Facebook Is Tracking What You Buy to Provide Marketers Better Ad Analytics

    September 25, 2012
    Josh Wolford
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Facebook’s already tenuous relationship with its users over privacy and the sharing of personal information has a new wrinkle, as it looks like Facebook has waded into the retail sales tracking business.

According to The Financial Times, Facebook has already measured the effectiveness of a few dozen ad campaigns with the help of a data mining company called Datalogix. Measuring the effectiveness of ad campaigns may seem innocuous at first, but it gets a little trickier when you learn that the measuring process involves matching Facebook user data on ad impressions with retail data mined from nearly every household in the United States.

Datalogix is the owner of a large database of consumer purchasing data. According to the company, their reach extends to “almost every U.S. household and more than $1 trillion in consumer transactions.” Most of this information is obtained via rewards programs at over 1,000 retailers across the country. For instance, every swipe of your grocery super savings card gives a company like Datalogix information on your buying habits.

Facebook and privacy – forever linked. How do you feel about the way Facebook handles your user information? What could the company do to assuage your concerns? Let us know in the comments.

Here’s where Facebook comes in. By using Datalogix to match email addresses and other user information from their database of consumers with their own records of user emails and personal info, Facebook can see if a person who saw a particular ad for a product or service ended up buying it later.

And this information is crucial for advertisers, who want to see the ad dollars they spend on Facebook translate into revenue at stores. “”We kept hearing back [from marketers] that we needed to push further and help them do a better job,” Facebook’s Brad Smallwood told The Financial Times.

It’s not surprising that marketers are pressuring Facebook to give them concrete evidence that their ads are working. Whether or not to even advertise on Facebook is a question that many marketers are still debating. Confidence in the success of Facebook ad campaigns is not exactly at an all-time high. If a marketer could see hard data that shows Person A seeing an ad and then buying Product B, that’s clear evidence that the campaign has merit.

Well then, how are the campaigns doing? So far so good, says Smallwood. Out of 45 ad campaigns tracked with the help of Datalogix, 70% of them resulted in a 300% return on investment.

So, is a privacy concern storm brewing? Maybe. It does involve the seemingly surreptitious use of personal information. Although, all of the information is anonymous when matched, and simply used for analytic purposes.

“Facebook doesn’t get data that retailers give Datalogix; retailers don’t get any data from Facebook; nor do advertisers share any of their data with Facebook or vice versa,” says Facebook. What Facebook does share is “anonymous IDs corresponding to consumers exposed to a given ad campaign.”

So, the sole purpose of the data matching is to see if person A, who saw an ad on Facebook for foot cream, eventually went into Walgreens and bought said foot cream. According to the companies, nobody cares that Roger Smith bought the foot cream, as the real identities of the advertising analytic subjects are of no consequence.

And Facebook doesn’t exactly hide this practice from its users (although it’s not incredibly easy to find). “Facebook has partnered with measurement companies to develop a system for advertisers to improve their measurement of advertising campaigns’ effectiveness at driving offline sales,” they say in the Help Center. They go on:

As trusted service providers, these companies have been contracted to produce aggregate and anonymous measurement reports to advertisers. No personally identifiable or individual data is shared with advertisers as part of the measurement process. Facebook has also designed the process to generate these reports with user privacy in mind. For example, Facebook identifies groups of people that have been shown ads on Facebook and matches them in a hashed format with the data the measurement companies receive from their retail partners. The measurement partners then analyze their data to produce aggregate and anonymous advertising effectiveness reports for advertisers.

“Remember that Facebook does not sell your personal information to advertisers,” ensures the company.

And on Datalogix’s side, they promise that the data they’re collecting doesn’t include “sensitive information.”

Datalogix receives data from consumer marketing companies & data compilers. This data consists of Personally Identifiable Information (“PII”) and Attributes. PII includes name, postal address, and email address. Attributes include demographic and behavioral information, such as past purchases. Datalogix does not collect or use sensitive information such as Social Security numbers, credit card numbers, or banking information.

For Facebook users, participation is opt-out – not only that, but the opt-out mechanism doesn’t exist on Facebook’s end.

If you wish to stop Facebook and Datalogix from using your info to gauge marketing success, you must opt-out on Datalogix’s end. Facebook links you to their privacy page in the Help Center, but doesn’t allow for users to opt-out on site.

Last month, Facebook settled with the FTC over charges that they deceived consumers by creating the illusion of private information. The FTC made it clear that Facebook must obtain user consent before sharing their personal information (read: opt-in). It will be interesting to see if and how this data-matching program runs up against that FTC mandate.

It’s clear that people have (and will continue to have) a problem with how Facebook handles their personal data. A recent survey showed that Facebook is still the most distrusted company when it comes to user data. Do you see this ad/retail tracking as a misuse of data? Does its “opt-out” nature mean that Facebook has violated earlier promises about privacy and information sharing?

And for marketers, how valuable is this information? Could knowing whether or not your Facebook ads directly led to a physical purchase influence your decision to advertise on Facebook? Let us know what you think in the comments.

