Pssst: Facebook is stalking you in stores ….

Why?

Ostensibly to see if its sponsors’ ads are working.

But, some skeptics (e.g. me) think that there may be other motives, too.

Here’s the scoop.

Last year, Facebook entered into a partnership with a company called Datalogix.

image

Everybody knows what Facebook does.

Datalogix, not so much.

Datalogix is a firm that records the purchasing patterns of more than 100 million American households.

When you stop by the supermarket … you probably hand the cashier a loyalty card to get a discount on your items.

That card ties your identity to your purchases.

Your sales data is sent over to a server maintained by Datalogix, which has agreements with hundreds of major retailers to procure such data.

Source: Slate

Hmmm.

Facebook and Datalogix … why the hook-up?

Let’s start with the positive spin.

As we previously posted, Facebook (and similar social networking sites) have been fending off criticism that their ads don’t generate ckick-throughs … heretofor, the currency of the internet realm.

So, Facebook has tried to turn the focus away from clicks … saying that “clicks don’t matter”.

Hmmm.

Instead, Facebook started saying that ads on its site weren’t about clicks.  They’re about “demand creation.”  You know like TV ads.

The claim was greeted with understandable skepticism.

So, FB linked up with Datalogix to prove it.

You see,  FB knows who you are and can link you to the places where you shop and the stuff that you buy via the Datalogix data base.

For example …

Datalogix can figure out how many bags of, say, potato chips you regularly buy.

Then, FB can flash some potato chip ads at you when you’re spending some of your 7 hours per month on the site.

Then, Datalogix can track you and determine if your “propensity to consume” potato chips went up … you know, did you buy more chips than usual.

Adjusting the data for special factors – e.g. Super Bowl Sunday — if your chip purchases increased, FB can claim that its ads worked.

Directionally speaking, FB can make a case that its ads work even if you didn’t click on them.

The ads created demand for potato chips.

More specifically, FB can estimate the “Marketing ROI” on the price it charges advertisers for their ads. The incremental  profits of the upped potato chip purchases can be related to the ad spend.

Presto! Marketing ROI,

To a quant guy like me, that’s pretty cool.

= = = = =
The potential dark side

Though I’m a quant guy. I starting to get a little jittery about the amount of my personal information being collected, sorted, mined and used to target me.

Between the credit card companies, insurance companies,  doctors & hospitals, loyalty card programs and, oh yeah, the government  … we don’t have many secrets left, do we?
* * * * *

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