In just over 14 years, Facebook has gone from a membership website for college students to a global social media platform boasting 1.9 billion users (which equates to about a quarter of the world’s population) and five million advertisers as of April 2017.
Big changes are ahead for those five million advertisers. As of September 30, 2018 Facebook will shut down its Partner Categories which allow advertisers to use information from third-party data providers to target campaigns.
There’s a lot to unpack with the changes and the rhetoric surrounding Facebook. Will users flee? What do the changes mean for businesses? But first, a background on how the platform became the advertising giant it is today.
In 2014 Facebook made one in its seemingly endless stream of algorithm changes that largely throttled the organic reach of Posts from Pages. It was the advent of the Boosted Post.
While Boosted Posts fall under the umbrella of advertising on Facebook, “Boosted posts are mainly used by companies so that their current followers can see them,” says Megan Medeiros, manager of paid media at Adept Marketing.
Pay a few dollars and the users that like your Facebook Page will actually see your content.
“It’s just so hard for a business to get any visibility without putting any dollars behind it,” Medeiros continues.
An ad on Facebook allows businesses to access anybody on the platform, explains Adept Marketing Co-Founder Danielle Walton. The purpose is largely building and driving external awareness.
Facebook advertisers can choose from a variety of ad products targeted to users in different ways – one of which was Partner Categories. This targeting method relied on data from third-party providers that allowed advertisers access offline purchasing behaviors and information about users that otherwise wouldn’t be available.
“The best part about these was you could reach super detailed and specific audiences, about how people engage past their computer, and really, in everyday parts of life,” Medeiros says.
Then, the Cambridge Analytica scandal happened. The political data firm gained access to the private information of more than 50 million Facebook users. A New York Times article explains that while Facebook allows researchers to have access to user data for academic purposes, it prohibits that data from being sold – which is exactly what happened when it ended up in Cambridge Analytica’s hands.
In the backlash, Facebook made the decision to end its relationships with all third-party data providers.
Facebook advertisers will still be able to use targeting, albeit relying largely on users’ behaviors within the platform.
Walton explains with an example. Adept works with a national pet boarding company that previously used Partner Categories to target individuals based on their travel habits, using third-party data to identify frequent travelers based on purchase behavior from credit card data companies.
Once the Partner Categories are eliminated, “We will no longer be able to have that level of targeting,” Walton says.
Instead the client will have to build their ad audience around individuals that are interested in travel and have noted that on Facebook or are liking content related to travel.
“It takes what allowed for really hyper targeting based on your behavior and right now it’s kind of moving it up the funnel,” Walton says. Instead of audiences built on behaviors, audiences will be built on interests – meaning they might not currently be in the buying market for that product or service.
Interest-based categories aren’t perfect, explains Walker Evans, partner at digital advertising agency Prociso. When a Facebook user often mindlessly clicks ‘Yes’ to the terms of service, they might not realize that Facebook is tracking their internet usage beyond the platform, potentially creating inaccurate interests – like a husband shopping for a gift for his wife being labeled a female shopper or a real estate agent constantly appearing as though they are in the market to buy a house.
Evans says the potential margin of error is worth it, though, for the gained level of specificity. It’s always more effective for an individual to see an ad for something they are interested in versus something they are not.
How moving audiences up the sales funnel will impact business owners remains to be seen.
“Right now, it’s too early to tell if there’s going to be changes in performance,” Medeiros says. But she points out it’s going to affect everyone across the board, leveling the playing field.
Local businesses and agencies seem to largely be taking a wait and see approach to the changes, with plans to continue incorporating Facebook as a part of their advertising strategies.
“Ultimately, you really have to assess who your customer base is and where social media – Facebook and really any platform – where does this fall in your customer’s journey, in their path to purchase?” Walton asks.
Owners Jim Miller and Annette Bellisari of local gourmet food company Bellisari’s are confident Facebook will continue to provide a strong opportunity to connect with their audience. In fact, they have seen a lot of success with the platform in the last year.
“We’re all about gourmet convenience, and our customers are primarily women – moms, grandmothers, working professionals with a million things on their plates – who find value in a product that will make their lives easier and bring their families together,” they say. “From our experience, that audience is quite active on Facebook and willing to engage with a brand that aligns with their needs and values.”
Pet boarding company Pet Palace also plans to continue to utilize Facebook to build brand awareness, acquire new customers and engage with current clients.
“Our current strategy on Facebook won’t change and we will continue to target the same audiences,” says Lora Shaw, VP of operations at Pet Palace. “That being said, we will be closely monitoring our results to ensure we are seeing equal results of our campaigns prior to the targeting changes.”
Bellisari’s is proactively anticipating the changes, starting with reviewing their existing ad sets and target audiences, determining which will be impacted and updating to the currently available options accordingly. The company adds that, “Internally-owned data, whether that’s from a Facebook Pixel or newsletter list, will also play a much larger role in our targeting following the update.”
Walton anticipates that until many business owners see how the changes actually impact them, they won’t be going anywhere.
“Once this change is fully in effect in September and then we start to evaluate the results of the campaigns and the performance going forward, if we do see that there is a really large drop, I think that’s when we might see people pull out, but as of right now, people are pretty comfortable staying the course and seeing what this change ultimately will mean for them,” she says.
Facebook is finding itself between a bit of a rock and a hard place, Evans says. The platform has to do what’s in the best interest of its advertisers since that is how it generates revenue, but users are the product being sold to advertisers. Gravitate towards the needs of one at the potential risk of alienating the other.
In the wake of the scandal and impending changes, Walton sees a new wave of awareness from Facebook users about how much control they actually have over their data. Facebook says users can control their Facebook ad experience through the Ad Preferences menu, which curates a massive list of “interests” that users are able to edit.
That list of interests, Walton says that’s the trade off for using Facebook for free. Users have to be cognizant that when a service is completely free, but there’s an entire multi-national company that operates behind it – something has to give. Whether right or wrong, Facebook will continue to leverage that data as its ongoing monetization strategy.