Lessons From the Facebook Fiasco

The funniest and the most ironic part of this Facebook fiasco is that target marketing based on data actually worked. If it didn’t, no one would care about some data geeks hoarding data somewhere in the cloud. And any reader of a magazine called “Target Marketing” shouldn’t be surprised by any of this.

Social Media Can't Be Your Only VoC Strategy

The funniest and the most ironic part of this Facebook fiasco is that target marketing based on data actually worked. If it didn’t, no one would care about some data geeks hoarding data somewhere in the cloud. And any reader of a magazine called “Target Marketing” shouldn’t be surprised by any of this.

Why should it be surprising that, with all of those behavioral and demographic data that Facebook collected, some analytics company could actually figure out who is more likely to vote for Trump? A mediocre-level analyst can do that with data far less immediate and complete than what were used in actuality.

In fact, the whole basis of the Facebook business model is that:

  • It is the largest billboard in the world; and
  • It can effectively deliver customized messages to each individual.

Facebook has been doing this kind of targeting with or without any third-party analytics vendor such as Cambridge Analytica. The fact that Facebook is expert in grabbing people’s attention (or their eyeballs) for elongated time makes it ever more powerful and effective than third parties; hence, all of the hoopla in the media.

The scarier part (to me, at least) is that a senator actually had to ask Mr. Zuckerberg about his company’s business model, to which he simply answered it shows targeted ads to its users. Seriously, how these fine gentlemen on Capital Hill will regulate any information business is beyond me. Maybe these senators should delegate that work to their grandchildren.

Because I — like readers of this fine publication — do target marketing for living, I wouldn’t blame Facebook for doing things that I would have done myself. And yet, this recent revelation of Facebook’s business with Cambridge Analytica doesn’t sit right with even the most avid practitioners of target marketing. It is not just the fact that it actually affected the presidential election, which is a personal matter for many. Even without any political ramification — which certainly is acting as a magnifying glass in this instance — something certainly went wrong here. Basically, sensitive data were mishandled, and there is no sign of data governance when it comes to sharing data with third-party companies. Considering the influential power of Facebook, no wonder everyone is talking about it as a scandal.

But here, let’s dig into this from a data player’s point of view.

PII – Handle With Care

Facebook is sitting on an amazing amount of personal data, as the users voluntarily share them. Just the profile page alone is a goldmine. Added to that, Facebook has data regarding what the users clicked, liked, shared, reviewed and bought. We are talking about all three major elements of data in target marketing — demographic, behavioral and attitudinal data (refer to “Big Data Must Get Smaller”) all in one place, with an amazing depth in each area. In the business of analytics, that is like having some kind of superpower.

In the early days of Facebook, I voluntarily shared the details of personal information, just to see how good the targeting would be. For the record, to this date, I’m not totally blown away by its targeting accuracy.

Sure, I put down my hobby as guitar playing, and Facebook would show me more guitar stuff. Anyone should be able to do that with such explicit data. But when I go to my Facebook wall, it still feels like I’m looking at a billboard, not a series of targeted messages. Especially the sponsored ads on the right side of the screen. Facebook has been showing me some SUVs (I’m not an SUV guy) and men’s apparel commercials (sure, I’m a man) for days. Meh. That looks like Facebook is just selling regular banner ads, targeted with some rudimentary selection logic using basic data.

Even during the last election cycle, with all of those hyper-political memes and reactions to them floating around, I’ve seen some “totally off the mark” political ads on my wall. What a shame, with all of that rich data in its hands.

So this Cambridge Analytica comes along, and promises the kinds of things that Facebook is supposed to be able to do with all its data for a bunch of politicians. And some bit the bait and paid a good amount of money for the vendor’s services.

Now, this third-party company got to have access to the Facebook user data or a pathway to collect more data on Facebook users. For that matter, any app that runs on Facebook — such as innocuous-looking personality tests — is specifically designed to harvest data. We all do it because it is fun to play, and the cost seems low. Not to offend anyone, all the apps normally require is signing on using Facebook ID. But that is all they really need.

