Facebook 'Relevant Ads' Track You Across The Internet
The social network claims to have designed "versions of the features with your privacy in mind," and to some extent this is true. Essentially what they have done is connected the dots between your use of their service and the rest of your browsing habits. But these grant access to sensitive pieces of data such as your email address & phone number (highly encrypted versions), collects internet usage information for marketing purposes (standard practice with most common browsers, but still slightly off-putting to some), and makes it somewhat taxing to opt out of such services.
Here's what's changed:
Facebook Exchange: Ads targeted based upon web browsing and searching outside of Facebook
In a joint venture between Facebook, the marketers, and who they're calling "third-party service providers" (the platforms who perform the ad-matching such as AdRoll, TellApart, etc), users are assigned a unique ID as they browse the web. The moment they wander back to the realms of the social network, this ID triggers advertisements related to what you were just looking at. Example: say you looked at a new copy of FIFA 13 from HMV and began searching for prices for the game. After this, you might start seeing adverts for the game from the aforementioned high street store pop up on your Facebook page.
Making a connection between your existing relationships with companies outside of Facebook and putting them in the destination where you probably spend a good deal of time every day is a rather clever move in terms of making good revenue on highly targeted potential. No more is advertising on the site based upon the set classifications of age, gender and tastes. It's based on the individual and their browsing cookies. Opting out is possible; but cannot be done through Facebook directly. Instead (in a rather coy move if I do say so myself), this can only be done through the huge network of "third-party service providers." Good luck trying to find the one advertising to you.
Custom Audiences: Ads targeted based upon your email address or phone number
Marketers using existing customer databases to advertise directly to those people on Facebook also. This is possible via "Custom Audiences," which Facebook requires the use of "hashes" of customer information to advertise. These are encrypted forms of your email address and phone number (if you entered that into Facebook at any time). The databases submitted by marketers are matched with Facebook's records, and the ads are circulated. It's essentially along the same lines of receiving marketing emails, only you don't realise these are targeted so specifically, as they still look like simple ads within the context of Facebook.
As our email addresses and phone numbers are sent as encoded hashes, they're designed to be protected against reverse engineering and interception. They should be safe if handled with care.
Facebook tracks what you buy to determine the effectiveness of ads
There has to be some analytical data, so Facebook can ensure the ads they're serving for their clients are doing a good job. For this, they partnered up with Colorado-based company Datalogix: a firm with a large database of customer purchase histories, thanks to the plethora of information gathered from store loyalty card programs. With this information, Facebook can now tell a business that after seeing an ad, x% of people bought their product. It's a clever way of resolving any doubt that a client would have in their head about the service; but for the users, it's another inlet into a piece of information that some people maybe comfortable sharing and some may not.
Whatever your opinion on these new implementations are, chances are the average user is not going to notice these in effect. It keeps the service free, all ads are kept within their own defined sections of the website, and all of the information used and shared for the purpose of advertising is deleted when it is "no longer needed" (a rather ominous sounding period of time). And wherever you go, this sort of tracking-based marketing is gradually becoming more commonplace as we submit more data about ourselves onto the web. There's plenty of ways to opt out: clear out your cookies, don't use Facebook or (my personal favourite) just use Adblock.
This isn't the 'end of privacy' that many articles have deemed it to be, as we never really had much privacy on the service to begin with.