Facebook said it will shut down its Partner Categories program, which was launched in 2013 and helps advertisers target ads based on third-party data, according to multiple reports, including a press release from Acxiom, one of the participating data brokers.
The program will wind down over the next few months, impacting partners like Epsilon, Oracle and WPP, in addition to Acxiom. The news is latest in a series of steps Facebook has taken to address concerns over data privacy in the wake of the Cambridge Analytica scandal.
Acxiom, in a press release, said the change in its relationship with Facebook is expected to negatively impact total revenue and profitability in 2019 by as much as $25 million. The company’s stock value was down 25% in trading Thursday morning.
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For many marketers, the news is likely to leave a hole in digital marketing strategies. Consumers demand personalization, the argument goes, and Facebook’s Partner Categories has been a powerful engine for delivering on this need and one of the social media giant’s key draws for advertisers. For brands looking to drive a bigger return on their investment, the thinking is that by narrowly targeting campaigns, money won’t be wasted on ads that reach consumers uninterested in making a purchase. The news, while significant, is in line with other recent steps by Facebook to address data privacy following the Cambridge Analytica scandal, although the argument could be made that so far the social media giant has been putting the burden on developers, in news announced last week, and now on data brokers. Facebook also said yesterday that it is making its privacy controls more prominent.
Not everyone has been excited about ultra-precise targeting. P&G, back in 2016, notably said it would walk back from overly narrow targeting on Facebook as the strategy contributed to stagnating sales because the marketer wasn’t reaching a broad enough group of consumers.
Some consumers have also complained that personalized ads can feel creepy when it seems like advertisers know too much about someone. Facebook’s targeting, on its own, enables brands to reach users based on self-selected data like gender, age, location and relationship status, according to information on the website for Nanigans, a Facebook marketing partner. With Partner Categories, brands can take targeting up several notches by matching Facebook data with clusters — 1,000 different clusters were offered as of several years ago — created by third-party data providers, such as people in households where insurance was renewed in a certain month or people in households that are heavy purchasers of certain product categories.
The news about Partner Categories could set the stage for a significant upheaval in digital marketing since Facebook commands a large percentage of brands’ digital advertising budgets. The impact could be compounded if other digital platforms follow suit, which isn’t out of the realm of possibility given the heightened attention to data privacy. Google earlier this week said it will support non-targeting ads as a way for publishers to address the upcoming GDPR regulations set to go into effect in Europe on May 25.