Facebook Restricts Data Harvesting and Limits Access to Home Shoppers

Most home builders advertise on Facebook.

Many, in fact, have moved a large percentage of their local marketing spend away from traditional media such as print and radio to the popular social media platform. Some have even left Google’s AdWords behind in favor of Facebook. Home builders have made these strategy shifts for good reasons. First, Facebook enjoys hundreds of millions of users in the two most desirable home builder demographic categories: leading edge Millennials and Gen X. Most builders will sell an overwhelming majority of their homes within these demographic categories and Facebook is loaded with them. Second, Facebook offers some unique targeting tools that were unavailable to advertisers in the past. Not only does Facebook know everything about their users (based on volunteered information and what they do, like and share), they also know about everyone’s friends based on the same criteria. Couple that data with Facebook’s extremely wide-open user data and privacy policy that allowed them to share all your information and that of your friends, and you had advertisers lining up throwing money at the company. Facebook offered highly-targeted, apparently no-waste advertising to home builders at cost per user or cost per acquisition numbers that were substantially less than print, radio or even pay-per-click rates on Google’s AdWords platform. Advertisers like Facebook so much that repeated reports of fraud rates and phantom users claiming that as many as 50% of the clicks from Facebook are from bots (numbers that would destroy other media) don’t even faze advertisers. Advertisers readily took the good with the bad because Facebook seemed to have an almost uncanny ability to put their ads in front of large numbers of the right people. No one really asked how they did it because it seemed to work so well. Advertisers were delighted that a Cost Per Click (“CPC”) on Facebook was often a third of the price of a similar cost using Google’s AdWords platform, and often the cost of an impression (getting your ad in front of a targeted user) could be as much as 10-15 times lower than an impression delivered using more traditional advertising options. Facebook founder Mark Zuckerberg has enjoyed this revenue model all the way to number 11 on the Forbes list of the top 25 wealthiest individuals in the work with a net worth of $34 billion.

This never before available opportunity to obtain and then deliver ads to individuals (read “voters”) was also keenly noticed by sparring political campaigns. Recently, both the Obama and Trump election campaigns took advantage of Facebook’s somewhat open personal data policy to create vast databases of psychographically segmented individuals to whom they could serve ads and information in order to encourage voters to support them. Much of this would probably have gone unnoticed, until Cambridge Analytica, a company used by the Trump campaign to provide micro-targeting data on Facebook users that they obtained through the use of a personality app, came under press scrutiny and was recently named, along with Facebook, in a class-action lawsuit claiming that the two companies violated a person’s right to privacy when their personal data, and the personal data of their friends, was released by Facebook and made available to companies without the individual’s consent. In the case of Cambridge Analytica (Trump), users would see the personality app, answer a question and due to Facebook’s open privacy policy, Cambridge Analytica would not only receive all that user’s personal data (contact info, likes, posts) but they’d also receive identical data on all that particular user’s friends. So, if Cambridge Analytica got a single Facebook user to complete the quiz on their app, they’d also acquire information on all that person’s Facebook friends. It was similar to a firework’s stand “Buy 1 Get 12 Free” sales strategy. For some advertisers, this represented the most bang for the buck in the media world and was a deal that was just too good to pass up. Below is a copy of the actual quiz that Cambridge Analytica used to capture Facebook users. With this innocuous app the personal data of 50 million Facebook users was harvested.


To balance the political see-saw, this approach was not so different from the way the Obama team used similar apps during the re-election campaign of President Obama, but there were some clear differences on the surface. The Obama app was much more political in nature. It asked users to donate, delivered information on voting, asked for volunteers and asked them to spread the word.


My personal sense of fairness feels that the Obama app was certainly more forthright than the Cambridge Analytica (Trump) app, and users knew more about what they were getting into when they engaged with the Obama campaign than they did with the Cambridge Analytica app. In fact, users of the Cambridge Analytica app had no idea they were participating in a political campaign by proxy when they filled out the fun looking app. If Facebook only delivered the personal data of just the person who signed up for the app, then most people probably wouldn’t have much trouble with either the Obama or Trump approach. However, due to the Facebook policy allowing wholesale data harvesting by releasing a person’s friends’ data, both apps were designed specifically to get all the data on each user’s friends. Since the average Facebook user has around 338 friends, a campaign doesn’t need to get many actual sign-ups to get the data of millions of Facebook users. There is far more value in a users’ Facebook friends than there is in the actual user, and the goal of both the Cambridge Analytica (Trump) app and the Obama campaign app was to get access to the user’s friends. To compound the deception, neither app explained to the user that all their friends’ data would be accessed. That information was buried deep in the Facebook Terms and Conditions policy that, until recently, no one was reading.

