We are drowning in irrelevant advertising. Some are inspired by it, most ignore it, some would like to get more relevant ad messages.
I have been convinced for a while now that selling user data is one of the most direct and potentially lucrative ways social networks can achieve the kind of revenues that would justify their valuations. A recent article on Facebook’s intention to “cash in” on user data reminded me of a recent conversation.
Last November, I sat on a “User Contributed Data” panel with Richard Cooperstein of Facebook and other experts at the last Monaco Media Forum. While Richard found himself in the position to have to defend Facebook’s privacy practices, I humbly pointed out to the audience that other, more powerful and deep databases store much more private and sensitive information which is routinely packaged and sold to businesses and government.
In fact, Facebook SHOULD leverage the vast amount of personal data it stores to allow marketers to target their campaigns more effectively, on-line and off-line. Here’s why it makes sense:
- Economics. Advertising from Facebook impressions alone (Social Ads, Engagement Ads, Display, etc..), will hardly unlock but a fraction of the true economic value of all that targeting data.
- User value. Behavioral and audience networks have proven the viability of targeting users beyond the confines of a single domain and reach them when a specific ad message is more valuable to them.
- Proven model. Credit card companies and data aggregators, such asChoicepoint, Lexis-Nexis and Acxiom, already own far more private and sensitive data about individual purchasing behavior, health and personal finances than Facebook will ever have and have built huge businesses of trading that data and selling it to corporations and the government.
- Privacy controls. With the appropriate opt-in/opt-out and consumer disclosures, social networks can find a balance between users’ right to privacy and ownership of personal data and the ability to effectively target them.
Would I mind if my credit card processor knew to offer me deals on backpacking gear (Facebook “knows” I am into that) instead of Alaskan cruises I will never be interested in? Not a bit.