…and what to do about it!
You’ve probably heard Facebook mentioned in the news lately. “People’s data was taken…” “Breach of data…” “Your user information…” Yes, it’s true. Many users’ information was taken and used for political advertising in these past elections. And truly, that’s the main reason why this breach has become such a big deal – because of the political implications.
Remember at the end of 2017 when Equifax exposed 143 million American consumers’ sensitive personal information? Well, that was worse because the information stolen was social security numbers, along with our credit information and much more! Instead, Facebook’s breach included people’s political affiliation and data that would tell the advertiser how likely people were to be swayed one way or another.
Why did this happen?
The reason why Facebook is such a compelling advertising platform is the exact reason why people wanted its user data. Facebook managed to get “partner data” from 3rd parties (such as Acxiom, Equifax, and others) a few years back and pair it with its user data. By layering that data on top of Facebook’s data, advertisers were able to target segments of people that had never been within reach of the smaller advertisers.
We know that large advertisers will buy large sets of consumer data – that’s how we get those annoying telemarketing calls. We don’t agree to that! Yet advertisers buy these lists and start relentlessly calling.
Well, with Facebook, advertisers were able to layer data like “average household income” and things like “having birthday” and offering that as a target to an advertiser for free!
Sure, you have to pay in order to run ads, but if you’ve ever tried to buy a “list of names” from a marketing company before, you know you’ll pay around $1 dollar per contact – and that does not include anything other than their address and zip code for the most part. If you pay more, then you’ll get a phone number, maybe an email.
So, you’ll buy 5,000 names in “your zip code” and pay some significant amount of money and then pay some more to send the ad out via snail mail…. And you get 1 or 2 calls out of it. And if you’ve purchased this kind of a list before, you know the list is not 100% clean, people move, change phone numbers, etc. But with Facebook, people update their information willingly and timely. With Facebook, you can reach people within 1 mile of your business… for pennies.
Could it be that’s why traditional media is jumping over this news story?
Consider this, many large TV advertisers (for example LendingTree, Chevrolet, Petco) took part of their marketing budget and moved it from TV to Facebook.
Because people are not watching that much TV anymore! So, the TV people are mad. Print media is pretty upset too!
Why would a small business send 10,000 postcards for $6,500 only to have no idea if it had a revenue impact on their business – media buyers can’t tell you anything other than “it got sent”! But with Facebook, you can spend $350 and reach far, far, more people! So Yes! Traditional media people are affected and perhaps are making a greater story out of this breach.
How about that Equifax breach? Well… who cares about that! …Perhaps we would if our information was stolen and someone took a car loan out on our name!
Ok, so now what?
Facebook is making some changes to the ad platform as a result of this data breach.
Facebook will limit or stop altogether, advertisers’ access to 3rd party information. What is this 3rd party information? Things like income, active credit card user, consumer electronics high spenders, vacation travelers and more. Acxiom was one partner (data provider that Facebook parted ways with) – you can read more about how they gather data on their website.
Now, Facebook has two basic types of user data:
Data that we, the users, give Facebook voluntarily and data they get from their partners (now ex-partners – also called 3rd party data). Things that we voluntarily disclose to Facebook are things like our birthday, gender, age. We also disclose to them, if we choose to, other things like who are our family members (married to, related to, etc).
We also share information about the things we like and we’re interested in. For example, if you like funny kid videos, then when you click “Like” on a video or when you share it, you’ve expressed that interest. Facebook then collects all this data and uses it in a “macro” way. So as an advertiser, you cannot show an ad to Mary Jones specifically, but you CAN show an ad to mothers, of young children who live 2 miles from your Daycare Center.
Now, if you’ve ever advertised on Facebook you’ve seen the seemingly endless segmentation options. As an agency, often we’ll get asked by our clients to choose multiple segmentation variables – for example, they’ll want to show their ad to a married couple in their early twenties, who went to college and who have income of $50,000 per year and who rent, AND who are in the market to buy a house in ___ city.
Seems brilliant doesn’t it?
Well, unless you are advertising statewide or nationwide and have a very large budget, you’ll not be able to find enough people meeting these criteria to create any meaningful results for your business.
From our experience, these changes that Facebook is making to the ad platform through 2018 will affect mostly the larger advertisers who were able to profit from this very tight and specific segmentations.
The impact to a small business versus a large one
We work with many companies of all sizes. We’ve worked with small business owners who spend $300 per month on ads on Facebook and we’ve worked with large clients that spend tens of thousands globally, so we can confidently say that if you’re an advertiser spending in your local market (a city or some miles around your business) you will not be significantly affected by these changes.
You will not be affected because if you advertise locally, then your most effective campaigns will target people with a close proximity to your business, maybe gender, perhaps age.
If you’re advertising a nail salon, for example, your best performing campaign will target women living within 2 miles of your business that are between 18 and 65 years of age. Then, as you set the campaign objectives from the options that Facebook sets forth, you’ll let its algorithm look for those people who are more likely to fulfill your objective (view page, fill out a form, visit a site, call, etc). This will be true for any local business.
Stay with me here…
if you’re a large advertiser that advertises nationwide with a large budget, say $100,000 per month or more, then more than likely you’re using much more segmentation and you might be a bit more nervous about some of the segmentation options going away. Well, the truth is that macro data and algorithms are still much better than humans at figuring out who is more likely to act. So even as a large advertiser, you might be even better off by having Facebook restrict your biases and letting their algorithm work based on your campaign objective.
