Automotive advertisers steer around new social media scrutiny

Controversy sparked by political data firm Cambridge Analytica's access to as many as 87 million Facebook users' information has led the social media giant to re-evaluate its ties to third-party data providers.

Automotive advertisers have routinely turned to troves of third-party data from companies such as Experian and Oracle, which are centered on the offline behaviors of consumers. 

Such third-party data can offer insight into whether people are in the market for a new vehicle and what they drive — two critical points for advertisers looking to target the right audiences.

As Facebook looked to protect itself and its users in the face of security questions, it would have been natural for advertisers to wonder if access to the lush marketing opportunities on consumer news feeds would get new restrictions.

But auto ad makers expect minimal impact, judging from Facebook's moves this year. The massive network, with 2 billion users globally, will still be open for business as usual once its policy changes take effect.

News feeds, in short, will still be home to plenty of metal.

Facebook said in late March it will modify its approach to third-party data companies by shutting down its Partner Categories. That product enables third-party data companies to offer targeting directly on Facebook. It will be phased out on Oct. 1.

Facebook's action won't eliminate third-party data use but will put more emphasis on the relationship between those third parties and advertisers that use the data.

According to Facebook, an advertiser can work individually with Experian, Oracle or another third-party data provider, and upload audiences into the advertiser's network to reach relevant people using Facebook's "custom audiences" tool after verifying appropriate permission.

Businesses can create custom audiences from lists of their customers, who are then specifically targeted on Facebook.

The advertisers would then "own that relationship with Oracle. Facebook's not involved," Stephanie Latham, Facebook's director of U.S. automotive, told Automotive News. "You can bring your data to the table, but we're not brokering it."

Asked if the change was meant to protect Facebook from scrutiny if a third party was found to have improperly gathered data, a company spokeswoman said, "It's less about protecting Facebook and more about making sure the right party is verifying the necessary permissions needed to protect people's privacy and the use of their data."

Advertisers say the effects of the shift will be minimal.

While third-party data are helpful in segmenting audiences to target, they haven't been the main source of customer information for some prominent automotive advertisers. Marketers at CDK Global, Cox Automotive's Dealer.com, Digital Air Strike and Reynolds and Reynolds' Naked Lime say their work on Facebook has been driven primarily by first-party data from dealership management systems and other sources, including Web traffic on dealer sites.

"Naked Lime has the advantage of being able to leverage a lot of dealership data," a spokesman said in a statement. "Companies without the infrastructure to house, secure, and analyze this data may be faced with delivering less-than-optimal targeting."

Andy MacLeay, director of digital marketing for Dealer.com, said Facebook's changes sparked a discussion of how his company will better use its first-party data. But he said there's a place for third-party providers as well.

"Not all of them are out there looking to cause trouble," MacLeay said. "Many of them are there with honest data segments. At Cox Automotive, we're in a really good spot because we can provide our dealers with that first-party data."

When Partner Categories launched in 2013, Digital Air Strike said it had a "sizzle appeal." Erica Sietsma, Digital Air Strike's senior vice president of consumer engagement and product strategy, thought the prospect of using third-party data to target Cadillac owners in particular markets, for instance, would yield strong returns on investment during ad campaigns.

The company used Partner Categories, but realized around a year and a half ago that third-party data weren't helping to convert leads any better than first-party data were. Plus, Sietsma said the cost-per-click for the third-party data was higher. Digital Air Strike pared its use as a result.

The company said Oracle data could be useful beyond advertising, which could involve data mining or predictive analytics.

"When this whole thing started to blow up, I was baffled that people were jumping all over Facebook and jumping all over [Facebook CEO Mark] Zuckerberg over data protection," Sietsma said. "They release zero data to advertisers. If I'm going to target Cadillac owners, they don't tell us who those people are."

Lance Schafer, general manager of product and technology for digital marketing company LotLinx, said he understands why Facebook is treading cautiously with third-party data providers. He feels Facebook had to act to preserve consumer confidence.

Schafer said LotLinx has focused on gathering first-party data for Facebook targeting.

"Because consumers trust Facebook so much with their data, [it] wants to be perceived as trustworthy," Schafer said of Facebook's move to shutter Partner Categories. "As marketers, it refocuses us to getting our own data to use for targeting, versus relying on third parties. If Facebook hadn't done this, the ability to advertise on Facebook might've been threatened, potentially through legislation or something like that. It is a good thing in the long run."

Jen Cole, CDK Global's vice president of advertising, wasn't surprised by Facebook's steps with third parties.

While CDK uses first-party dealer data for Facebook marketing to mold target audiences, Cole says third-party data can broaden the reach of campaigns. She said advertisers can build dealership customer profiles from first-party data, and then use third-party data to go after similar people.

"We don't expect any significant impact," Cole said. "They are making some changes to how we can leverage IHS/Polk data that comes from Oracle.

"They're not turning it off. They're just putting some new structure in place in terms of how we could leverage it."