Politics being what they are, especially in today’s hostile and divided governmental and social environments, Mr. Zuckerberg was asked before Congress to answer questions about the seemingly unregulated way that Facebook was selling user’s access and data to advertisers without the user’s consent. Other than the staggering revelation about the nearly total lack of knowledge about social media, networking, and advertising by our elected officials, one good thing may have come out the committee: new regulations about the manner in which Facebook can deliver user’s data or allow access to these users to advertisers. One of the problems is that they’re apparently allowing Facebook to determine that policy rather than coming up with the regulations and protections themselves and making Facebook comply. It’s a little like putting the fox in charge of the henhouse. Europe seems to be well ahead of the United States on this topic, and the European Union has enacted the General Data Protection Regulation (GDPR) that went into effect on May 25th. It looks to be providing the boilerplate for the US policy.

Since Mr. Zuckerberg appeared before Congress, Facebook has launched an exhaustive ad campaign across all media letting people know that they’ll be taking better care of user’s data. We’ve all probably received an email from Facebook about their updated user policy. Other companies are following suit, so those of us who are members or have signed up for websites have by now probably received updated user policies from all of them. Facebook’s new user policy will now allow users to determine how their personal data will be handled and what kind of access to people or personal data Facebook will allow advertisers to have. With Facebook’s new privacy tools, users can determine how much access advertisers will have to them and their friends. The social media marketing landscape has clearly changed.

These new changes could affect home builders in a couple of interesting ways. First, builders who only focus their advertising to address leading-edge millennials may not experience much negative impact on their marketing strategy and conversion numbers. Many of these individuals grew up in a fantastically “open data/lack of privacy” environment and are not bothered as deeply by issues of privacy or being constantly targeted and retargeted by ads while they’re on Facebook. While some millennials may modify their privacy settings, many probably won’t. In my opinion, Gen Xers will be the market segment that uses these new Facebook privacy settings the most. Many people over 40 value privacy and many have fought to keep some degree of it in their lives. This critical market segment is the bread and butter of many home builders and is the group delivering the largest percentage of many builder’s sales. My expectation is that many Gen Xers will take advantage of the new Facebook privacy tools and limit the access advertisers have the to them, their family and their friends. This may reduce the number of these people that home builders can access through Facebook, and if the supply of possible eyeballs is reduced while demand for these shoppers remains high, then the cost per click will correspondingly increase, costing builders more money to access the same number of shoppers. Finally, there is the question of fraud as a percentage of the Facebook audience: it may actually increase. If we accept that there is already a question of fraud with Facebook clicks, it stands to reason that these “bot networks” won’t modify their Facebook settings to actually restrict advertiser’s access to them, so we can assume that that bot traffic will comprise a larger percentage of Facebook click activity once these privacy restrictions are introduced.

All this puts Facebook in an interesting position. On the one hand, severely limiting the number of clicks they generate through these new privacy policies could reduce their revenue by having millions of individuals restrict how their personal data is used which will create fewer ad placement opportunities and therefore fewer clicks. On the other hand, being seen as an advertising environment that generates money by fostering click fraud could be equally damaging. For home builders, the challenge is a little less complex. In many product categories (personal hygiene products, snacks or drinks for instance), the overall target audience for these products is vast and advertisers may not feel the pinch of new privacy policies, but buying a home is much different from buying an energy drink or a new shampoo. The audience for home shoppers is small and highly desirable and competition for these people is aggressive and expensive. Reducing an already limited audience such as new home shoppers, with stricter, more protective policies, has the potential to drive up the price-per-click for these people. Builders will continue to aggressively bid against each other for these valuable clicks. In many cases, a builder’s ads may now only be placed in front of people who exhibit a specific type of behavior- not their friends. My assumption is that impressions in some home shopper categories will decline and the cost per click will increase with an overall possible increase in the percentage of fraudulent “bots” that are seeing and clicking on your ad…and builders will pay for every click. This should begin to bring the cost of using Facebook more in line with other media. Facebook may be fulfilling the old prophecy, “If it looks too good to be true, it probably is.” Other social media sites such as Twitter and Instagram will surely follow suit, and other platforms that can access a user’s personal data, such as Pandora, will also come in line with the new privacy policies. All these new developments will start to restrict the available audience for home builder ads and force home builders to keep their eyes peeled and necks strained looking for the “next thing” in advertising. We seen regulation come to all forms of advertising and this latest injection of limitations into Facebook is no different from some of the regulations we’ve seen imposed on other areas of the internet.

As these regulations take effect, we’ll be keeping a close eye on how they will limit or expand our reach, impact and our cost per click. I know most home builders will be doing the same.


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