show more game stories. Additionally, Facebook could use this interface to determine if a user is interested in other feature-specific modules, such as “Friends’ Popular Places“.

By getting users to explicitly state how interested they are in discovering new games, Facebook can improve the user experience for gamers and non-gamers alike. Facebook has a large stable of sidebar modules that alternate in a shared space. Developers should be excited that this tested module design could lead those who are interested to see the Discover New Games module more frequently, helping their games to grow.

Facebook Page admins can now see a View Notifications link in the right sidebar when viewing their own Pages from their profiles, as well as when the’ve switched to “Use Facebook as Page”. Previously, Page notifications could only be accessed from the top navigation bar’s Notifications channel when an admin browsed Facebook as their Page.

By being able to view Page notifications from the personal profile, admins will be more likely to check the alerts and respond to fan activity such as wall posts and uploaded photos.

“Use Facebook as Page” was introduced as part of the February 2011 Page redesign. It allows Page admins to to view Facebook Notifications about activity on their Page, and opt in to email notifications as well. This is especially helpful for admins of smaller Pages who are interested in knowing about every new piece of content added to their Page for conversational or moderation purposes, but that don’t receive so much activity that the Notifications list is too long to use effectively.

Facebook may have noticed that few admins were checking these notification, possibly due to the friction of switching to assume their Page’s identity. The addition of the View Notifications link that shows a counter for new activity may have been designed to increase engagement with the tool.

Fans who receive replies from admins have a better user experience, are likely to become more loyal, and therefore are more likely to share a Page with their friends. In this way, easier access to Page Notifications helps make Facebook more interactive and helps Pages grow, which in turn gives Facebook’s advertisers more connections to target, earning Facebook money.

[Thanks to Brittany Darwell for the tip]

Turkish horoscope and video apps, as well as several Connect and quiz apps, birthdays, bands and Formspring made up our list of the top 20 growing Facebook applications by daily active users this week. The apps grew from between to 88,300 to 1.1 million DAU. The list is compiled using AppData, our data tracking service covering traffic growth for apps on Facebook, and covers those that gained the most users in the past seven days.

Top Gainers This Week

	Name	DAU	Gain	Gain,%
1.	Daily Horoscope	2,251,032	+1,118,641	+99%
2.	The Fortune Teller	1,222,663	+1,111,459	+999%
3.	Gardens of Time	762,495	+737,882	+2,998%
4.	Today’s Video	326,041	+251,666	+338%
5.	Zombie Lane	541,842	+241,264	+80%
6.	Windows Live Messenger	15,252,327	+223,800	+1%
7.	Yahoo!	7,163,455	+213,726	+3%
8.	Komedi Kral	257,319	+204,477	+387%
9.	Günlük Burç Yorumları	245,475	+184,966	+306%
10.	Quiz Taco!	502,239	+180,858	+56%
11.	Bubble Saga	357,346	+176,693	+98%
12.	Diamond Dash	901,329	+165,721	+23%
13.	Birthday Calendar	173,418	+129,069	+291%
14.	BandPage by RootMusic	971,066	+122,404	+14%
15.	Gourmet Ranch	433,174	+121,227	+39%
16.	izletTV	142,848	+120,939	+552%
17.	picplz	128,792	+103,403	+407%
18.	Zoosk	648,533	+95,662	+17%
19.	Mahjong Trails	362,702	+89,266	+33%
20.	Formspring	1,032,703	+88,313	+9%

Turkish horoscope apps topped the list. Daily Horoscope, which is in English but grew primarily in Turkey, saw 1.1 million new DAU this week and the Turkish version, Günlük Burç Yorumları, grew by about 185,000 DAU. The apps work pretty much the same way; after allowing permissions the user is taken to their daily horoscope, where they can comment or invite any of their friends with the same zodiac who are displayed. Comments create feed stories and the apps posts daily horoscopes to a user’s Wall.

Turkish video apps also made an appearance on the list. Today’s Video added 251,700 DAU, Komedi Kral added 204,500 DAU and izletTV about 121,000 DAU. The apps all allow users to watch, Like and share videos on Facebook.

Connect apps were also on our list. Windows Live Messenger grew across countries and languages in France, the United Kingdom, Mexico, Italy and Canada, by 223,800 DAU in total. Yahoo’s Connect app grew by 213,700 DAU, mostly in the uS. Finally, the mobile photo sharing app picplz’s Connect app grew by 103,400 DAU. BandPage by RootMusic saw 122,400 DAU mostly in the US and continues to grow. The Connect app creates a custom tab with a band’s tour schedule, music, photos, Twitter and more. Formspring, another Connect app, grew by 88,300 DAU mostly in the US; we previously wrote in depth about the app, which has multiple viral opportunities. When a user answers a question, the answer may be posted to Facebook, Twitter and MySpace.

