$137.8B U.S. ad spend for top 200 advertisers
Through its ubiquitous "like" buttons on publisher sites across the web, Facebook has long been able to watch the web surfing behavior of its 1.28 billion monthly users.
Soon it will begin to use that information for ad targeting on Facebook.
Facebook already enables retargeting to users who've previously visited specific websites and apps, which advertisers can turn on by affixing tracking software to their products. Additionally, ads can be retargeted to Facebook users on their desktop screens via FBX, the company's ad exchange, which a plethora of demand-side platforms like Turn and AdRoll are plugged into.
But what Facebook is now enabling is far more expansive in terms how it uses data for ad targeting. In a move bound to stir up some controversy given the company's reach and scale, the social network will not be honoring the do-not-track setting on web browsers. A Facebook spokesman said that's "because currently there is no industry consensus." Social-media competitors Twitter and Pinterest do honor the setting. Google and Yahoo do not.
Facebook will honor the settings to limit ad tracking on iOS and Android devices, however.
How it works
Historically, interest-based targeting on the social network hinged on users' own declarations of their likes and interests in their profiles, as well as Facebook pages they had "liked," according to Brian Boland, Facebook's VP-ads product marketing.
Now, Facebook is using the passive data -- where users go on their PCs and phones -- to make its own ads smarter. Advertisers who want to reach Facebook users who are interested in camping, for example, will be able to reach that audience with greater accuracy. "There's just a more robust set of information that informs that you're interested in camping," Mr. Boland said.
The social network's footprint is visible across the web in the form of the "like" button; a Facebook user can be recognized on sites where the button is encoded, whether they "like" something or not. However, Facebook won't be adding users tracked via desktop likes to the targeting mix at present, according to Mr. Boland, though it's in the plans.
For now, it will capture websites that use Facebook's conversion tracking pixel -- which advertisers affix to see if their Facebook ads are yielding sales and traffic -- as well as mobile apps that use Facebook's software development kit to deploy Facebook services, like the log-in. Websites and apps that have Facebook's tracking software encoded to retarget their visitors are also in the mix. Impressions tracked via the "like" button encoded in mobile apps -- which Facebook recently introduced at its f8 conference for developers -- will also be included.
Mr. Boland said the new targeting is intended to help direct-response advertisers, in particular, to make their Facebook ads more relevant to their selected audience.
"Their ROI should improve and make them a more effective advertiser on Facebook," he said.
At the same time that Facebook is taking steps to cash in on its ability to track users outside of its walls, it's also looking to stave off a backlash by launching much-improved privacy controls -- notwithstanding the fact that it's abstaining from recognition of the do-not-track browser setting.
Now users who click or tap on the drop-down menu on a Facebook ad and select "Why am I seeing this ad?" will be taken to a brief explanation for why that ad was shown to them. For instance, a user could be told they saw an ad because they're interested in televisions, and that Facebook's inference was based on pages they've liked and ads they've clicked on.
From every ad, users can also steer themselves to an "ads preferences" settings page, where they can tell Facebook not to show them ads based on their inferred affinity for certain categories. Conversely, they can also select categories they are interested in.
Ads targeted with browsing history will be marked with the blue icon of the Digital Advertising Alliance's self-regulatory "AdChoices" program, through which people can opt out of behaviorally-targeted ads. (That becomes visible when a user taps or clicks on the drop-down menu in the upper-right corner of an ad to learn more about it.)
"For as long as Facebook has sold advertising, people have been wary about what Facebook has been doing with their data," said eMarketer's principal analyst Debra Aho Williamson. "By making these two announcements together, Facebook is saying, yes, we're gathering more data to target, but you have control over what data we're able to use."
The new "ad preferences" tool will start rolling out to U.S. Facebook users in two weeks, according to a Facebook spokesman. The company doesn't have a definitive date for when targeting powered by data about people's website and app visits will be turned on.