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April 18, 2018
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What Facebook’s Privacy Changes Mean for Advertisers

Even with such public outcry, only a small percentage of Facebook users (7.7%) say they will stop using the social network altogether.

In the wake of the Cambridge Analytica data misuse, Facebook has been scrutinized and its CEO, Mark Zuckerberg recently spent hours testifying before Congress as questions about the future of Facebook and online privacy regulation in America have swirled. However, even with such public outcry, only a small percentage of Facebook users (7.7%) say they will stop using the social network altogether. Only time will tell if scale and usage will drop significantly in the future depending on how Facebook adapts to protect user privacy and what government regulations are established.

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In response to privacy concerns, Facebook has taken the first steps in recent weeks to secure and make transparent the way that data is collected from user profiles and used for ad targeting. These changes, and those that may follow, affect both consumers and advertisers alike.

Changes on the Facebook Platform:

For those users who continue to use Facebook, they will find changes in the platform that help them more easily navigate their privacy settings to see who they are sharing their data with. Facebook has recently updated their settings menu on mobile to include ‘Privacy Shortcuts’ where you can add more layers of protection to your account, control your personal information by deleting activity (shares, likes, searches, etc.) and control what information from your profile is used for ad targeting. [1]

In addition, Facebook has updated their regulations on information that apps outside of Facebook are able to collect and use. This includes apps that provide the option to sign in using a Facebook login to capture user data. Moving forward, Facebook will approve any and all apps that request access to information such as likes, photos, posts, videos, events and groups. These apps will need to agree to strict requirements before they will be granted access to any data. Part of their new self-regulation, Facebook will no longer give apps access to personal information such as religious or political views, relationship status and details, custom friend lists, education and work history, fitness activity, book reading activity, music listening activity, news reading, video watch activity and games activity. Lastly, app developers will not be able to collect any data if a user has not used the app in the last three months. The new regulations will restrict the amount of data that outside applications are able to receive and use for their own purposes. [2]

Changes for Facebook Advertising:

These changes are beneficial for consumer transparency and protection, but what changes are happening in terms of data sharing and how does that affect advertisers? In Facebook’s self-serve advertising platform, the third-party data that has been used for targeting audience segments received from data providers such as Axcion, Oracle and Experian, etc will no longer be available for use. Advertisers have leveraged this third party data, referred to as “Partner Categories”, in Facebook’s Custom Audiences program to develop in-depth audience segments based on demographics, behaviors and interests. Without the “Partner Categories” available, advertisers will need to find new ways to find their desired audience by inferring attributes based on the information that will be available from Facebook.

However, Facebook also recently announced their plans to develop a permission tool that will allow advertisers to use data collected outside of Facebook by certifying that the advertiser has permission to use the data. Given this update, it would seem that advertisers will need to work directly with third-party data providers to import custom audiences into Facebook, making the advertiser ultimately liable for the ethical capture and use of this data. This option has potential for large advertisers that have access to their own first and third-party data, however this may not be feasible for smaller brands that have relied on Facebook in the past to help them find their audience.

With these changes, the data that advertisers will have access to for ad targeting will be heavily reduced. The audience segments available will be more general, with limited information to differentiate users. Since Facebook users who are concerned with data privacy are likely to change their settings and restrict ad targeting options, the pool of users that advertisers can reach for any given behavior or attribute will likely decrease. With less Facebook profile data and no third-party data available, advertisers will be left to import their own first and third-party data and develop creative targeting strategies to maintain success.

Furthermore, most advertisers will need to reassess how to use Facebook within their overall media mix. Facebook was once a resource to find a highly targeted, niche audience segment and reach them with a specific message. Now, Facebook becomes a medium that offers a broad, more generalized audience reach. The success that was once had by advertisers using a mix of Facebook and third party data to find audiences will be altered, as ad performance and efficiencies are likely to change. Ultimately, it will be a challenge for all advertisers to adjust campaigns accordingly and reallocate ad dollars to other platforms if necessary. [3]