The rest of the list was a mixed bag.

Quiz Taco grew by 180,900 DAU. The app has strong viral potential, as it is a 25-question quiz with raunchy questions about your Facebook friends, promising you information about what friends answered about you towards the end. Every time you answer a question a feed story is created.

American Greetings’ Birthday Calendar app grew by 129,100 DAU. The app added users primarily in the US, Indonesia and the Philippines. Basically, the app prominently displays your friends with current birthdays and offers you several ways to send them a birthday card or virtual good. The app’s display is a calendar with your friends’ profile photos and sends you alerts to remember their birthdays.

Dating app Zoosk with 95,700 DAU, mostly US growth. Stay tuned for our look at the top emerging apps on Friday.

Developers don’t have to explicitly violate Facebook’s policy to feel the wrath of the site’s enforcement team, as we’re reminded in a dramatic case today.

Last month we covered how social quiz app Badoo had gained 2 million daily active users in a few weeks using aggressive viral tactics such as placing roadblock in the user experience for users who weren’t sharing their quiz answers to the walls of friends. Then suddenly, the app lost 75% of its DAU. It’s now been revealed that Facebook requested the developer make significant changes to the app, triggering the decline.

The situation is an example of the subtlety of Facebook’s enforcement strategy. If a developer pollutes the site’s user experience even without violating a specific policy, Facebook won’t hesitate to threaten it with an audit and potential removal if it doesn’t comply with requests for changes. While this enforcement method is subjective and coercive, preserving trust in the Platform by coming down on abusive apps is in the best interest of the developer and user communities.

Badoo‘s social dating and friend finding site boasts 112 million registered users, which it monetizes through the freemium model where users pay for increased visibility and the ability to message strangers. To feed the top of the funnel it needs to draw in as many new users as possible. Its Facebook app was designed to do just that. Rather that focus on content, Badoo recently stripped away much of the functionality for new users except for its viral mechanics.

Users answer questions written in large font about their friends, but might not notice the tiny pre-checked box indicating their answers will be posted to that friend’s wall. If users uncheck this box, they see a pop-up roadblock with suggestive language asking whether they want to “Let friends know!” or “Keep them ignorant”. These two tricks combined to drive explosive growth of the app, which drew our eye, and Facebook’s ire.

Between April 13th and 15th, Badoo dropped from 4.1 million to 1.2 million DAU. Lloyd Price, director of marketing for London-based Badoo told the Financial Times that “After working with Facebook last week, we made requested changes to our application which has resulted in an initial drop in daily active users.” The app is now beginning to stabilize at just under 2 million DAU.

The app made the required notice about publishing to a friend’s wall quite inconspicuous, and added friction to the experience of refusing publication, but neither of these tactics are against the rules. Badoo didn’t have to make the changes, but it did instead of risking closer scrutiny of its compliance, which could have lead to an outright shut down. Facebook has disabled spammy quiz apps in the past, such as when it temporarily shut down Phrases worldwide, leading to swift 3 million DAU drop after it was reinstated outside the US. Badoo must have reasoned that going dark for a few days would have hurt it worse than the changes.

Facebook is sending the message to developers, “This is our Platform. Innovate and experiment, but don’t mess with the users.” Some developers previously told us they felt that Badoo was breaking policies, although Facebook told us at the time that it wasn’t. This new enforcement might confuse developers, but it might also encourage some to focus more on following the spirit of the platform rather than the letter of its policies.

This morning Facebook announced the release of several new tools to help users stay safe while using the site. Soon, users will be able to enable two factor authentication to add an additional layer of security to logins. HTTPS browsing has been improved, and the anti-bullying social reporting tool has been rolled out more areas of the site. Facebook has also redesigned the Family Safety Center to be more visually oriented and easy to navigate.

With such a large user base and open Platform, safety issues are inevitable, so Facebook is trying provide as many preventative tools and resources as possible.

In January, Facebook began allowing users to browse the site over a secure HTTPS connection. Facebook recently noted that 9.6 million users are now browsing with HTTPS. However, third-party applications must specify a secure canvas or tab URL, otherwise users are shown a roadblock indicating they’d have to be switched to an HTTP connection to use the app. If users accepted the switch then navigated away from the app, they would still be using HTTP. Now Facebook will automatically return users to HTTPS whenever they finish using an app that doesn’t support it.