Things get a little tricky there, though; so, who owns the data? The user, Facebook or the third-party vendor? It really depends on that user agreement that 99.99% of users didn’t bother to read. If I must provide an answer as a professional data player, I’d say “all three,” because data collection and refinement warrants some value. Saying a user has the sole ownership of data is like saying that a rice farmer has a right to every piece of sushi sold in restaurants indefinitely.

People who do target marketing for living, in this case or in general, are less scared of such data sharing. What would be the worst thing that could happen? That I get to see an ad of a political candidate who I can’t stand on my Facebook wall? That is, however, if the data are used for general targeting purposes only. Data breaches are indeed scary, because pretty much everything that you put in and you did are linked to your personally identifiable information (PII).

We know that no reputable data player would look up one person at a time by name and see what she is up to. In this case, the operative word is “reputable.” Even the folks who gave permission to Facebook to collect and use data wouldn’t agree that that third-party vendor was indeed reputable. Figuring that out is assumed to be the duty of Facebook, and it is sad that even it didn’t seem to know.

Facebook did not have a good handle on “who gets to use what data.” That is the most unsettling part for people who deal with data for living. Facebook is not exactly dealing with credit card or medical data there, but the sheer volume of data makes the matter as serious. Would it be harsh if I say that Facebook, in pursuit of increasing its revenue and shareholder value, just went for things that it shouldn’t have gone for? Where is the governance? All this mess, for what? Some “semi-accurate” targeting? (I’d love to see some reports on the backend.)

Data-Mining Friends, Too?

It is one thing that Facebook or its partners used data that I shared on Facebook in the form of profile and interests. It is quite another if some shady vendor downloaded the entire list of my friends and call it “its” data source.

That is just a sleazy practice. I’m pretty sure that I did not give permission to share the entire list of my friends with a company that conducts some goofy political spectrum test. No one would put that in an agreement in case just “1” person reads it. Because they themselves would know that that is a sleazy thing to do.

Data players must follow a very simple rule; if you don’t want someone to do certain things with your data, don’t do it yourself (refer to “Don’t Do It Just Because You Can”).

Don’t Be a Data Hoarder

In the business of targeting (or analytics for such targeting), more data don’t always guarantee accuracy. There are all kinds of data out there, and not all data are useful or effective in prediction (refer to “Not All Databases Are Created Equal”). That is why I have been writing repeatedly that one must set the project goal first, not just before some elaborate analytical exercise, but even before data collection.

Mindless hoarding often gets the collector in trouble like we are seeing here. Sometimes “more” data increase only trouble, not the targeting accuracy. Yes, the databases must be broad, accurate, recent and consistent to be useful. But too many data players became too greedy, and there are consequences of being greedy.

Maybe the notion of Big Data gave a wrong impression that big is always good. There are costs involved in dealing with really large data, and another lesson that we must learn here is that a collector can make people mad if “they” think that he is going after too much data.

If the goal is to obtain a “reasonable” level of accuracy in targeting, no, you don’t have to have every piece of data about the target. No analyst likes missing values, but there will be no complete database now or in the future, anyway. A job of analysts is to make the most of what they get, not asking for the entire universe. So, always consider the cost of hoarding too much information, including the social cost.

If all Cambridge Analytica wanted was to predict who was more likely to vote for Trump last year, there were many safer and simpler ways to go about doing that.

Facebook Is Too Powerful?

The ironic part of it all is that Facebook, thanks to its vast coverage, doesn’t require pinpoint targeting precision, anyway. It’s not like it’s going to spend over $1 per piece in direct mailing. Targeted messages are cheap on that platform, and the risk of being wrong is not that high (relatively speaking).

And it seems like Facebook knows it, too. Based on numerous articles that I read about this incident, its analytics is more about maintaining a captive audience by creating a very addictive platform. If the number of eyeballs and time spent on the page are what they are really pursuing, they seem to be doing a fine job there.

If the goal is about increasing targeting accuracy — while not pissing off a great number of people — then it is obvious that Facebook must tighten up its grip on data governance. Like most other data players like us have been doing all along.

