Facebook is working with US data provider Datalogix to measure how many people who view ads on the social networking site then go on to buy that product in a store. Initial testing from the two firms indicates that on average, for every dollar a marketer spent on Facebook it earned an additional $3 in incremental sales.
The move comes amid growing shareholder pressure for Facebook to prove the value of its advertising. However, the new move has raised concerns among privacy advocates over the use of personal information.
Datalogix holds data from over $1 trillion consumer purchases made by more than 100m households at retail stores across the US.
By matching email addresses or other identifying information associated with those cards against emails or information used to establish Facebook accounts, Datalogix can track whether people bought a product in a store after seeing an ad on Facebook.
Despite concerns over privacy, sources close to the firm said that people would be able to look up their profiles to see what purchase information is associated with them.
If they wished, they could then opt out of having their information used for measurement purposes.
The emails and other identifying information are made anonymous and collected into groups of people who saw an ad and people who did not. Datalogix compiles a report for Facebook and its advertisers to measure which creative approaches and demographic targeting persuade people to buy specific products offline.
“We kept hearing back [from marketers] that we needed to push further and help them do a better job,” said Brad Smallwood, Facebook’s head of measurement and insights.
Facebook said it is paying Datalogix for the data-matching. So far, the two companies have measured 45 campaigns and in 70 per cent of cases, for every dollar a marketer spent on Facebook it earned an additional $3 in incremental sales, Smallwood said.
Some privacy advocates question whether the practice violates the $9.5m settlement Facebook struck with the US Federal Trade Commission over charges that it deceived consumers by not keeping privacy promises.
Facebook users are automatically included in the advertising studies conducted with Datalogix, and cannot directly opt out through their Facebook account. Instead, they must go to the Datalogix website, for which Facebook has a link posted in its help centre.
Facebook and Datalogix said individual-level purchasing data were not shared with Facebook or its advertisers. Individual Facebook user data are not shared with advertisers. Facebook said it was working with an outside auditor to monitor its practices.
Currently, Facebook is only tracking this information for users of its site based in the US.