Last month at President Obama’s White House Conference on Bullying Prevention, Facebook launched its social reporting tool that lets users message bullies to ask them to stop, and message friends to ask for advice. These options were initially only available on Facebook profiles and walls, but now users will find them on Pages, Groups, and other native Facebook apps.

Two Factor Authentication is a new feature that’s currently undergoing gradual rollout.If enabled, after users enter their email and password, they’ll be prompted to enter an additional code that will verify them as the account owner. Facebook doesn’t specify how the feature can be enabled or how the code will be received, confusing some readers of the announcement. The option will likely appear under in Account Security settings, though, and codes will likely be delivered via SMS similar to Google’s Two Factor Authentication and Facebook’s one-time passwords.

The Family Safety Center augments resources Facebook launched last April with new explanations of the site’s philosophy, the Facebook community, and safety tools. User can navigate kid-friendly graphical interface to explore areas designed for parents, teens, teachers and law enforcement, or Like Facebook’s Security, Safety, and Privacy Pages.

Despite Facebook’s continuing security improvements, the blog of safety and security company Sophos yestoday called for a drastic overhaul of Facebook’s policies. It demands that new features be turned off until users opt in, that app developers be individually vetted, and that HTTPS be enabled by default.

However, these demands are self-serving for a company that makes its money on security products, and don’t take into account the potential negative impacts these changes would have. Most users wouldn’t take the time to opt in to new features, which would lead to a stale user experience for those didn’t, and diminished social value for those that did. With millions of developers creating applications, vetting each individually would mean sizable delays between when apps were built and when they could launch, as well as enormous additional costs for Facebook. Finally, HTTPS slows down browsing, which could lead to fewer page views, engagement, and social interaction per session.

Facebook is striking a proper balance between providing adequate security tool and maintaining a dynamic user experience and development Platform. At this point, it falls on users to educate themselves with these resources, and protect themselves on Facebook the same way they have to anywhere else on the internet or in the real world.

Last night, Facebook launched Facebook Studio, which showcases what the company considers to be successful marketing campaigns and explains Facebook’s marketing products. The stand-alone site’s goal is to foster a community where ad agencies can be inspired to develop marketing strategies that are inherently social.

However, given that this marketing site is designed by Facebook to promote its own products, the information is generally positive and does not deeply explore issues such as user perception of the spamminess of campaigns or the cost associated with developing these campaigns.

Facebook Studio will serve as a central repository for previously rare and scattered case studies. Demonstrations of the potential of different Facebook features and channels may bring a wider variety of marketing campaigns to users. By strengthening its relationship with ad agencies and teaching them how improve their results, Facebook hopes these agencies will push their brand clients to spend more on its marketing and advertising services.

Similar to Facebook’s Preferred Developer Consultant program, a presence on Facebook Studio might help agencies sign more clients. In exchange, though, they’ll be educating their competitors on how to copy their successes.

Gallery and Agency Directory

With the consent of their brand clients, agencies can submit summaries, screenshots and videos of their marketing campaigns to Facebook Studio. Once approved by Facebook, the submissions appear in the Facebook Studio Gallery. Visitors can browse these submissions and leave Likes and comments on the ones they find the most inspiring. There are already more than 70 submissions in the gallery to browse.

The submissions will also automatically appear as links on the Agency Directory profile of the the agency that executed the campaign which includes contact and background information. Over 200 agencies and their local branches now show profiles in the alphabetical directory located at the bottom of each Facebook Studio page, including 360i, AKQA, Deutsche, Digitas, Involver, Ogilvy & Mather, Publicis, Razorfish, and Saatchi & Saatchi.

Spotlight and Awards

Submissions to the gallery that are comprehensive, receive the most Likes, and that Facebook’s team finds innovative are permanently added to the Facebook Studio Spotlight — a collection of the best Facebook marketing campaigns of all time. These submissions have greater visibility and could bring agencies more business.

Both the Gallery and the Spotlight can be sorted and narrowed by a variety of parameters such as region, most liked, most recent, brand category, and Facebook feature used. Gallery submissions don’t need a video unless they’re promoted to the Spotlight

The Spotlight currently includes Corona Light’s “Most Liked” campaign, television show True Blood’s Facebook feature-laden Blu-ray DVD, an Altoids mints viral video, and more. The top campaigns in Spotlight are eligible to win Facebook Studio Awards, as decided by a panel of Facebook judges. Facebook hopes these awards will provide selling points for agencies which they can tout to attract new clients.