  • http://www.edgeworksgroup.com Frank Reed

    While Facebook’s look into a person’s world is a bit creepy they are simply the first company to push a lot of envelopes in their attempt to make advertisers happy enough to spend a ton of money with them.

    I don’t like it personally (but as a member of the marketing community what’s not to like!?) but I also have the option to not use it.

    It’s really that simple.

  • http://ephedrinewheretobuy.com Mike Budd

    Come on!
    Who cares when Google is drawing your attention on ads in gmail based on your private info?
    Millions of people happy to use Facebook for free and shouting if they might see their personal data being used for marketing segmentation??
    Millions of people giving all details about their private life online and hoping that nobody will use them.
    Come on…

  • http://incomefromhometips.org WAHM

    This has been going on for a long time and Facebook is not the first.

    A few years back when the dog food recalls were happening, one of my friends received an email from the dog food company informing him of the recall on his specific bag of dog food. In this particular case the email was for a good reason, but think about it– they knew he had purchased the dog food at Costco on such and such a date, they knew where he lived, and found out his email. How did they do this? He paid with a credit card.

    Now fast forward to today, when all it takes is touching a cellphone screen that’s also transmitting GPS info. Or worse, people are swiping QV codes and giving their info away for the sake of a dollar or two off.

    Facebook is not free. WE are its product, WE are what it’s selling.

  • http://www.captaincyberzone.com Cap’n Cyberzone

    So is Google …
    And Google doesn’t stop there, it’s tracking everything that it can about you … every Google resource that you use collects every bit of data that you generate.
    It’s (honest) motto should be a retake on “Stuck like glue” …
    “Stuck Like Google”.

  • http://www.tipsforum.net Jonson

    facebook is not the first many other site is also doing this thing from many time ago.

  • http://storiestrendingnow.blogspot.com/ Stories Trending Now

    Like Others said, They are not the first to do this but its good they are doing this at least helping advertisers get more from their spendings.

  • http://mabuzi.com Mabuzi.com

    We worry about government intrusion into privacy yet corporations are a lot worse. There are no internal checks and balances like government its what you can get away with with out been caught.

    You might know about tracking but the average punter including the millions of kids on FB have no idea. Your children’s privacy has been compromised.
    Opps sorry its not because you know what is going on you have taken precautions to protect them but hey lets nail the other dumb idiots out there.

    Their rights have been abused and its OK because you as a person are profiting off their stupidity and hey every one is doing it so its ok.

    Does SEO industry have any other function other than self serving profits and cowboy behaviour? Is there a code of conduct and some form of regulation?

    Maybe its time for a little reflection and do unto others as one would like done unto you.(or your kids).

    • http://www.infowars.com Banatu

      The worst of it all is that the government and these corporations are often working together. And sometimes it’s not even our government!

      Anyone who doesn’t see the very serious risks behind this sort of data-gathering and retention, as tool of both manipulation and oppression or worse, is simply woefully ignorant of history.

  • http://www.shrinkwrapandstretchfilm.com Brent Roake

    Personal intrusion has always been my issue with Facebook. I understand that other companies and websites have this intrusion as well, but it feels like not the extent Facebook of Google has. For advertisers it is a great draw to advertise on facebook and assisting in obtain higher ROI.

  • http://www.angersausomeaussies.com AngersAusomeAussies

    FB IMO is dishonest & your privacy is NOT private period. I had not been on FB for a long time, then one day, I got on it & FB changed over my page to their new TIMELINE crap & all my privacy settings were also changed. FB better becareful or they will fold, which my be a good thing for all of us who value our privacy, which FB DOES NOT!!

  • http://karras-bommer.blogspot.com Karras Bommer

    I don’t use Facebook, therefore no problem for me. I once belonged, then I found who was (behind the scenes)involved with Facebook and closed my account, or rather tried to – closing one’s Facebook account seems to be really difficult to do.

  • http://www.webcivil.blogfa.com mahdi

    A comprehensive portal for students and civil engineers – Comprehensive Site Architecture, Civil Engineering News, Iranian Concrete Institute, Proceedings of Civil Engineering, Engineering Courses, Nanotechnology, architecture, decoration, design, projects, dams, tunnels, bridges, earthquakes, and the construction industry. ..

  • http://www.engage-2012.com/ Engage 2012

    Facebook and privacy will always be an issue. There will always be people that will be worried about their privacy on social networks. However, this will only help you to display only relevant ads on your Facebook – the ads would be there anyways, so why the worry? If it will help you with displaying the relevant ones…?

  • Kim

    Lack of privacy is specifically why I do not use Facebook on a regular basis. Even if they paid me for my info I would not use them. They don’t have much respect for one’s privacy and they make huge amounts of money off users.

  • http://endless20dollarpayments.com Art

    Like many I don’t use my real name because of the privacy, pardon me, what privacy. I read an article saying F/B is monitored by the CIA, how much nosier can you get than that. Real tight Privacy!