Human biases in advertising versus the machine
Did I say biases?
We’re biased in nature.
Let me give you a real example of how Facebook’s algorithm was able to discover a more profitable market segment for one of our clients.
A client in the beauty industry (retail) came to us to handle their digital marketing, and we asked them a common question:
Who is your target customer?
“young women between 20 and 30 who want to look beautiful”.
Now, we started a campaign on Facebook with a more broad segment: targeting women between 20 and 65 and with an interest in all things “beauty.” We reviewed the results after we had gathered enough data.
The results were shocking to the client…
Their most profitable segment, in fact, were women in their late 40s and older, who wanted to look “younger.” – NOT the 20-year-old’s our clients thought were their core target market!
The great thing about this older segment was that they have more disposable income, so our client was able to develop an offering that was at a higher price for this segment. This discovery would not have been possible without the data and algorithms from Facebook and without removing the natural bias from the client.
There are, however, significant lessons to learn from this Facebook debacle.
Savvy marketers have known these lessons for a while – especially us in digital media.
“You should NOT build your house on rented land.”
We’ve been telling our clients this for a long time.
A few years ago there was this frenzy about gathering “likes” on your Facebook business page.
We would ask clients, rhetorically, if Facebook changes their terms and conditions and takes your “likes” away, what are you going to do then?
After thinking twice, some clients would change their minds and would let us focus on true customer acquisition.
Yet, this is not a Facebook-specific behavior. We have clients that put all their eggs in the Adwords basket. We have a plumber client whose business took a huge hit when Google launched their Home Services platform and the Adwords campaign he had been running for years stopped delivering leads at the rate he was used to.
We’ve had clients that came to us after doing SEO for several years with a one-trick-pony agency (using one particular SEO tactic), and as soon as Google changed their algorithms, their site disappeared from Google’s index.
These “quick” techniques of acquiring fans, followers, rankings, positions, do not work.
Email, email, email
So, what then?
We have always advised clients that there are two things that are Your Assets to use and monetize:
- Unique content published on your website
As a business, the only real asset that connects you to your customers and potential customers is your email list. Always be collecting emails. Always. Even if you don’t send emails out, having an email list is valuable to the point that some small businesses are sold based on how extensive their email list is!
Which bring us to the question:
How do you build an email list if you don’t have one?
Ask your customer for their email!
You can ask upon checkout if you sell something, you can ask people to sign up to receive coupons and other information via email, you can do special promotions or contests and ask people then. Be creative but always be thinking about how you can get emails from your foot traffic if you’re a brick-and-mortar business.
Sure, ask people that visit your website to give you their email. Now, this is more tricky. Getting traffic to your website requires some SEO effort and here’s where the content comes in. Once you get the web traffic, however, you still have to figure out how to get people’s email!
You have to have a good reason for people to give you their email online. The most common tactic is to offer a valuable piece of information in return for their email – a bribe if you will. We have probably asked you for your email right here as you’ve read this post!
What if I don’t have any organic web traffic?
If you don’t have organic traffic to your website, then you can start advertising to acquire cold traffic. Here comes Facebook again. Facebook is the most inexpensive way to acquire web traffic. But just because you run an ad, it does not mean you’ll get thousands of people on your list, like magic. It will take work. So, if you’ve never done this, then start small – with a small budget around your place of business. Offer something of benefit that people want to exchange their email for. Use tools like “Leadpages”, or “Optin monster” and install on your site. Install the Facebook pixel (read more about the Facebook pixel here).
Lookalike audiences with Email as your seed list
A lookalike audience is a fantastic targeting option from Facebook, that will not be subject to changes in 2018, at least as far as we know. Lookalike audience is a segment of people that look just like your customer email list (or current website visitors).
Like we’ve mentioned before, algorithms are capable of finding similarities amongst vast amounts of data where humans are not. In other words, if you have the Facebook pixel installed on your website you’ll be able to then target other people highly similar to your current client list, or to people that have filled your forms or visited a particular page on your site.
Facebook is not going away
To conclude, we believe Facebook is not going anywhere.
The value Facebook provides to its users is truly impressive.
Think about the benefits Facebook has provided to you or someone you know.
Here’s my case:
Through Facebook, I’ve been able to reconnect my friendship with a high school friend that now lives in Germany, I’m seeing his family grow, we share recipes, and we chat about the challenges of parenting. I connected with my childhood friend who lives in a small town in Mexico. She recently opened a health and nutrition store and I’ve been helping her with her marketing questions. Facebook allows my kids’ grandparents to see them grow, even if only virtually, and watch when they compete in sports, when they get an award in school or when they are goofing around in the park. Through Facebook, we discover new places to eat, because our friends have visited, or we’ve become aware of events in our area that we would not see otherwise.
Facebook does provide great value, and thus, these advertising foes will subside, and Facebook will continue to deliver the most efficient advertising for small and large businesses alike.
Having said that, as a business owner or manager, keep focusing on delivering good service, good products, and good value to your customer base, gather your own customer information as much as you can – as this is truly the only customer asset you’ll own for advertising purposes regardless of the media of choice.