Most Facebook advertising agencies know that Facebook’s ad targeting tools use online data to target Facebook users for specific ads. Facebook collects data on users’ online activities and the information they give when registering for an account or when completing their profile. The email address and phone number people provide and the posts they react to, share, or comment on are actions Facebook adds to its user data. For some, this information may be mundane and insignificant. On the contrary, that information helps Facebook advertising agencies target the right audience likely to convert. For instance, if someone liked Tastemade’s fan page, Facebook knows that that person will likely respond to ads related to food and cooking.
Although nearly all Facebook advertising agencies know that Facebook collects data from its users for better ad targeting, most are likely unaware that it also obtains offline data, or data that occurs in the real world. In fact, not only does Facebook know whether its users like Tastemade videos posted on its platform, but it also knows how much money they make, what they buy in-store, how many credit cards they own, or whether or not they own or are planning to own a house.
Currently, Facebook purchases offline data from six companies: Acxiom, Epsilon, Experian, Oracle Data Cloud, TransUnion and WPP. These companies collect information about consumers through store loyalty cards, mailing lists, public records information, browser cookies, among many others. If a customer purchased a pack of toilet paper from Target and used a Target rewards card to get a discount for the purchase, that information is collected and saved by those data companies. These companies also collect data on people’s gender, economic status, purchasing habits, home ownership status, and more. Data companies sell their information to Facebook, giving the social media giant a better idea of what consumers like, where they shop, and what they buy.
Elisabeth Diana, Facebook’s manager of corporate communications describes the transaction between Facebook and data collecting companies as “trying to give [Facebook advertising agencies] a chance to reach people both on and off Facebook.”
The idea is this: the more Facebook knows about its users, the easier it is to serve relevant ads to them. Facebook’s practice of collecting user data stems from its desire to enhance and better the digital advertising experience for both Facebook advertising agencies and users.
Granted, Facebook’s nearly omniscient knowledge of people’s lives may unnerve many. However, a system called hashing keeps consumers’ information private.
The first step in hashing involves encrypting personal information such as name, phone number, or login information. Next, Facebook transforms the information into a series of numbers and letters. For example, the information of a customer aged 25 who lives in California and who likes cooking, Martha Stewart, and Venice beach is hashed into something incomprehensible like “20saadfasd93902w4awdfasdf.” Afterward, Facebook combines this information with the information data collection companies have to create a better picture of people’s shopping habits. Because of hashing, Facebook will not know that, for example, Stephanie Mills bought a pack of toilet paper from Target. It only knows that one data matches another for ad targeting and nothing more.
Because Facebook collects data from both an online and offline source, it’s no wonder Facebook ads are relevant. The more information Facebook gathers about its users, the better, more relevant ads these users will see.
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