Learning Lab and What’s New

Agencies and other marketers can learn how use Facebook’s marketing products in the Facebook Studio Learning Lab. Each entry in the Learning Lab includes an introduction video and in-depth description of how to use a product, and a FAQ.

Currently, the Learning Lab includes entries for

• Facebook Marketing
• Facebook Pages
• Facebook Ads
• Sponsored Stories
• Places & Deals
• Facebook Platform
• Facebook Research

Facebook Studio also features a blog called What’s New. It includes interviews, step-by-step walkthroughs of Facebook’s more complicated marketing products such as Sponsored Stories, reminders about product changes, and announcements about Facebook Studio Live events where marketers can get hands-on experience and learn from experts.

Helping Agencies Convince Brands to Market on Facebook

Agencies have the power to convince brands to shift their spend away from traditional marketing channel and towards Facebook. This new site is the result of a team that Facebook assembled last August to try to determine how to woo agencies.

By fueling the competition between the agencies through the Spotlight and Awards, Facebook may have found a way to make them feel appreciated while simultaneously getting them to share their secrets. The question remains whether agencies will continue to be willing to submit their campaigns.

The strategies, ideas, and best practices found on Facebook Studio could raise the bar for marketing on Facebook, bringing fresh experiences to users. Facebook hopes this will lead users to see interaction with brands on Facebook as something fun and social rather than a dilution of communication with friends.

It’s in the interest of the agencies and Facebook to only exhibit successful campaigns. While useful, Facebook Studio may give a positively biased perspective of some strategies, and it won’t teach marketers how to avoid pitfalls. For independent analysis of the best and worst marketing campaigns, visit the Facebook Marketing Bible, Inside Network’s comprehensive guide to marketing and advertising through Facebook.

Facebook added over 20 million additional monthly active users across all countries and regions in the month of March, growing its total audience by 3.4%. The site posted notable gains throughout its maturing markets in Europe, while also increasing traffic in its emerging markets in Latin America and the Middle East and Africa.

The full breakdown of growth by country and demographic, including 12-month historicals and projections, is available in this month’s edition of Inside Facebook Gold.

Inside Facebook Gold is Inside Network’s data service providing monthly data on Facebook’s growth outlook through a comprehensive data feed service and growth report.

The April 2011 edition of Inside Facebook Gold includes:

• Global Data Feed Service, a comprehensive data CSV supplying vital stats on Facebook’s audience size, demographic distribution, advertising business, and global language distribution.
• Facebook Global Monitor, 100 pages of leaderboards and charts covering audience change in 160 Facebook country markets.

Inside Facebook Gold is a data service designed for analysts seeking to understand and maximize opportunities in the Facebook ecosystem, and presents data on key indicators ranging from the site’s traffic growth to its advertising business and its robust applications platform.

Download the April 2011 data suite at Inside Facebook Gold.

Syncapse made some big hires this week in our roundup of Facebook platform hires. The company brought on a Director of Strategy, Chief Service Officer and Vice President of Program Delivery. Context Optional and Wildfire also made some hires.

If your company is hiring new people or making a notable promotion, please let us know. Email mail (at) insidefacebook (dot) com, and we’ll get it into next week’s post. Also, please note that information about most new hires, below, comes directly from company updates from LinkedIn.

Looking for new opportunities? Check out the Inside Network Job Board, which shows the latest openings at leading companies in the industry.

Here’s this week’s list of hires:

Context Optional

• Jordan Enright-Schulz, Strategist – Now at Context Optional, previously a Freelance Producer and Web Content Manager at 21 Drops.
• Matt Kim, Account Coordinator – Now at Context Optional, formerly an Investment Banking Analyst at Pacific Crest Securities.

Syncapse

• David Blumer, Director, Strategy – previously worked as a Manager of Integrated Marketing, Microsoft Canada.
• Claude Galipeau, Chief Service Officer – Now at Syncapse, formerly General Manager, Rogers Digital Media.
• Derek Marshall, Vice President, Program Delivery – Now with Syncapse, previously a Senior Director of Digital Engineering at Rogers Communications Inc.

Wildfire

• Neil Joseph, Social and Digital Media Specialist – Now at Wildfire Interactive, Inc., previously in Market Development at Tesla Motors.
• Madelon Wills, Account Manager – Now with Wildfire Interactive, Inc. and formerly a Manager at Cavé Vin.