Facebook will remain as a powerful force in the market. With or without precision targeting, it’s the biggest billboard in the world. Let’s just say that I didn’t sell off Facebook stocks because of all of this. But if Facebook really wants to benefit human collectives like it used to say in the beginning, lots of significant changes are warranted. And I think that subject is for other forums, not here.

Author: Stephen H. Yu

Stephen H. Yu is a world-class database marketer. He has a proven track record in comprehensive strategic planning and tactical execution, effectively bridging the gap between the marketing and technology world with a balanced view obtained from more than 30 years of experience in best practices of database marketing. Currently, Yu is president and chief consultant at Willow Data Strategy. Previously, he was the head of analytics and insights at eClerx, and VP, Data Strategy & Analytics at Infogroup. Prior to that, Yu was the founding CTO of I-Behavior Inc., which pioneered the use of SKU-level behavioral data. “As a long-time data player with plenty of battle experiences, I would like to share my thoughts and knowledge that I obtained from being a bridge person between the marketing world and the technology world. In the end, data and analytics are just tools for decision-makers; let’s think about what we should be (or shouldn’t be) doing with them first. And the tools must be wielded properly to meet the goals, so let me share some useful tricks in database design, data refinement process and analytics.” Reach him at stephen.yu@willowdatastrategy.com.

10 thoughts on “Lessons From the Facebook Fiasco”

  1. A basic principle of data privacy policy should be that the data belongs to the user, not the firm. This is the basis of PIPEDA in Canada and the GDPR in the EU. This means that true informed consent must be give n. i.e. Opt-in, right up front at more places in the data use chain….not buried in 50 pages of terms of use legalese. Also the abity to control the use of the data must be made available at the time it is requested — every time — not buried in 15 pages of settings designed around dark UX theory with the goal of tricking people into taking actions they would never normally take (such as allowing linkedin to suck your entire contact list into its spam machine).

    The EU is on the right track. Soon this sort of regulation will spread and the mighty will be humbled.

  2. Customers, perhaps without even thinking about it much, trusted facebook and facebook let them down. We can debate the particulars, but that is what happened. Now the rest of us look bad, or we’re having our intentions questioned. Maybe it’s time to level with people so we can go on about our business and sell stuff and make money. I’ve yet to see any industry “self-regulate” itself to everyone’s satisfaction, have you?

  3. Writing in this space not long ago I simplified (perhaps over-simplified) the central issue of what has become the ‘Facebook fiasco’ which I take the liberty of repeating here:

    “If you don’t want Netflix to stream movies to you when you want them (and even to suggest others you may like based on those you have seen) nothing obligates you to subscribe. If you don’t want to have your groceries or that 50 pound package of dog food delivered, no problem.

    “The choice belongs to each one of us.

    “The price for the convenience of the digital benefits, is that you will always be giving up data about yourself. Some database out there will know you have a dog, the kinds of groceries you like (and can guess with accuracy the size of the family), how many and which types of films you choose and on and on and on. And there is no way you can ever get it back.”

    Let’s get real. The problem is not going to be solved by legislation or industry codes. It will only be solved by consumers making a choice and deciding whether or not to pay the price of having his/her data out there for the benefits of convenience or whatever.

  4. Agree that it should be no surprise that a presidential campaign looks to an analytics agency to help guide ad buys whether social media, television, print, or just which neighborhood to door knock. Every campaign did it I’m sure… this is what target marketing is. Is Facebook the bully in the playground? “My bat, my ball, my rules!” Yes. Should government jump in to regulate? That can cut both ways.

    1. Yes, any presidential campaign that does not use analytics to guide media buys is the most likely to lose the campaign.

