How Does Facebook Know What Ads to Show You? (Example)

The way Facebook determines what ads to show you is based a lot around the information you provide by your online activity. By using things such as your age, location, page likes, app use, and even data from the mobile websites you browse, Facebook profiles you into categories that advertisers can then use to target ads to you on Facebook.  If the ads you see on Facebook sometimes seem frighteningly specific to you, that's because Facebook is constantly keeping track of your activity, determined not only by everything you do on Facebook, but also by your offline activity as well.

With a few key partnerships in place, Facebook also uses what you buy in real life stores to influence and track the ads you see.  Through combined data, they have an idea of what you like, where you shop, and what you buy. It sounds a bit crazy, but do not be alarmed!  This practice is actually much older than many people realize. Facebook combines the information from data collection companies like Epsilon, Datalogix, Acxiom, and BlueKai with information they have about you. Through things like store loyalty cards, mailing lists, public records information, and browser cookies, these companies already collect information about you. For example, if you buy a bunch of frozen pizza at a grocery store, and use your loyalty card to get a discount, that information is cataloged and saved by a company like Acxiom.

Basically it comes down to this:  your online and offline activity combined- determines what kind of ads you'll see. Of course, a lot of complex math and algorithms are in place to actually produce this data, but much of it comes down to how much information you are making public—whether you're aware of it or not—that makes the system work. In theory, it does this to make targeted ads more relevant and specific to you.

Facebook does break their targeting categories out into subcategories including Demographics, Interests and Behaviors.

Demographics are used to reach people based on things such as education, employment, household, financial, income, language and lifestyle.  To take a look at how specific the targeting can get, let’s look at education as an example. Demographics could answer questions such as:

• What’s their education level? (Associate degree, college graduate, Master’s degree, Doctorate degree, high school grad, in grad school, in high school, still in college, professional degree, some college, some grad school, some high school, not specified)
• What was/is their field of study? (Business, Marketing, Finance, etc.)
• What school did they attend? (High schools, colleges, graduate school etc.)
• What years were they in undergrad? (Select a range of years people graduated)

Another great example could be moms. Demographics could target not only are they a mom, but what type? (Big-city moms, fit moms, corporate moms, green moms, moms of pre-school age children, moms of high school kids, new moms, soccer moms, stay-at-home moms, trendy moms, sports moms)

Interests reach specific audiences by their “interests” and this is where things can get really interesting, because you can type in just about any brand, place, or topic and target those users if the audience is large enough.

This category includes: apps they use, posts they share on their timelines, and pages they “Like.”

Not surprising, the Interests section includes the most targeting options. There are tons of categories, with even more subcategories. The category breakdown is as follows:

• Business and Industry
• Entertainment
• Family and Relationships
• Fitness and Wellness
• Food and Drink
• Hobbies and Activities.
• Shopping and Fashion
• Sports and Outdoors
• Technology

Behaviors are used to reach people based on purchase behaviors or intents, device usage and more. Typically this data is acquired by Facebook from third-party data collection companies. Like Interests, there are many, many Behaviors and even more subcategories to target. Some examples of Behavior targets and subcategories:

• Automotive: What kind of vehicle do they drive? What cars are they interested in? New or used? Buy or lease?
• Charitable Donations: Do they donate to charitable organizations, and if so, which ones?
• Digital Activities: What Internet browser do they use? Are they console gamers? Are they early or late technology adopters?
• Financial: Are they likely to invest? Are they likely to be high spenders? Do they have multiple lines of credit?
• Mobile Device User: What brand of mobile device do they use? Are they smartphone or tablet owners?
• Purchase Behavior: Do they use coupons? Do they shop from department stores or luxury stores? The kinds of products they heavily buy: clothing, toys, house goods?
• Residential Profiles: How long have they lived in their home? Are they likely to move? Have they recently borrowed money to purchase a home? Are they renters?

These are just a few examples, but you can see, Facebook uses many ways to target, all in the hopes of showing the consumer, relevant, useful ads, which is what makes it such a powerful advertising tool.