Tuesday, March 26, 2013

Facebook Able To Provide Targeted Advertisements Based On Your Offline Choices

Facebook is looking to improve upon its targeted advertising strategy by collecting behavioral data outside of what Facebook users reveal about themselves on the site. By doing this, Facebook is looking to give marketers a 22% ROI increase on their ads. Facebook has partnered with the following companies to help with data collection:

  • Acxiom -  Data aggregating company using a variety of services such as federal government documents, court records, financial services and more
  • Datalogix - They claim that their database has over 100 million US Households and that the data they have one these Americans contains over 10 billion in purchase transactions and over 1 trillion in spending, allowing them to give you specific spending habits in categories like fine jewelry, automotive purchases, college tuition, etc.
  • Epsilon - Another transaction data collector that creates lists of prospective customers. As part of that data, they also include age, ethnic information, profession and political affiliation.
  • BlueKai - This company creates tracking cookies to allow brands to monitor customers visiting their website. The data can then be used to show a user an ad when they log into their Facebook account.

"Our goal is to improve the relevance of ads people see on Facebook and the efficacy of marketing campaigns," Gokul Rajaram, product director for ads at Facebook, said in an interview Friday. 

With this new targeted advertising initiative, consumers could begin to see advertisements that aren't just based on their activity on Facebook, but on what purchases they've made, giving them an idea of whether you prefer Tide or All for your laundry detergent, if you're more likely to give your significant other roses or lilies on an anniversary, and so much more. Basically, even if you don't reveal something on Facebook, the site may know about your online and offline proclivities through their partnerships with these various data collectors. 

According to a study, Facebook ads work. "Of the first 60 campaigns we looked at, 70 percent had a 3X or better return-on-investment — that means that 70 percent of advertisers got back three times as many dollars in purchases as they spent on ads," says Sean Bruich, Facebook's head of measurement platforms and standards. What's more, half of the campaigns showed a 5X return — advertisers got back five times what they spent on Facebook ads.

But the most interesting finding was the total lack of correlation between purchases and clicks. "On average, if you look at people who saw an ad on Facebook and later bought a product, [fewer than] 1 percent had clicked on the ad," Bruich says. In other words, the click doesn't matter; people who click on ads aren't necessarily buying, and people who are buying are almost certainly not clicking.
These numbers and the efforts being made to collect data speaks loudly about the data trail that consumers leave both online and offline and how this trail can be followed back to any advertising platform, including Facebook. The use of loyalty cards, visiting websites, giving your ZIP code at the checkout... all of this information gets used in helping to identify your purchasing preferences which in turn will allow Facebook to offer more targeted advertisements. 
Facebook claims that when allowing for these targeted ads, identifying information about users are not shared with advertisers. Facebook user names and email addresses are encrypted and then matched. Facebook is also allowing users to opt out of seeing specific advertisements on their page and have the ability to opt out of targeted messages by going to the third-party data partner's website. 
The process has given rise for the Electronic Frontier Foundation to provide step-by-step instructions on how to opt out. 

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