Report: Facebook to match user profiles with offline purchases for ad targeting

Facebook is partnering with data vendors like Acxiom, Datalogix and Epsilon to allow advertisers to match data from consumer loyalty programs with user profiles in order to target ads by offline purchase habits, according to Ad Age.

The social network did not confirm the report or offer any comment, but Ad Age cited an OMD social media director who has been involved in beta tests. The news is also in line with what we have heard from sources familiar with Facebook’s advertising plans, who told us that Facebook would soon introduce new targeting options based on data from outside of the social network.

Last year Facebook began working with Datalogix to measure how Facebook ads affect in-store sales. Datalogix has information from loyalty cards and programs at more than 1,000 retailers. Facebook can then match email addresses or other information associated with those memberships with the email addresses or information associated with users’ Facebook accounts. All emails and personally identifiable information is anonymized, but the companies can compare the differences in sales among groups who saw certain Facebook ads versus those who didn’t. It makes sense that Facebook could also use the matches to create groups for ad targeting.

Many media companies, including DSPs, DMPs, agency trading desks, ad networks and exchanges, already partner with Datalogix and similar companies to target users by offline purchases in a privacy safe way. Most consumers are unaware that this goes on, but when Facebook moves into this area it is likely to face much more scrutiny. Not only is Facebook under a greater microscope, but users feel a personal connection to the service and often worry about who has access to their information and how it could be used. On the other hand, most people don’t think about browser cookies often, and they likely haven’t heard of companies like BlueKai or AppNexus, which already help advertisers target them by their online and offline behavior. Facebook will have to take extra precautions to prevent users from feeling exploited.

The social network has evolved its position on ad targeting in the past year. Instead of having advertisers target their ads only based on information users have added to their profiles, it now allows targeting by first-party data like CRM lists through Custom Audiences and cookies through Facebook Exchange. Now it seems to be letting in third-party data from vendors like Datalogix.

This trend was foreshadowed by a job listing Facebook added to its careers page in August 2012. The job description for a Product Marketing Manager, Monetization says, “Facebook is seeking an expert in data management platforms. This role will develop our plans and vision for how we can enable businesses to better reach their customers and prospects on Facebook.”

Data management platforms help advertisers organize their first party data (web analytics, CRM), second party data (from strategic partners that can match CRM records or cookies) and third party data (such as from Acxiom or Datalogix) to improve their advertising efforts. As we wrote about previously, Facebook is uniquely positioned in each of these areas, and because it can match data to a unique user profile, it has an advantage over other systems, which tend to rely on cookie matching. And with Facebook, advertisers can combine demographic, interest and other targeting to ensure they’re reaching the most relevant audience.

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