  5. Thank you for your comments. In many ways, I agree with all of these comments.
    (1) Data ultimately belongs for the user . Yes, the user should be able to opt-out anytime. The user must have the final say in that matter. But I think if the data have gone through significant refinement process (e.g., a model score such as “Likely to vote for Trump”, not explicit data with names attached), I think the folks who put in effort should have some share there. Data refinement and analytics is an industry in itself, and no one would work so hard without any monetary benefit.
    (2) As Mr. Rosenwald correctly pointed out, yes, it is a barter system. We enjoy platforms like Facebook or LinkedIn for free. Now, if they abuse the data (as in this case), the price jumps up. Younger folks are already leaving Facebook, as they think that the price – their data essentially – is too high. But will the market function without government intervention? I really hope so.
    (3) As Ms. Barker pointed out, I also believe that such government intervention can cut both ways. Look what happened to the “do-not-call” list. Politicians exempt themselves! And it is clear that senators are clueless in this matter… Over regulation may kill lots of economic opportunities as well. And we will definitely see more random (i.e., non-targeted) messages everywhere, and that could be annoying as hell too.
    (4) Will self-regulation work then? Clearly, it didn’t work for Facebook. But I hope that this incident will work as a wake up call for many in the data industry. That is, until someone forgets the rules and guidelines again. Remember Double-Click-Abacus data merge scandal in 2000? Let’s just say that opt-in rules got so much looser since those days. I guess it is time for all of us to tighten up the grip again, and this is the year 1 again.

    1. Well said – data is the price of admission in some cases

      And thanks for the walk down memory lane with the DoubleClick-Abacus merger… they were just too far ahead of their time, because look at the world now………….

  6. Hey Stephen, I admire you standing out above the rest and speak some truth about issues. When I started reading your articles I could finally say, Yes, someone else gets it. So thanks for adding transparency to the dialogue. On that note, I have a question. This is a little dated, but I have never been able to get anyone to talk about this. When Facebook went public, they were touting their numbers like badges on a shield showing their victories in war. They proclaimed they had 800 million to 1 billion members, and THAT is what drove the price up for investors. Their volume of viewers was unlike anything ever seen and thus merited your stock purchase.

    But why didn’t anyone tell them the truth? Facebook members have more than one account. Many have 2 to 4 accounts. Its the same person, with multiple profiles. So when they say they have 800 million unique members, its actually around 200 million unique members with a total of 800 million profiles. Granted, 200 million is still a lot of viewers and participants in any website, but it is hardly the 800 mil to 1 bil that they were getting everyone excited about.

    The media of course, like CNN and the major news outlets ran with the story without verifying any of it, like they normally do, and basically advertised this false narrative that Facebook had 800 million members. I couldn’t believe it.

    When I asked different online “experts” about this, they all suddenly shut up and dropped my conversation. It’s as if the Facebook IPO was built on a lot of hype and everyone just wanted to make money on this IPO. All these expert commentators online were in on it. They didn’t want to tell the truth. They were all in for self-gain.

    Am I wrong here?

    1. No, you’re not wrong! In any case, everybody lies and exaggerates. And we all know that market is a very emotional place, and perception governs the price more than facts. Bothersome reality for data geeks.

      Why does Facebook brag out the sheers size? Because higher number would “sound” more impressive. And that tells us that they are indeed the largest billboard in the world, not necessarily a 1:1 marketer. Again, bothersome truth about them, as they can be so much more effective if they borrow some “basic” elements of target marketing.

      Or, even if they know about the true nature of 1:1 marketing, why would they put themselves in a position where they have to explain that to the mass? Most of people do not care about all this data stuff, unless there is a scandal or data breach. Now, if the goal is to drive the shareholder value, well, they would be better off not talking about any geeky details, and just stick to a very large number (i.e., number of subscribers without du-dupping).

  7. I’m an old foggy, doing marketing and sales since the early Seventies. Back then any of us in the business would have willingly paid for information as specific as we could find.

    The way it was, unless we were able to pay for primary research; i.e., studies, polls, surveys; then we had to rely entirely on secondary research. I found the most helpful sources for this were Trade and Consumer publications. One could buy their subscription lists tailored to specific demographics along with any pertinent date about groups most typically shown (anonymously of course) broken down by quintile distribution — 20% categories.

    Now in the age of FaceBook and such social networking platforms we can buy the same kinds of data as before, but most likely with much more accurate definitions and for survey-kind of information, much larger cells to cross tabulate.

    Like it or not, anytime you’re participating in a social or media environment, you have to assume your actions become part of its database. There is nothing inherently wrong or evil in this. You are just a piece of data. But if you think it’s intrusive and all the other pseudonyms for privacy, then you must remain isolated from such interactive platforms.

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