Facebook (NASDAQ:FB) should prepare for more debate over its controversial privacy policies. Reuters reports that the social network will expand its use of users’ personal information to target its advertisements. For the first time, Facebook network will use information like members’ web browsing history to help marketers choose relevant ads to display.
Facebook’s advertising system relies on an internal profile of each of its 1.28 billion monthly users. In the past, that profile has consisted of the comments that users make and the posts that they like within the site. Now, that profile will also take into account the external websites and mobile apps that each Facebook member uses. As Ad Age explains, Facebook already enables retargeting ads to users who visit specific websites or apps. The social network does that by offering traffic tracking software that marketers can attach to their websites and apps. Then a retailer can target Facebook ads to users who’ve already looked at its site and products.
And Facebook already has access to some of its members’ external browsing information through its use of plug-ins that integrate the social network into other sites, and through the conversion tracking pixel that the network offers for marketers to measure the efficacy of its ads. But this is the first time that Facebook will use that information and not honor the “do not track” setting in web browsers.
Facebook’s competitors in the social media sphere — Twitter (NYSE:TWTR) and Pinterest — do honor the do not track setting. But advertising competitors Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO) do not.
Reuters explains that Facebook’s move to profiles enhanced by browsing history could mean that a user who researches a television on another site or in another mobile app could then see that information added to the internal profile. The profile would then indicate that that user is interested in televisions or electronics, and marketers would advertise such products to that user on Facebook. Advertisers will be able to target specific audiences more accurately as Facebook quantifies users’ interests with more data.
To accompany the changes, which are sure to renew discussion over Facebook’s privacy policies, the social network is giving its members the ability to view and edit their internal advertising targeting profiles. Users will be able to see the “interests” recorded in their profiles, and can add or remove categories from the profile. Facebook also plans to link users to a site where users can opt not to have their online activity tracked. Every ad will also indicate whether it was targeted to the user’s browsing history by displaying the icon of the Digital Advertising Alliance’s “AdChoices” program, which offers users the option to opt out of the targeted ads.
Despite the fact that Facebook won’t recognize web browsers’ do not track setting, it’s likely hoping that the improved privacy controls will appease users who are uneasy about the new use of their activity outside of the social network. As it collects more data on users’ web browsing and app use for ad targeting, it also gives users more control over what specific data the targeting is able to use.
Facebook is introducing the changes as it sizes up the competition it faces from Google. As eMarketer reported in March, Facebook and Google are both looking to grow their mobile advertising businesses. In 2013 Facebook accounted for 17.5 percent of the global mobile advertising market, and Google controlled 49.3 percent. Between them, Facebook and Google controlled 66.8 percent of the global mobile ad market. However, eMarketer predicts not only that mobile advertising revenue will increase by 75.1 percent in 2014 — to $31.45 billion — but that Facebook will cause Google’s share of that revenue to drop to 46.8 percent.
It’s also worth noting that eMarketer expects mobile to account for 63.4 percent of Facebook’s ad revenues in 2014, and only 33.8 percent of Google’s. That indicates that the two are playing a slightly different game — and that mobile is likely more of a priority for Facebook. The social network’s new use of web browsing and app data to target advertising isn’t particularly surprising
“We do not use what you say in email, chat, video calls, or voicemail to target advertising to you. Nor do we use your documents, photos, or other personal files to target advertising to you.”
The policy covers Microsoft’s online services, like Bing, Outlook, and OneDrive, but does state that Microsoft will still collect data from user accounts to learn how people use its services. Microsoft says that data will come from users’ “communications” and “files,” such as words in email messages or documents stored on OneDrive. But unlike with Facebook’s new changes, users can’t control what data is being used.
Privacy online is already a contentious issue, and will become even more so as the companies at the top — Facebook, Google, and even Microsoft — compete for the digital advertising dollars that have become integral to their bottom lines. As The Atlantic reports, Google is expected to make $19.1 billion in digital ad revenues this year, followed by Facebook at $4.8 billion and Microsoft at $2.7 billion. Leveraging all the data that they can get will likely be the name of the game as each company tries to be the and most effective advertising platform.
Facebook’s new privacy controls will roll out in two weeks, and the timeline for ads targeted by web browsing and app data is not yet clear.