In the past, a user's Facebook advertising would eventually be impacted by what's on her wall and in her stream, but this was a gradual shift based on out-of-band analysis and categorization.
Now, at least for participants in this test, it will become crystal clear that Facebook is looking at and listening to your activities; making assumptions about who you are and what you want; and using those assumptions to change how you are treated.
This month — and for the first time — Facebook started to mine real-time conversations to target ads. The delivery model is being tested by only 1% of Facebook users worldwide. On Facebook, that's a focus group 6 million people strong.
The closest Facebook has come to real-time advertising has been with its most recent ad offering, known as sponsored stories, which repost users’ brand interactions as an ad on the side bar. But for the 6 million users involved in this test, any utterance will become fodder for real-time targeted ads.
For example: Users who update their status with “Mmm, I could go for some pizza tonight,” could get an ad or a coupon from Domino's, Papa John's or Pizza Hut.
To be clear, Facebook has been delivering targeted ads based on wall posts and status updates for some time, but never on a real-time basis. In general, users’ posts and updates are collected in an aggregate format, adding them to target audiences based on the data collected over time. Keywords are a small part of that equation, but Facebook says sometimes keywords aren't even used. The company said delivering ads based on user conversations is a complex algorithm continuously perfected and changed. The real aim of this test is to figure out if those kinds of ads can be served at split-second speed, as soon as the user makes a statement that is a match for an ad in the system.
With real-time delivery, the mere mention of having a baby, running a marathon, buying a power drill or wearing high-heeled shoes is transformed into an opportunity to serve immediate ads, expanding the target audience exponentially beyond usual targeting methods such as stated preferences through “likes” or user profiles. Facebook didn't have to create new ads for this test and no particular advertiser has been tapped to participate — the inventory remains as is.
A user may not have liked any soccer pages or indicated that soccer is an interest, but by sharing his trip to the pub for the World Cup, that user is now part of the Adidas target audience. The moment between a potential customer expressing a desire and deciding on how to fulfill that desire is an advertiser sweet spot, and the real-time ad model puts advertisers in front of a user at that very delicate, decisive moment.
“The long-held promise of local is to deliver timely, relevant and measurable ads which drive actions such as commerce, so if Facebook is moving in this direction, it's brilliant,” said Reggie Bradford, CEO of Facebook software and marketing company Vitrue. “This is a massive market shift everyone is pivoting toward, led by services such as Groupon. Facebook has the power of the graph of me and my friends placing them in the position to dominate this medium.” [More here]
This test is important and will reveal a lot. If the system is accurate and truly real-time, the way it works will become obvious to people. It will be a simple cause-and-effect experience that leads to a clarity people have not had before around profiling. This will be good.
However, once the analysis algorithms make mistakes in pigeon-holing users – which is inevitable – it is likely that it will alienate at least some part of the test population, raising their consciousness of the serious potential problems with profiling. What will that do to their perception of Facebook?
A Facebook that looks more and more like HAL will not be accepted as “your universal internet identity” – as some of the more pathologically shortsighted dabblers in identity claim is already becoming the case. Like other companies, Facebook has many simultaneous goals, and some of them conflict in fundamental ways. More than anything else, in the long term, it is these conflicts that will limit Facebook's role as an identity provider.