Facebook Adopts Direct Marketing Tactics for Display Ads

Direct marketing often gets a bad rap. People don’t like talking about mailing lists and CRM if they can instead jaw on about this or that viral/disruptive/engaging/[insert jargon] campaign. But Facebook will soon give brands a new reason to care about direct marketing.

Next week, Facebook will begin allowing brands to put ads in front of users who may or may not be their fans on Facebook. As first reported [1] by Inside Facebook, advertisers will be able to target users by user ID, email address or phone number, akin to how magazine publishers offer subscribers’ mailing addresses to direct marketing companies.

A Facebook spokesperson said the company has been testing the new targeting options with a select group of advertisers for a few months. In one case, a financial services company sought to convert current customers into fans of its Facebook page; the brand ended up doubling its fan base. Meanwhile, an app developer wanting to give its users a heads up about a new update witnessed an ROI two to three times that of its prior Facebook campaigns.

Privacy concerns are an issue, considering advertisers will be able to target Facebook users based on personal information, but the social net's spokesperson stressed it is information the advertiser already has and that Facebook will not be sharing data with brands.

Here’s how it works. A brand uploads a file including the email address or phone number a consumer provided when he or she made a purchase in a brick-and-mortar store or online; an app developer can upload the user ID it received when a Facebook user connected his or her account with the app. That file is hashed, so an email address is transformed into a set of numbers, letters or symbols that disguises the actual address. Facebook then looks at its own hashed data to see where it matches with the advertiser’s information. Facebook informs the advertiser of the number of matches it found—actually, the number of an advertiser’s current customers it can target with a Facebook ad—and then the advertiser can run the campaign against those users.

Advertisers will be able to layer in Facebook’s existing targeting options—age, gender, interests, etc.—to better message their existing customers. That will help brands that have little information about their customers beyond an email address or phone number. Because customer databases are often full of customer entries with information such as name, address, age, gender and purchase history, brands can look at that information to infer profiles of customers for whom they lack information. Having observed that a majority of its customers are women who live in affluent neighborhoods, a luxury retailer, for example, could then create a list featuring customers for whom it has only an email address or phone number and target them with Facebook ads geared towards women interested in jewelry and traveling.