We've all had that eerie experience of feeling watched. You purchased an item, either online or in a store. Then, you sign in to your favorite social media account, only to find yourself bombarded with ads for the item you just purchased. If it feels like you are being stalked, you are, sort of. No human being is actually looking over your shoulder or reviewing your data. Instead, a combination of data sharing, smart algorithms, and detailed ad targeting is what's creating that feeling. Don't like it? There are still some ways you can opt out.
Offline Activity and Facebook
We all know that Facebook has a trove of personal data on its users. We post pictures, write posts, and like and comment on our friends' activity. But what many people don't know is that Facebook has much more information than just what you do on their platform.
The vast majority of Facebook's revenue comes from advertising—$17.3 billion out of a total $17.6 billion revenue in 2019. Advertisers love Facebook ads because they can use Facebook's data to target ads very specifically. That's why you see ads that seem to be so personal. Ideally, you should see ads that are most relevant to you, which could be helpful. But it can also be a bit creepy.
Some of the technology Facebook uses for ad targeting is pretty high-tech. But when it comes to collecting your offline activity, there's no technical wizardry involved. The most common way Facebook collects data about your offline shopping activity is that retailers simply give the data to Facebook. And the retailers have that data because we give it to them freely.
If you've ever used a rewards program at the checkout or provided your phone number or email address, that retailer is tracking your transaction. Offline retailers use that tracking data to remarket, basically sending ads to people who are already purchasing their products. One way to remarket is by targeting existing customers with Facebook ads. To do that, offline retailers need to share some of the data they collect about you with Facebook.
Facebook Advertising Audiences
The power of Facebook advertising is its ability to target very specific audiences. For instance, a boutique fly fishing accessory store in Newnan, Georgia, could decide to show ads only to men ages 45-60 who live within 15 miles of Newnan and who have demonstrated interest in fly fishing and luxury brands. The targeting can get pretty specific, especially as multiple factors are layered to form a pretty unique profile for a particular ad. Often, a business will have many versions of an ad, and the exact version you see will be tailored to your profile.
One way marketers can define an audience is by targeting people who have already purchased from them. To follow their offline customers onto Facebook, retailers share some of their data with the social media giant. The resulting collection of Facebook users is called a custom audience.
Here's how it works. When you make a purchase at an offline retailer, you provide some personal information, like your phone number, email address, or rewards account. The retailer then passes on that transaction data to Facebook. The data includes what you purchased, when you purchased it, and the personal information you provided. Once Facebook has even a little bit of personal information linked to a purchase, they unleash their algorithms, which can link a transaction to a Facebook account. Facebook uses this information to form a list of real Facebook users who have made purchases at the offline retailer, i.e., a custom audience.
For security, the information is all hashed before it is shared with Facebook. Hashing is a common online security practice in which data is scrambled so that it is only readable to an algorithm, but not to anyone who might intercept it. For additional security, once a transaction is linked to a profile, Facebook deletes its copy of the transaction record. What the retailer is left with is a very accurate list of Facebook users who have purchased their products offline. They can use that list, called a custom audience, to target ads.
Retailers can also leverage their custom audiences by creating Lookalike Audiences. A Lookalike Audience is a group of Facebook profiles that is similar to the users in the custom audience. This way, advertisers can reach out beyond their existing customers to people who are likely to share their current customers' interest in their business and products.
There is nothing inherently wrong with custom audiences or targeted ads. The benefit of targeted ads is that you are more likely to see ads for things that actually interest you. Of course, the more we learn about the world of social media and online advertising, the more some users become protective of their data and their privacy. Luckily, there are some ways to opt out of targeted Facebook ads and information sharing.
The easiest way to control how ads are targeted to you is to go into your ad setting on Facebook, found here. If you don't want Facebook to serve you ads based on data from offline retailers, simply uncheck 'Ads based on data from partners.' You can also see which advertisers or businesses have uploaded a list containing your personal information, and take yourself off of some of those lists. Try exploring this part of your settings to control more details of how your data is used. You can learn more about Facebook ad targeting here.