Over the past few years Facebook has grown from a tool for connecting with others to a tool for sharing information with others. This new model is helping Facebook to collect more relevant information about consumers and is slowly changing the advertising world forever. We are in the midst of a shift toward monitoring our digital footprints and Facebook is currently taking the lead in what appears to be a battle for our commercial identities.

The Death Of Cookie Advertising

As the internet emerged, numerous technologies began to sprout up which provided marketers with the ability to group, monitor, and target their existing and potential customer base. While keyword marketing has become the leading model of online advertising many new forms have emerged as targeting systems have become improved. The old model of “cookie advertising” in which consumers were grouped and segmented as they navigated from one site to another is slowly becoming obsolete with the advent of feed technology.

The fundamental theory behind Facebook is that consumers are willing to publish a large percentage of their commercial activities. This includes playing games, reading news, and even making purchases. Essentially it’s a large sampling of all the activities that consumers partake in on a daily basis. Each of these activities can be combined to create the most accurate commercial profile of any individual consumer to date.

Before discussing what will theoretically be provided by Facebook in the future, let me first paint a picture of how ridiculous the existing “cookie advertising” model is. As most marketers understand, users are tracked as they navigate around the web. As they move from site to site, companies like Advertising.com (aka. Platorm-A which is part of AOL) track all the sites a user goes to. As the user moves across sites, a profile is being developed. Here’s one such consumer profile, as described by Platform A:

Jennifer is a 33 year-old, middle income suburban mom. She buys the family groceries and clothing, and she influences auto and tech purchases. She is the primary finance manager for all household funds. She loves her life but doesn’t feel she always has time to be herself.

So how did Platform A determine that Jennifer is a 33 year-old middle income suburban mom? Using statistics, they were able to determine that a user who navigated to AOL Living, MapQuest, and TMZ is most likely a 33 year-old mother. It’s a logical model but unfortunately we don’t have a complete profile of Jennifer. This model also has a large margin of error due to the fact that someone searching for “Vanessa Hudgens Nude Photos” is probably not a 33 year-old mother. In other words, search traffic to most news sites around the web, completely distort traditional online targeting models.

The Ultimate Consumer Monitor

Facebook, in contrast to Platform-A and other similar advertising platforms (DoubleClick, etc), is producing consumer profiles based on actual components of information that the user is willing to share. Not only do you have valuable information about the individual but you can target them specifically. Let’s compare the example model from above with one that Facebook should be able to provide in the near future:

Jessica is a 33 year-old mother who got married two years ago. She plays tennis about once every two weeks (according to her status updates), recently purchased “Sarah’s Key” by Tatiana de Rosnay, and plans on going to Maine next month for a family vacation according to a recent update on the Where I’ve Been application. Jessica also added a cute outfit to her Baby Gap wish list yesterday.

Compare that information with the generalized profile provided by Platform-A. There are subtle differences, but the primary difference is that the information can be attributed to a single individual. This completely changes online advertising and soon enough it will change advertising all together as your offline activities will be published as well. With the initial information being provided by the “information” tab in your profile, how is Facebook going to compile this additional information and provide targeting for additional attributes? The information will come from the users of course!

Why Do We Share?

There is an incentive for individuals to share their commercial activities. When we purchase clothes, we often consider how others will perceive the purchase decision. In addition to clothes, many other purchase decisions make some sort of consideration as to public perception. With that in mind, many consumers are willing to share a lot of their commercial activities. Just bought a book? Let your friends know!

Did you just purchase a ticket to London? Post that information to keep your friends up to date. Read a news story? Share it with your friends! While there are different philosophies on “consumerism”, there’s no doubt that many purchases involve some consideration to status and that many consumers identify strongly with products or services that they consumer. While we each have different levels of desire for status, it’s something that is widespread in Western cultures.

While humans also share information for altruistic purposes, there is often a fair amount of social value that comes from sharing information. While social scientists are a better group to explain why we share, I thought I would go over some of the basic reasons to simply illustrate that there is an incentive to share information with others. All of this sharing ultimately leads to an improved picture of who we are.

I would argue that public perception of us is strongly tied to our consumer behavior which presents a massive opportunity for Facebook. All the information currently being provided by applications can be used to help target ads more effectively. As I described in the theoretical consumer profile above, the Where I’ve Been application was used to determine that Jessica would soon travel to Maine.

Conclusion

Enough about why we share and what consumer profiles are being developed. The main point is that traditional advertising models are outdated as we gain more detailed profiles of individual consumers. It’s clear that the information being distributed is extremely valuable. For example, in my theoretical Facebook targeting example, Jessica posted her upcoming travels on the Where I’ve Been application.

Such information is extremely valuable for businesses in Maine that wish to advertise to Jessica as a potential buyer of their products and services. While Facebook hasn’t publicly launched tools to target based on the information we share through applications, I have no doubt that it will eventually become available. While I could go into detail about how such a system would work, the most basic component is rewarding developers who provide structured information through their applications.

Applications would eventually become part of ad targeting variables and developers would be paid a percentage of all ad spends that leverage their application for targeting purposes. (Read more in an article I wrote in February about leveraging structured data for targeting). While such systems are much further down the road, the race to capture information about our digital identities is on and Facebook is looking to become the center of them.

The race ends in a full assault on traditional advertising (online and offline). Do you think there are enough incentives for users to share valuable information about themselves? Are you willing to share your consumption habits with your friends?