Tech Law: Has Facebook found the balance between targeted ads and privacy?
by Paul Jacobson (@pauljacobson) Not too long ago, I suggested that advertisers should forgo targeted ads which leverage personal data because of the challenges that accompany this data usage, particularly from a privacy perspective, and the risk that only showing consumers ads relating to products and services they already use only reinforces a pretty narrow set of choices — a sort of selection effect.
The selection effect remains a challenge but Facebook’s announcements at its f8 Developer Conference recently point to a very interesting solution for the potential privacy problem: a vast database of anonymised data segmented into useful demographics.
Facebook’s scale means that advertisers may potentially reach a significant number of Facebook’s 1.39 billion (as of December 2014) consumers whose attention is increasingly focused on Facebook ads. This is both a metaphorical goldmine and a growing risk for advertisers and publishers who are becoming increasingly reliant on Facebook for the reach the social giant promises.
It isn’t difficult to see the appeal of embracing Facebook’s advertising products, especially LiveRail’s potential impact on in-app advertising that will reach Facebook’s 1.19 billion monthly active mobile users. Combine LiveRail with Facebook’s Audience Network and advertisers should have a potent platform.
Facebook Audience Network
According to MarketingLand’s article titled “LiveRail To Power All In-App Ads On Facebook Audience Network, Support App Video Ads”:
“Introduced in April, 2014 and launched globally last October, the Facebook Audience Network is the in-app ad network that expands advertiser reach to third-party mobile apps beyond Facebook — think Google AdSense designed specifically for app publishers. In addition to native ad units, FAN has standard mobile banner and interstitial formats to promote app installs, app engagement or drive traffic to advertisers’ mobile sites.
“LiveRail’s video platform has been used by publishers and media companies like ABC, A&E Networks, Gannet and DailyMotion to serve ads on their video content. With this announcement, LiveRail will function as Facebook’s ad exchange, with in-app inventory management as the first phase. The pitch is that publishers will see higher CPMs via LiveRail because it allows them to segment inventory and accept bids from a full-range of buying sources including direct and programmatic agency trading desks, ad networks, demand-side platforms and FAN itself. LiveRail will also tap into Facebook’s anonymized demographic data and targeting capabilities through access to FAN, helping advertisers meet demographic targets before their ads are actually served.”
The challenge that investing in Facebook’s advertising platform brings is that advertisers become a captive market, too reliant on the platform to reach similar scale outside of Facebook’s environment.
Publishers enticed by Facebook’s offer to host their content directly in the News Feed face a similar dilemma. They will likely reach even more people through a medium that can focus their attention on publishers’ content through algorithmic tweaks with the opportunity to participate in associated advertising revenue. At the same time, their content is published on Facebook’s terms — which are dictated by Facebook’s priorities, not the publishers’.
Most of the focus at f8 was on advertisers and publishers but what about the people whose data fuels this machine? Leaving aside “you are the product” rhetoric, should users be concerned about their data being sold as a commodity to advertisers, and publishers even more so? The answer, at least from a privacy perspective, will depend very much on which demographics are included in the datasets Facebook sells access to.
For now, it appears that Facebook will only permit targeting based on limited demographics, such as age and gender, although, when it comes to mobile, location will almost certainly be included in the mix.
That segmentation may not be enough to render the data personally identifiable so consumers will remain relatively anonymous, at least until they respond to the advertising and identify themselves through a subsequent transaction.
At that point, advertisers could learn more about the user than was possible without Facebook but, then again, I don’t know the extent to which the situation has changed. Facebook has always known a lot about us; the questions have always been how much of that data Facebook has used and for what purposes?
A viable balance
Certainly, from an advertiser’s perspective, Facebook is a compelling choice and, by limiting available demographics, I suspect it has found a viable balance between targeting and privacy, at least relatively.
South African-born Paul Jacobson (@pauljacobson) is a content marketing specialist and reformed internet lawyer, now based in Israel. He has a passion for the social web, internet trends, digital marketing and related themes such as online reputation management and privacy. He contributes the regular “Tech Law” column focusing on issues in the digital marketing space to MarkLives.com. CC BY-SA 2.5
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