How Facebook is Delivering Personalization on a Whole New Scale

Here are a few things to know about Facebook’s 1.2 billion (and ever-growing) users: 60% of them access the site every day. Increasingly, they are coming to the site only by smartphones or tablets. And many are joining from countries far from the company’s U.S. base, such as India, Brazil and Singapore.

In its 10-year life, Facebook has become the premier digital platform for individuals to connect with each other and for brands to reach current and prospective customers — in intriguingly savvy and data-driven ways.

Blake Chandlee, vice president of global partnerships at Facebook, has seen the growth and shifts at the company up close. He’s been with Facebook for nearly seven years. He started as the first international employee, in London, and built all of Facebook’s international businesses for his first five years. Today, Chandlee works with a variety of partners: global operating companies on the advertising agency side, and Facebook’s developer network, which is hundreds of developers building on top of the Facebook platform. He also oversees Facebook’s own data and how it works with the data of partners such as Axiom, Epsilon, Benelogic and Experian.

In a conversation with Gerald C. (Jerry) Kane, an associate professor of information systems at the Carroll School of Management at Boston College and guest editor for MIT Sloan Management Review’s Social Business Big Idea Initiative, Chandlee details Facebook’s growing ad business in the mobile environment, the hunger of media companies for Facebook’s “chatter data,” and the power that comes from being able to overlay third-party data onto of first-party data from brands and Facebook’s own customer information.

Can you give us a “state of the union” of Facebook in terms of business? What’s changed over the last two to three years, and where do you see it going in the next two to three years?

Facebook over the last few years has fundamentally shifted from being primarily a desktop experience to a mobile platform. Well over half of our users are utilizing or accessing Facebook via mobile devices, and that trend is accelerating.

It’s also becoming a much more international and global company. We just passed 100 million users in India, for example. We’ve seen tremendous growth in those emerging markets around the world, both in terms of just sheer users and engagement.

The mix in those countries is primarily mobile, so there are a lot of people who have never experienced Facebook on a desktop and never will. So, today, we think mobile first. We are shifting to a little bit more of an app-based approach to the world, which is going to include things like Messenger, Instagram and WhatsApp. The WhatsApp acquisition was the significant one in the messaging space for us.

This fundamental shift of the entire user experience is trickling down to not only our users but to our advertisers. Two years ago, we had zero ad business in the mobile environment. Now well over half of our revenue is mobile. We think between ourselves and Google, we’ve effectively shifted mobile into the forefront. And we think brands are benefitting from that because the user experience and the way brands engage with consumers in mobile is very different than a desktop experience.

Part of your role is partnering with companies so that Facebook is not just serving up ads, but helping partners better understand their client bases. Can you talk a little bit about that?

This is a fairly core value that we hold: we don’t think that we need to build everything. This has been going on since I joined the company. We want to be as open and platform-driven as possible, meaning that rather than having to build every product or piece of content, years ago we elected to open up our platform and allow developers and different companies to build on top of Facebook the stuff that they think would be relevant and social in nature, or social-by-design, if you will.

So folks like Spotify, folks like Netflix, gaming players, and traditional media companies, like The New York Times and Wall Street Journal, all built fairly deep integrations into Facebook that allowed their content to be shared among friends. The key is that the content, whatever form that might take, is designed to be shared. That’s on the consumer side.

If you flip over to the advertisers’ side, we have an ecosystem of hundreds of marketing developers — what we call PMDs, Preferred Marketing Developers — that are building very robust ad platforms on top of Facebook and bringing those to market. We manage that so that voice is consistent with ours strategically.

Can you highlight a particular company that has really benefitted from its partnership with Facebook?

We have brands that we consider partners, folks like Procter & Gamble and Unilever. Procter & Gamble might want to see data about users of hair care products and we can help them understand through our Insights platform the kinds of folks that are talking about their brands or engaging with their brands on Facebook. We aggregate the data so there’s no personal identifiable information shared, and help them understand what their consumers are talking about — the kind of television shows they’re watching, the kind of music they like listening to. That kind of information for a brand is very, very powerful. It helps them make a lot of different decisions around product development and communication strategies.

