You’re probably familiar with Facebook advertising. If you’re in marketing, you may even use it. But many of us are still unsure about what types of user data Facebook collects and how they use it for advertising.
In an attempt to shed some light, here is an outline of the ways Facebook incorporates user data into its advertising (and the ways it doesn’t).
There are a few pieces of data required to create a Facebook account, such as your name, gender and network (e.g. your school or company). That information, along with your profile and cover photos, is publicly available, no matter what.
Facebook privately stores all your activity within their platform. Engagement with other users, such as commenting or sending a message, check-ins, Page likes, and other activity is recorded and privately stored.
Facebook uses its records of your activity to tailor your experience on the site. For example, the friends you interact with most are likely to be featured prominently in your News Feed.
Your Data and Facebook Ads
Facebook also uses this activity data for advertising.
Facebook allows advertisers to target their messaging based on self-reported demographic information, relationship information, location data and recorded Facebook activity. This advertising, though highly targeted, is 100% anonymous.
Here’s how it works: an advertiser can target their ads to married women between 18 and 35 who live in New England and like the TV show ‘The Bachelor.’ Facebook will then give the advertiser an approximate number of users who fit that criteria, but will not provide the names or any information that might personally identify those users. So, in this example, the advertiser would know that they can target the 10,000 people on Facebook who fit their criteria, but they won’t know that Jane Smith of Boston is one of those 10,000 people.
Facebook also creates broader segments of users who share interests. Segments are groups like “Sports Fans” or “Moviegoers” that are compiled based on behavior or profile information. Someone who has liked the Oklahoma Thunder’s Facebook Page is likely to be in the “Sports Fans” segment, as is someone who lists ‘basketball’ under their interests. Someone who frequently posts status updates about new movies is likely to fall into the “Moviegoer” segment. Segmenting is valuable to advertisers, because instead of simply targeting people who want to see the new Batman movie, they can target all moviegoers and get in front of a larger, but still relevant, audience.
Segmenting is done programmatically—profiles are segmented based on the presence of certain keywords. No Facebook employee reads through individual profiles to assign users to segments.
Your Data and Facebook Exchange
Recently, Facebook announced they will be launching a real-time bidding platform called Facebook Exchange. The exchange, when it launches, will allow partnered DSPs and retargeting providers to purchase selected Facebook ad inventory in real time. Advertisers will be able to target ads based on their own data about users (e.g. whether the user has previously visited the advertiser’s website.) This will allow technologies like retargeting (serving ads to users who have visited your website) to operate within Facebook.
One common misconception about the new platform is that advertisers will be able to target based on data they’ve collected in addition to the rich user profiles owned by Facebook. This is not the case. Advertisers whose retargeted ads appear on the exchange will not have access to Facebook data about those users, and will not be able to further segment retargeting campaigns based on demographic data or interests.
Within this exchange, Facebook is operating as just another web property, like the Huffington Post or your favorite blog. DSPs and retargeters can place ads based on prior site visits, but not based on whether you’re a moviegoer who lives in Atlanta.