The Facebook data privacy saga took center stage last week when Mark Zuckerberg testified on Capitol Hill, and it’s clear that conversations around data privacy and protection are far from over. Weeks ago, Facebook officially pulled the plug on its Partner Categories program, essentially “unfriending” third-party data providers from its platform and restricting advertisers from using third-party data for ad targeting. As a result, countless negative stories are assessing Facebook’s treasure trove of data, dominant market position and the possibility of regulation.
My response: I’m glad we’re having these important conversations, and Facebook’s decision to pull third-party data from their platform is a step in the right direction.
Some advertisers are worried that without third-party data on prospective customers’ buying habits, Facebook ads could become less effective. What many of us in the industry have known for years from countless ad testing is that third-party data is not a particularly effective tool anyway. At its best, it improves ad performance marginally, but with questionable ROI given the associated costs. At its worst, the data can lead advertisers down the wrong path entirely. Marketers and data junkies take a huge risk by assuming that someone else has figured out their audience, instead of executing on great fundamental marketing day-in and day-out, over and over again, relentlessly.
Look at what happened to P&G last summer. Gillette embarked on a new marketing campaign to send 18-year-old guys a “Welcome to Manhood” package with a razor and a how-to-shave guide. The idea was promising, except for one little thing: The data it used, which included information from a third-party provider, was wrong. It ended up sending these packages to women and 40- to 50-year-old men. Not only did its not find its target audience, its reputation took a hit.
Around the same time, Deloitte came out with a study on the inaccuracy of third-party data called “Predictably inaccurate: The prevalence and perils of bad big data.” It asked consumers to review data on themselves from a third-party data provider and found that only 29% of the data was more than 50% accurate.
Think about that for a second.
This means that aggregators aren’t even getting the easy data points, gathered from public records — like age and gender — correct. This means that all this time advertisers have been relying on conflicting, irrelevant and bad data — and this, in turn, is determining their audience. It’s like saying only people who like the Dallas Cowboys live in Dallas, yet the Dallas Cowboys sell more jerseys than any other professional football team. How can this be true? It’s not. It is dirty data, and it isn’t helping; it’s hurting.
A few years back, Mediasmith, a media buying firm, tested the accuracy of data from 11 different vendors in the United States and the United Kingdom to target online ads. Its findings showed that four of the vendors failed to target users based on age or gender.
These study results beg the question: Why are companies still using third-party data? Most likely it’s because the companies have been using third-party data for years, and they believe that they need the data in order to market to their target customers effectively. They don’t. Effective marketing is all about the fundamentals and involves constantly iterating and looking at the data to learn what resonates and what actions to take next. This approach really works — with significantly lower costs and risks than using third-party data.
Some are predicting that Facebook advertisers will see a decrease in return on investment and won’t want to pay the same rate for each impression, and that as a result advertisers will leave the platform, and Facebook revenues will decrease. I do not believe this is true. Facebook has clean data on its 2.2 billion users and doesn’t need to add a layer of risk on top of that — for it or for its advertisers.
So far, top advertisers are not leaving Facebook. They know what we all know: Facebook is still a viable channel for advertising, and nothing really has changed. The bottom line is that every company should know its own customers. If advertisers have gleaned anything from this current debate, it’s that relying on third- or even fourth-party vendors for client insights is risky.
The conversation is far from over. Today and in the near term, data protection will continue grabbing headlines while we all debate how personal data should be used and protected. In the meantime, advertisers can feel comfortable knowing their Facebook ads are just as effective as ever.