If you are a CTO you won´t get fired for buying IBM. Or at least that´s how it used to be. Today, if you are a head of marketing for a big firm you won´t get fired for buying demographically targeted ads. Especially when they are spiced with some psychographic variables such as self-reported interests. That´s what Facebook are able to offer today, and they got a 12.2 per cent market share in online display ads in 2010 based on it. By 2012 that market share is expected by eMarketer to grow to 19.4 per cent.
Facebook’s distinctive form of display advertising is increasingly attracting advertisers. These are mainly smaller companies, and some of them have a strong direct-response focus.
Facebook sits on a vastly more interesting asset for targeting their ads than the profile data that their users fill in though – the gazillions of status updates that people publish on the network without thinking too much about it. The tricky part here is the privacy concerns of people express in regards to Facebook – can they be trusted with the data we put in there? How much do they know about us and how do they use it? Who else gets to peek?
To go from good to great always involves standardization. That Facebook and media measurement behemoth Nielsen struck an exclusive partnership deal in 2010 and launched an online campaign tracking product this year paves the way for more money in the online ad market. Users will be anonymized in the measurement process, storing only the profile data which will probably avoid a lot of public outcry.
However, my guess is that the words in the status updates will provide the really disruptive value, not too far away in time, and overshadow age data and self-reported interest. The big firms buying ads will probably not be the ones pushing the development towards text analysis based psychographics. Facebook is already doing research on it, so the only thing missing is how to do it without upsetting users.
However, it might not be ads that will be the most lucrative source of income for Facebook. The research mentioned above shows that psychographics based on word usage correlates with number of friends and also what friends take an interest in. That makes the data useful for predicting and optimzing viral spread which would be what viral-thinking, rather than display-thinking campaigners would be willing to pay for. And since it can be fully automated, but still anonymized, like Google´s Gmail ads people might not be that upset after all.
So, betting that psychographic text analysis for displaying ads isn´t very far out. Next step after that would, in my view, probably be selling “viral distribution optimization” based on the psychographics data. And finally, when the psychographic word patterns have been found by applying some serious statistical number crunching machine to all that data – the time might even come when psychographic segmentation based on personality will step in from the cold and be standardized. And jeeez what insight we will have gained into the human psyche as a side-affect of that when and if that happens.