In a continuation of the fallout to the Cambridge Analytic a privacy scandal, Facebook announced the shutting down of its Partner Categories – a section in its advertiser tools that allows third-party data brokers like Experian, Oracle and Acxiom to sell targeting data to businesses and companies.
What this simply means is that these third-party aggregators will no longer be allowed to match their data against Facebook’s audience and then sell the information gleaned – usually purchasing activities- to businesses and companies for improved ads targeting purposes.
There are three available data sources used in ads targeting – From Facebook, from business themselves and from third-party data brokers. These data brokers get their data from Facebook users’ other online (purchasing) activities outside Facebook. This third source is what Facebook is shutting down in the next 6 months as they have decided they are a jink in their privacy security armour as they have less control over how and where these firms get their data.
So what exactly does this change mean for stakeholders -Facebook, Facebook users, third-party data aggregators and businesses that advertise on Facebook?
For Facebook, it means they will jettison the partnership they have with major data brokers. The Social Media giant is hoping that this move, as well as other moves – will go a long way in assuring its users as to their online security. On the flip side, this move may negatively affect Facebook’s earnings from ads as businesses may seek alternative ways of advertising to potential clients. Apparently however, Facebook has decided that the earnings are not worth any potential troubles that may arise.
For Facebook users, it means they will be less targeted with those “too perfect” ads as their online activities outside Facebook will no longer be matched with them on Facebook. That creepy feeling of being watched will be reduced.
For third data aggregators, it means a loss in business revenues. Already, there is a wave of worry among these third party data brokers and agencies about the ban. The impact was seen in Acxiom stocks as it dropped by 30% following the announcement. In fact the company now expects “total revenue and profitability to be negatively impacted by as much as $25 million” in 2019 as a result.
For businesses that purchase these data for improved advertising on Facebook, they will have to rely solely on the data collected by Facebook together with their own data. As most businesses have at best scant data, they will be heavily reliant on whatever data Facebook is able to provide. Bottom line, their advertising efficiency on Facebook will be drastically reduced.
Although Partner Categories was not how Cambridge Analytic a got their data – and the outcome of the ensuing scandal, Facebook has taken this step nevertheless, as a precautionary move. They have responded well to the public backlash and are removing potential frailties from their system.