• by Mark Walsh  @markfwal, April 10, 2013

Facebook on Tuesday formally rolled out ad targeting based on users’ online purchasing histories and location. The new self-serve option will allow marketers to target ads across some 500 specific audience categories from children’s cereal buyers to likely economy car buyers, matched to people who fit those profiles on Facebook.

These “partner categories” -- available to U.S. advertisers today in the Power Editor tool and the Facebook API -- are derived from third-party data collected by Acxiom, Datalogix and Epsilon, which the social network announced partnerships with in February. It had previously teamed with Datalogix on testing to determine the impact of Facebook ads on offline purchases.

On top of the partner categories, advertisers can overlay Facebook’s other demographic and interest-based targeting to further refine their audience parameters. That, in theory, should help boost conversions and improve campaign ROI, while providing “a better experience for people who see more relevant ads,” according to Facebook.

Amanda Peters, head of social media at iCrossing, suggested the addition of such targeting could help encourage clients to spend more on Facebook advertising. Typically, gauging the value of campaigns to increase a brand’s fan base or promote a piece of content has been difficult.

“However, with the launch of [Facebook Exchange] and features like Partner Categories, we’ll see more brands start considering Facebook ads an alternative to other display advertising,” she said. “Being able to target users based not only on their interests but also their behavior outside of Facebook is powerful and the ROI is measurable.”

But the targeting tied to shopping data quickly raised privacy concerns when Facebook’s alliance with Datalogix was first disclosed in September, and later, when its testing of the capability was first reported in February. For its part, Facebook has stressed that the data used is all aggregated and that no individual information is shared among itself, data providers and marketers.

The companies anonymize the information through hashing technology that allows them to match up data about a user based on their email address or phone number without that information being intelligible to either Facebook or its data partners.

Facebook uses the same process for its Custom Audiences offering, which allows marketers to retarget users on the social network using personal information from their CRM databases. But privacy advocates have questioned whether hashing actually guarantees privacy, and last year asked the FTC to look into the Facebook-Datalogix deal.

A screenshot of the tool for targeting the new partner categories shows information on the size of a given segment along with relevant details and data source. Children’s cereal buyers, for instance, includes 14.8 million people who spent three times the national average on children’s cereal over the last 12 months. The information came from loyalty card and other transactional data supplied by Datalogix.

How Facebook users will respond to the heightened level of ad targeting over time is not clear. But the company provided further information today on its privacy page about its data partners’ polices and how to opt out of ad targeting on Facebook that uses third-party data.