Feb. 26, 2013 at 8:04 AM ET
The offline and online data collection worlds are about to collide as never before. Facebook will soon announce partnerships with Axciom, Epsilon and Datalogix, three real-world data marketing giants with access to billions of pieces of information about Americans’ shopping habits, according to a person familiar with the deal.
Facebook will not share its users' data with these firms, said the source, speaking on condition of anonymity. Instead, it will allow advertising clients to enlist the help of offline data to deliver targeted Facebook advertising, the source said. A supermarket loyalty card user, for example, might see Facebook ads that reflect their grocery-buying habits.
Facebook will use added security features to make sure data doesn't flow between it and the database firms, and that matches will be made using a technique that makes individual consumers blind to the companies involved, the source said. The source requested anonymity because she was not authorized to speak on the record about the deal.
Still, the marriage of real-world and virtual databases has some privacy advocates nervous.
“There needs to be limits on Facebook's growing use of outside data broker information so its users can be targeted by marketers," said Jeff Chester of the Center for Digital Democracy. "Companies like Acxiom, etc., contain vast stores of details about us, including online and offline information."
Pam Erlichman, spokeswoman for Datalogix, confirmed in an e-mail that her firm “is participating” in a new advertising partnership with Facebook, but directed additional questions to Facebook. Axciom also referred all questions about the deal to Facebook. Epsilon did not immediately respond to requests for information about the deal, which was first reported in AdAge. A spokeswoman for Facebook said she would not comment on the report.
Data brokers Acxiom, Epsilon and Datalogix already use their vast records -- which include e-mail lists, grocery store shopping habits, and much more -- to send highly targeted junk mail and other kinds of advertisements to consumers. Increasingly, these firms have tried to sell their market intelligence online. In a recent brochure, Datalogix makes its case for merging the two worlds:
"Why are offline transactions relevant online? Because they’re a more predictive indicator of intent rather than banner ad clicks. Too often, marketers view click-throughs as response data. But a click-through is not a sale," it says.
This isn't the first time Facebook has partnered with Datalogix; the social media firm announced last fall that it was conducting research with Datalogix to show that Facebook ads actually encouraged offline purchases. Through that arrangement, Datalogix is tracking groups of Facebook users who were also in its database to see if those who saw certain kinds of Facebook ads were motivated to make later purchases at grocery stores. Facebook was unable to identify individual consumer purchases through the research , the firm said at the time, but was able to see if ads were, in aggregate, effective in getting shoppers to buy grocery items.
Here’s how the data sharing will work, according to the source: Epsilon, Datalogix and Axciom will upload lists of customers to Facebook, tagged through email addresses or phone numbers. Facebook will then find matches among its users, and create what it calls “custom audiences.” These can be narrowly focused –18- to 24-year-olds in California who drink cola, for example. Then, these audiences can be targeted with precise softdrink ads.
Facebook will not know the identity of these consumers, however, because the data it receives from its partners will be scrambled, or “hashed,” preserving their privacy. No data will change hands, said the source.
Rainey Reitman, a privacy expert with the Electronic Frontier Foundation, did a deep dive through the data that was shared between Datalogix and Facebook last fall.
Reitman said that on the surface, she saw no new privacy issues raised from extending the Facebook-Datalogix partnership, as long as Facebook continued to insure that user information wasn't flowing out of the company to its new partners.
"Facebook is holding onto its data quite carefully," she said. "It has a financial interest in doing so ... and that should help protect users' privacy." She was concerned that loyalty card users might be surprised to find their information can find its way into a Facebook advertising formula, however.
Another privacy expert, Larry Ponemon of research firm The Ponemon Institute, said he didn't think privacy issues were inevitable in the deal -- "more-targeted ads could be a good thing for users," he said. But he cautioned that regulators and consumers should be very skeptical of any broad link-ups between online, and offline data, as they have in the past.
"This is what got DoubleClick in trouble with Abacus Direct," Ponemon said, pointing to the now-infamous advertising deal struck in 1999 that was eventually scuttled because regulators concerned about the ad network's ability to track users through cyberspace and in the real world through technology. "What's changed? Perhaps Facebook will never have custody of the data the way they are doing it, they are one or two steps removed, but how does that affect the privacy issue?"
Ponemon says that consumer expectation is often the forgotten element in attacks on privacy, and he's concerned about that happening if Facebook has access -- however obscured -- to grocery store loyalty card records or similar data.
"When a person signs up at Giant so they can get milk at market price, they are not thinking that information is now going to be linked to their Facebook account," he said. "It seems like there's this trend to have mega-databases, and all these things working together in constant harmony, but the problem we have is we haven't thought through the potential privacy risks."
The main concern, he said, is that mega-data collectors like Facebook and Axciom could join forces and build "the ultimate dossier" on consumers.
"Could this lead to the disintegration of our privacy rights, or is it just another creative way of serving an ad? We'll have to see in the details," he said.
Chester, from the Center for Digital Democracy, said it was important for consumers to know their rights when such databases are shared, adding that is also is important for consumers to be given ample opportunity to opt out of the sharing.
“Companies like Facebook want to pool more information together to essentially enable it to know what its users are doing on their mobile phones, such as when shopping,” he said. “(Privacy advocates) believe that Facebook users should have the power to decide what information can be used to profile and target them--especially when it comes from these powerful storehouses containing what we do, who we are.”
Users can opt out of Datalogix online digital advertising by visiting the firm’s privacy page and clicking under the section labeled “Choice.”
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