Now that Facebook has gone public, it’s beholden to shareholders and has to keep finding ways in which to maximize their profit. Considering that advertising made up 85% of their revenue last year, it’s no surprise that Facebook would turn their attention towards enhancing this approach. This is where Facebook Exchange comes in.
Facebook Exchange is an ad service that allows businesses and companies to bid on and buy advertisement space that’s targeted specifically at certain member “profiles”. Creating ad profiles of its members is nothing new for Facebook, nor is it anything new on the Internet in general. For awhile now, Facebook has targeted ads toward its members by combing through their likes, locations and pages they’ve viewed to create these profiles. This process has been minimally invasive, though, as the information they collect has been solely based on a member’s activity inside Facebook. Facebook Exchange is different in that Facebook will now serve you ads based on your activity outside of Facebook.com.
How It Works
Assuming that you remain logged into your Facebook profile, a tracking cookie will be placed on your web browser anytime you visit a site that uses Facebook Exchange. This cookie tracks your activity on that particular site and takes special notice when you show “intent to purchase”. Facebook and the company whose website you’re browsing work together to deliver you very specific ads the next time you check your profile or News Feed. This, in turn, makes Facebook’s advertising much more effective and much more appealing to large companies—and also a little more concerning from a privacy standpoint.
To get a better idea of how Facebook Exchange works, imagine you are interested in buying a new laptop, so you go to Samsung’s website to browse the different models. You look around for a while, maybe a little deeper at a few specific models that peak your interest. You might even add one to your shopping cart before finally exiting out. Upon logging back into Facebook, you notice ads on your News Feed that specifically advertise deals on Samsung laptops, or even creepier, deals on the specific models you were looking at.
“For example a travel site could serve ads about a flight to Hawaii to someone who almost bought a flight on their site. Advertisers might pay big premiums for highly-accurate targeting.” – Josh Constine, TechCrunch
That’s the idea behind Facebook Exchange.
To make privacy matters even more concerning, a recent Q&A with TechCrunch made it clear that there aren’t any plans to offer Facebook members an easy way to opt out of Exchange through Facebook privacy settings. Instead, members will need to opt out directly through the ad firm (remember, Facebook merely facilitates the advertising process for these firms). This is accomplished by closing an ad when it’s served to you and then clicking the provided link that leads to a page where you can opt out of future Facebook Exchange ads. For good measure, and as an extra layer of privacy across the Internet, you can always install anti-tracking cookie software.
Luckily Facebook users in Europe won’t have to worry about Facebook Exchange due to the EU’s strict cookie laws, which requires all companies that use tracking technology to receive consumer consent before tracking. Given enough time, however, I’m sure Facebook will find a way to track all of its users quickly and efficiently. So even if you aren’t currently being tracked, I would recommend familiarizing yourself with tracking cookies and how to disable them.
It would seem that Facebook is following in the footsteps of MySpace with their more aggressive shift to increase advertising revenue in order to prove their value. Instead of balancing user privacy with profit they’ve decided to tip the scales in favor of profit, all while disenfranchising the users who made them great in the first place.