Can Facebook Possibly Build a Business Model That Isn't Inherently Creepy?

More

That question is meant 100% seriously. The issue isn't that I find Facebook creepy. I don't, really. But today's story about the company tracking drug store purchases to display more relevant ads to users is a good example of the tension between social media and social mores.

For now, Facebook uses aggregated information about the lives of its hundreds of millions of users to place relevant ads next to pictures and stories from our friends. That's how it makes money. Our information is currency. More information makes better ads with better click-throughs at better rates for Facebook.

But the road to more information runs straight into user fears of creepiness. Today, to get advertisers more information, Facebook announced that it is partnering with Datalogix, a company that can tell whether a social network ad-click leads to a purchase. Datalogix has done similar work with CVS's ExtraCare card program. As The Atlantic Wire reported in an article entitled "Facebook Now Knows What You're Buying at Drug Stores":

Facebook will be using Datalogix to prepare reports for its advertisers about who, if anyone, bought more of their stuff after they ran ads on the social network. But by matching your Facebook profile with your CVS bill, this means that Facebook has the potential to know some of your most intimate details (my, that's a lot of bunion cream you're buying!), and the privacy concerns are enormous. When DoubleClick attempted something similar to this, user-backlash ultimately led them to cancel the project.

Consumer advocacy groups are pushing back. "We don't believe any of this online-offline data should be used without express consumer approval and an opt-in," Jeff Chester, executive director of the Center for Digital Democracy told the Financial Times.

Facebook's relationship with Datalogix is unlikely to make or break the company's next few quarters. But Facebook's financial future depends on its ability to glean information from its customers to serve more relevant and more lucrative advertising, and if the only way there is through companies and processes that writers, users, and consumer advocates characterize as "creepy" that poses a huge challenge to a company that has always put a premium on being cool.

Update: Here's Nicholas Carlson from Business Insider on Facebook's newish ad strategy, called "re-targeting":

How re-targeting works: You visit Warby Parker, the online glasses seller. You look at a pair of glasses you might like to buy. You decide not to buy them right then. You leave the Warby Parker website. Later, on other Websites, you  see ads with the pair of glasses you liked.  

You see those ads because when you visited warbyparker.com, your browser downloaded a tiny piece of software, called a "cookie," that told the ad servers on sites using re-targeting that you had previously gone to warbyparker and looked at a certain pair of glasses.

Sounds smart. And hopefully lucrative. I don't mind being followed around on the Internet by an advertising bot that keeps reminding me that I checked out lime green capris on Gap last week. But I don't know how other people feel about being regularly reminded about their past clicks.

Jump to comments

Derek Thompson is a senior editor at The Atlantic, where he oversees business coverage for TheAtlantic.com. More

Thompson has written for Slate, BusinessWeek, and the Daily Beast. He has also appeared as a guest on radio and television networks, including NPR, the BBC, CNBC, and MSNBC.

Get Today's Top Stories in Your Inbox (preview)


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Miami: The Next Big Start-Up City?

How the city became a center for innovation

Video

Video

A Brief History of Romantic Comedies

From The Atlantic's Chris Orr

Video

Life in 'the New Arctic'

A moving portrait of a fading landscape

Video

Video

The Rise of New York City

A fascinating look at Manhattan in the 1940s

Video

What Is Methane Hydrate?

"Flaming ice" is a vast natural energy source

Video

NASA's Time-Lapse of the Sun

Now with epic dubstep music

Video

Shaken Not Tuned: Cocktail Experiments

Can a tuning fork improve a cocktail?

Video

Video

Is He Cheating? A 1950s Guide

'That little blonde secretary from the office?’

Video

New Yorkers: Vintage Vacuum-Tube Amps

Risking electric shock to restore old amplifiers

Video

The DIY Piano-Bicycle

Everybody needs a hobby

Video

What Does It Take to Make Real Craft Gin?

Tour the Green Hat Gin distillery

Video

Letter From the Editor

The June 2013 issue

Video

What Straights Can Learn From Same-Sex Couples

New insight from decades of research

Video

The End of the Mall Rat

A tribute to that pillar of teen culture

Writers

Up
Down

More in Business

In Focus

Picking up the Pieces After the Tornado in Moore, Oklahoma

Just In