No, Facebook isn’t selling your personal data to advertisers. Not exactly. Not yet. But Facebook's inching toward it quickly as pressure mounts on the freshly-IPO’d company to prove its earning potential to investors.
A Wall Street Journal report Monday brought news that Facebook is now allowing some of its advertisers to target Facebook users based on the email address and phone number the user includes in their profile. If the advertiser already has one of those data points for the Facebook user in its own database (and knows a certain amount about their income, buying habits, and other demographic data), it can learn even more about the user from his or her social network data, then carefully target an ad at the user.
A bank could, for example, use the data-matching technique to target auto loan offers to Facebook users who have big bank accounts and who have “liked” a car company page.
And this practice isn’t confined ad placement within Facebook, as it has been in the past. The social networking giant has also begun placing such ads on Zynga using the same process. This “test” will no doubt be extended to other sites around the Web.
Pushing the envelope, again
Facebook has for a long time given advertisers and app makers the benefit of its massive store of personal data, which now comes courtesy of more than 900 million members. But until now Facebook has helped advertisers target only broad groups of people, like 30-37 year-old males who live in Colorado and enjoy boating, for example.
As a Facebook user, knowing that my actual telephone number and email address are in play and being being shared and matched between huge marketing databases brings things much closer to home.
Facebook has, for a few years now, been playing safe on data privacy. It has been watching closely our cultural expectations of privacy, as well as goings-on in legal and legislative circles. Very few (if any) major privacy breach settlements have been exacted from social networking companies by the courts. And numerous personal data privacy bills have put through the system in Congress, but none have become law.
Facebook would never have declared it’s IPO if it didn’t view these things as signs of a favorable privacy environment. In true Facebook fashion the company is now pushing the envelop on personal data privacy. Everybody—especially investors—knows that Facebook’s most valuable asset is the mountain of personal data sitting in its servers. The company is now moving more quickly toward taking more liberties with that data, “renting” more of it to advertisers in more overt ways.
The dissappointing performance of the Facebook stock so far may be putting a fire under Facebook to do this. “Facebook’s stock price is trading about 50 percent below its Initial Public Offering price and is under immense pressure from investors to boost its revenue,” says Darren Hayes, a professor at Pace University’s Seidenberg School of Computer Science and Information Systems in New York.
Hayes says the effectiveness of Facebook’s advertising campaigns has come under scrutiny after General Motors pulled its advertising deal from Facebook earlier this year, citing concerns about the efficacy of ads on Facebook. Facebook has itself warned investors of declines in advertising revenues.
Mother of all ad networks
The tactics revealed in the WSJ piece are important because they form the rough outlines of Facebook’s end game—to become an ad network, like Google. But instead of targeting ads based on Web searches and browsing habits like Google does, Facebook will do its targeting based on highly personal data—data that is much more predictive of what a person might actually buy.
“An ad network would be bi-directional: displaying ads across the Web based not only on browsing activity, but a user’s Facebook profile info, status updates, and posts,” explains privacy analyst Sarah Downey of Abine. “Information would flow back and forth between Facebook and the rest of the Web to track and target users everywhere they go, which most Internet users wouldn’t view as a positive because most of them don’t like being tracked.”
‘Like’ it or lump it
But there’s no easy way to opt out of Facebook’s new tracking and targeting practices. You would have to do separate opt-outs for each of Facebook’s eight advertiser platforms or use a privacy plugin software to block tracking, Downey says. The fact is Facebook offers a free service in exchange for the opportunity to market stuff to you based on your personal data. That’s the deal. Like it or lump it.
If you use Facebook it’s a good idea to remove any highly-identifiable information like your telephone number and email address from your page. It’s also a good idea to log off every time you’re done using Facebook, so that the company and it’s partners have a hard time tracking your movements around the web after dropping a cookie in your browser. If you want to avoid third-party cookies altogether, you can turn on the Do Not Track feature in your browser (if available) or do what I did and install the Abine Do Not Track Plus extension to your browser.
Also see today’s feature on third-party Facebook security and privacy tools: “Lock down your social media with essential security add-ons.”