February 28, 2013

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Facebook Flirts with Big Data Facebook has to build a better case for ad sales. It looks like alliances with big data suppliers like Epsilon, Acxiom and Datalogix are a key part of the strategy, according to Ad Age. The operative theory is that more precise targeting yields better results and higher customer satisfaction. The good news is that this will extend classic direct marketing targeting and segmentation to Facebook and provide marketers with all kinds of inventive ways to target campaigns and allocate budgets. The bad news is that crunching big data and matching it anonymously to Facebook profiles will further muddy Facebook’s loosey-goosey reputation as protectors of customer privacy. In recent moves, Facebook allowed marketers to upload data from brand e-mail lists and loyalty programs and crosstab them against brand followers. This answers the burning question among marketers; “Are we hitting the same guys twice in two separate channels or are we addressing two distinct audience segments?” The answer affects message construction, offers, frequency and contact strategy. It may also help answer the chicken or egg dilemma; are customers Facebook fans because they love the brand and seek it out across online experiences? Or does Facebook create interest, awareness, preference and loyalty among people who haven’t already opted-in to the brand? One of my clients who participated in this “custom audiences” exercise found just 8% overlap between their weekly CRM e-mail list and their Facebook fans. They inferred that they have two disparate audiences with different expectations from the brand. This impacts content strategy and our editorial calendar plus it begs for further research. The exercise also triggered client paranoia that Facebook would glom onto our lists and use them for their own purposes as a quid pro quo. Facebook denies this and claims it keeps no record of uploaded matching data. But this worry will persist. The big data hoopla is not much more than extension of direct marketing techniques into the online space with the uncertain promise of real-time processing and communication. Traditionally a direct marketer goes to Acxiom or Epsilon or their competitors and appends data to their lists in search of more new or “best” customers. By understanding who owns a home valued above $250K, who has diabetes, who has kids under the age of 12, who has a credit score north of 675 or who owns a gun campaign narratives and targeted offers can be constructed. Data appending is a hedging tactic to increase the likely number of responders. Once these variables are appended to a list, by matching either e-mail or postal addresses, marketers create models, build segmented lists by anonymously selecting names that fit the criteria or use these variables to borrow names from list co-operatives. Appending these variables to Facebook profiles would give Facebook the opportunity to create standing sales channels of Moms, sports car enthusiasts, campers or fishermen, Vera Wang buyers, gluten free eaters or asthma sufferers that could be merchandised to brands again and again. Similarly, for a premium price, Facebook could build a targeted list to suit any particular product or campaign criteria. Marrying big data to Facebook is a potential bonanza for Facebook’s shareholders and brand marketers. The trick will be how this is sold to Facebook users. You can hear Zuckerberg falling back on “make the world better” as a rationale for serving up individualized experiences and personalized ad messages. At the same time you can image how creepy or annoying it might be to be bombarded by ads while you’re trying to keep up with friends and family. A backlash against big data and the continuing commercialization of Facebook could kill the goose that laid the golden egg or the skillful application of big data could propel Facebook toward global domination. Stay tuned. The game is just beginning.
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Facebook's Emerging Ad Strategy If you pay attention, you can begin to see Facebook’s ad sales strategy coming together. The announcement that Facebook is buying Atlas from Microsoft comes on the heels of Facebook’s announcement of big data alliances. The pieces of Facebook’s future advertising juggernaut are emerging. First, figure out how to better engage advertisers by cross-tabbing and de-duping their CRM databases with Facebook fan bases so they can plan ads and campaigns more effectively. Second align with big data suppliers to enable segmentation building, intense precise targeting and personalization. Third, use the Atlas infrastructure to build more ways to dice and slice Facebook audiences and to serve Facebook ads with better precision and metrics. The game plan directly addresses the biggest objections in adland. The Atlas buy feels like a play to accelerate building infrastructure rather than developing a new third-party ad-serving revenue stream. The value of Atlas, widely considered second tier behind Google’s Doubleclick platform, is a head start on proving the impact and value of Facebook ads to a growing number of skeptical advertisers. With Atlas in-hand, Facebook programmers and strategists can start modifying and adding onto an existing platform, which will give them something to brag about and sell more inventory sooner. The combination of these three moves will allow Facebook to answer many of the outstanding questions on targeting, impact, metrics and ROI by big name advertisers who have embraced social media advertising tepidly. Data-centricity will fuel better targeting, tighter message strategies and the ability to drive sales in real time. The mother lode of data emerging from the combination of sources, not to mention Facebook profiles, will yield a huge competitive edge in identifying likely prospects, building propensity-to-buy models, scheduling ads and forecasting or driving sales in real time. Add this information to growing opportunities for advertisers to track conversion events like registrations or checkouts and the possibly inadvertent slip exposing a new metric called “return value” and you might get the idea that at Facebook, social media is morphing into direct and database marketing.

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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