Facebook-Datalogix Partnership to Track Offline Purchases by 100 Million+ Households

facebook-blue-eye-spyFacebook has announced a new partnership with market analytics firm Datalogix, designed to measure how often Facebook’s 1 billion users see a product advertised on the social site, then complete the purchase in a real-world retail store. How do they plan to do this? By tracking the purchases of more than 100 million households at 1,200 brick-and-mortar retailers.

Facebook assures privacy watchdogs the user data will be anonymized via encryption and that no personal user information will be shared with Datalogix. However, privacy experts at the Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD) aren’t convinced; they’re already fired off a letter asking the FTC to investigate.

Jeff Chester, executive director of the CDD, explained their concerns to CNET:

In light of the recent consent order with Facebook, which resulted from the complaint brought by EPIC and other consumer privacy groups, it is critically important for the FTC to look closely at this proposal and to determine whether the company is complying with the terms of the settlement. Under terms of that settlement, which was finalized last month, Facebook agreed to obtain users’ “express consent” before sharing any information that exists outside the auspices of its privacy settings and to provide users with “clear and prominent notice” anytime their information is shared. I believe the FTC should be investigating all this as part of its review under the consent decree.

Facebook’s Brad Smallwood, head of measurement and insights, responded to their concerns – sort of. He published a post on the Facebook blog Monday, reiterating the benefits of the program as well as Facebook’s goals. He said, in part:

Since the early days of digital advertising, online marketing has been focused on optimizing ad campaigns for the click. But while clicks are an effective way to measure campaigns designed to drive traffic and fulfill direct response goals, increasingly, research from firms like Nielsen suggest that clicks aren’t the right metric for the broader set of marketing objectives beyond direct response. So how can marketers with goals like driving in-store purchase or branding objectives – those similar to TV – build and measure their campaigns?

“Products like Nielsen Online Campaign Ratings measurement solution can help brands optimize for reach and effective frequency for their digital campaigns, and Datalogix’s new tool can measure real return on investment by connecting those brand digital ad exposures to in-store sales. This is something that has never been done before at this scale.”

The Electronic Freedom Foundation isn’t buying the feel-good benefits for advertisers as justification for the potential loss of consumer privacy. In “A Deep Dive into Facebook and Datalogix: What’s Actually Getting Shared and How You Can Opt Out”, they explain how loyalty programs are the backbone of Datalogix’s advertising metrics program:

“These loyalty card programs have long been criticized by consumer advocates, who point out that they create a long data trail of our everyday purchases. Concern over these cards spurred the creation of advocacy group Consumers Against Supermarket Privacy Invasion and Numbering (C.A.S.P.I.A.N.), which argues that grocery stores falsely inflate prices for those not participating in the programs and that the programs themselves are expensive to run.

“We were also initially concerned that Facebook could test a number of small, overlapping data sets to hone in on individual user behaviors. We raised this concern with Facebook, and Facebook responded that, due to the large sample sizes that were being tested, it would be impossible to figure out whether a specific individual bought a specific item. Apparently Facebook also sent in a privacy and security auditor to assess this issue, and was satisfied with the results.

So how can consumers opt out of the program? Go to the Datalogix Privacy page and scroll down (wayyy down) until you see the “Choice” section. The link in the top paragraph will only opt users out of cookies. Read to the last sentence in the Choice section and click on the link in the sentence, “If you wish to opt out of all Datalogix-enabled advertising & analytic products, click here.”

Fill out the form to opt out of the program, which should prevent Datalogix from including your information in the hashed data they provide to Facebook.

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