Facebook's Like Button: Data Goldmine

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Social networking giant Facebook uses Like buttons and its other social plug-ins to record which websites its members visit, and could potentially use that data to inform ad targeting on its own site, or those of third parties.

According to a Facebook spokesperson, the company creates an impression log every time a signed in member views a Like button or social plug-in on a third party site, regardless of whether or not they interact with it. That record, which is tied to members' unique user IDs, includes information on IP address, URL, date, time, and browser, and is retained for a period of 90 days.

Facebook insists it does not use those logs to target ads, and says it currently has no plans to do so, but the widespread use of its plug-ins amongst the majority of major online publishers enables it to construct extremely thorough and detailed behavioral profiles. Just as behavioral targeting or analytics providers drop pixels on web pages or in ads to track users, Facebook collects data in a similar manner through its plug-ins.

However, behavioral companies often compensate publishers for access to their users' data, whereas Facebook does not. According to Say Media President Troy Young, it's up to publishers to decide if the value they're getting from the plug-ins is worth trading for data on their audiences. "Publishers face this issue all the time. Countless vendors of 'publisher services' pull data in exchange for value, and while Facebook takes data, they also push tons of traffic. The question is, what happens long term when the value of data trumps the value of the publisher's content or environment?" he said.

Although Facebook doesn't yet make use of the behavioral information it collects, that data could prove invaluable for advertisers and hugely lucrative for itself. For example, if the social network records a user's presence on ten sneaker-related blogs over the course of a day, a shoe retailer would likely pay a premium to reach that user via an ad placement on Facebook.

In another scenario, Facebook might decide to launch its own ad network utilizing data gleaned from its plug-ins as well as from its own site, or choose to sell audience data to publishers to help them better monetize their own inventory.

At present, however, the Facebook spokesperson reiterated that no user data is sold or passed on to third parties through its plug-ins without their permission, and that no personal information is shared with advertisers. Marketers are, however, able to target ads based on the likes and interests included in members' profiles, including their interaction with plug-ins such as the Like button.