With Facebook taking its first steps toward becoming an online marketplace, the issue of targeted marketing is rearing its ugly head once again. As users are spending more and more time wandering around the internet, they are generating an ever-growing mass of personal information. Despite numerous attempts to create trustworthy tools for wiping away one's online footprints, the Web continues to have a long -- and sometimes embarrassing -- memory.
One recent brouhaha has arisen from attempts to combine online and offline consumer profiles. Like Dr. Jekyll and Mr. Hyde, many consumers try to separate their internet wanderings from their "real" lives. From a personal perspective, this can make it easier for users to hide potentially embarrassing predilections from their friends and loved ones. From a marketing perspective, however, it can result in an incomplete and inefficient customer profile.
The offline side of marketing may be best represented by Experian and Acxiom. Basically corporate sociologists, these companies accumulate customer profiles from warranty cards, wedding registries, and other public-access information. When publishers, retailers, credit companies and the like want to send out targeted marketing, they work with a data company to compile a customer list that perfectly fits their need.
Here's how it works: to begin with, Acxiom has amassed a gargantuan file on everyone -- including you. In fact, in a recent New York Times article, it claimed to have "1,500 pieces of data on every American." When a magazine publisher wanted to compose a mailing list for a magazine, he asked the company to "find the names and addresses of 10,000 Americans from each of 11 cities who had houses worth more than $1 million, net worth of over $2 million, lived within a few miles of other rich people and subscribed to business publications." Acxiom was able to quickly prepare the list.
On the internet, Facebook is the big dog of consumer knowledge. By analyzing the applications that users download, the amount of time they spend in them, and the various other pieces of data that they spread through the site, Facebook can create advertisements that are incredibly targeted. The trouble is, when the company uses this information, many users get upset. As Fred Vogelstein wrote in Wired, "Facebook's performance advertising program allows [marketers] to design and distribute an ad to as narrow an audience as they would like . . . [but] there is a fine line between 'targeted and useful' and 'creepy and stalkerish' -- and so far, not enough advertisers have been willing to walk that line."
For Facebook, one solution -- and a potential revenue source -- lies in extending beyond the borders of its site. With new advertising programs like Connect and Open Stream, the site will be able to function like Acxiom, helping to create tailored ads for other companies. Although this won't erase the ick factor of highly-targeted marketing, it will create some distance between Facebook and the effects of its snooping.
It's worth noting that, in many ways, targeted advertising can be a wonderful thing. When a customer uses Amazon, for example, his or her purchases lead to other suggested purchases. Over time, this can translate into some very sophisticated suggestions, and some wonderful discoveries. Similarly, regular Facebook users can find that the targeted ads on the right-hand side of the site often hold useful surprises. Basically, by compiling their users' likes and dislikes, online sites can help customers find things that they never knew they wanted.
The trouble is that, unlike online info, which is based on personal preferences, real-life demographics are based on public information. Because of this, the cross-pollination between online and real-life profiling can be fraught with potential dangers. Just as it might be difficult for suburban newlyweds to explain a mailbox stuffed with targeted, sexually-explicit ads, it could be equally hard for young hipsters to explain to their roommates why they keep getting invitations to join My Little Pony's Super Fun Club. The bottom line is that, until consumers become comfortable with fusing the two halves of their lives, marketers are well advised to keep Dr. Jeckyll and Mr. Hyde far, far apart.
Take the first steps to building your portfolio.View Course »