Have you noticed how good some web sites are at displaying ads that target your particular interests? The practice feels both intrusive and a bit scary, but impressive at the same time.
Facebook, for example, has been under serious pressure to increase profits after its stock price fell far below initial investors’ expectations. Last week the company surpassed one billion regular users: some of those visit only once per month, but many others visit many times per day, or stay on the site for hours at the time.
Facebook makes no money from people using the site to check in on friends, post pictures of their kids, or announce what they’re having for lunch: its revenue comes from ad sales, and the more effective the ads, the better.
So, like other sites, Facebook both collects and exchanges information with vendors or data miners so that the ad space on each user’s page is festooned with offers judged to be most interesting to that user. Through a marketing venture called “Facebook Exchange,” for example, if you buy a book from a favorite author on Amazon, your Facebook page will soon feature Amazon ads for other books by the same author. Poke around the latest fashion designs at a site like Nordstrom’s, and you’ll soon see ads for the very same items you spent the most time perusing.
Sometimes it’s a bit like the old question of which came first, the chicken or the egg. Did you visit a shopping site because you saw an ad, or get an ad because you previously shopped?
Sites like Google are already very good and tracking how many “clicks” each ad gets, and how often users make an online purchase after viewing an ad.
Some privacy groups are concerned that Facebook is now taking it up another step by partnering with a company called Datalogix, which uses information gleaned from customer loyalty programs and other sources to report how often someone views an ad on Facebook and later buys that product, not online, but in a retail store.
Facebook insists that the information is encrypted and anonymized in a way that can’t be reversed, so that it’s not really sharing personal data with other companies, just providing encoded data that Datalogix can use to make aggregate reports on the effectiveness of particular ads. Whether that’s the real truth or a politician’s truth could be a matter of interpretation.
While privacy advocates complain, most of us continue to shop, get news, be entertained, and visit social networking sites online, even though we have to wade through both generic and targeted ads to do it. It’s a little scary, for sure, but it’s also the price of participating in the online world: even in cyberspace, we understand that there’s no free lunch.