On the agency side, it’s very similar type of information. We can help them understand frequency curves around media planning, deep insights if they overlay with some insights they have through their own proprietary insights platforms. Again, helping them to help their brands in being more knowledgeable about people and their consumer base.

Running with that theme, one of the big stories coming out of our latest social business survey is the use of data. We’re finding that one of the big dividing lines between companies that are using social effectively for business value versus ineffectively is their use of data. Can you give some specific examples of how they’re using the data generated by you to make business decisions or to provide insights?

I think there’s an evolution going on. I think if you’d asked me this question two years ago, I’d have talked about native data, which is all the information that consumers share with us when they either register or that we gather about them about the brands that they like or the kinds of content they share. Again, all of this data that sits on Facebook primarily and that data is pretty powerful.

Where we’re seeing the real traction and some real momentum is combining that data with first-party data from brands. That means that brands can take their first-party data and then, in a privacy-friendly way, use hash technology to overlay those audiences on top of Facebook audiences. Neither of us actually have access to who that individual is or why they’re being overlaid, but we can interact with those consumers in the form of advertising and then measure on the back end the kind of impact the ads are having on brand attribution or actual sales. That’s where there’s an enormous amount of interest and investment taking place today, for the last 9 to 12 months.

We’re also able to overlay third-party data on top of that through companies like Datalogix and others. They’re sitting on top of frequent shopper programs. They’ll be able to say, “Okay, we found heavy laundry detergent households that are loyal to Tide, and heavy laundry households that have never bought Tide.” If you’re a brand manager, you’d want to talk to those two different people differently. We can apply that across most categories and most vertical markets at this point, as well.

So that combination of first-party data with third-party data and then, be able to find those consumers and scale, is fairly unique to Facebook and to the digital space in general.

Let me just make sure I understand. Procter & Gamble has data about their customers. You have data about your customers. There’s technology that lets you match them up without violating privacy on either side and so you get more from the combined data.

That’s right. Typically companies are using email or direct mail or whatever it might be to reach these consumers. This is where Facebook actually stands out. I think Twitter is doing this, as well, and Google is doing some testing. I think LinkedIn is trying, too.

The key is having real live data. Because we have peoples’ real names and an email and, typically, a phone number, our match rates against databases are in the 80-90% range. Most of the time when they just use email, for example, the match rates drop off pretty significantly, to maybe 30%, which is hard to scale, right? We can run algorithms against those audiences that identify very specific groups within that. That’s using data in a very, very sophisticated way.

Can you lay out a little more how this data is being used by companies?

So 60% of our users come back daily, which means we have an enormous audience, larger than network television in scale. Companies can start talking to people as individuals based on actual purchase behavior or whatever behavior the brand feels is important. That’s truly personalized marketing in scale versus hoping you found the right person because they watched a certain television show or targeting someone because they fell into certain zip code.

Historically, we’ve never had the ability to have the scale of a mass media along with the personalization that digital provides. We feel that a real identity is able to be delivered. When you lay that on top of a mobile device, we think that’s the reason we’re seeing such growth in mobile, quite frankly. We think mobile is the next television platform and all indicators are that that will probably come to fruition in the next five to seven years.

Where do you see data use going in the next 12 to 24 months?

The question is, where is it not going to go? This is not only for the advertising world. It’s also for how brands are managing their internal CRM [customer relationship management] platforms. They’re managing supply chain management. This data is permeating itself through the organizations, and there are folks like SalesForce that are doing a tremendous job helping brands and companies match up social indicators — or social signals, if you will. That should really transform the way brands think about everything from product development all the way through to distribution. That’s where data is going.

To look at it simply as an advertising mechanism or an insights mechanism is, I think, just scratching the surface. SalesForce has done a really nice job with Coca-Cola, for instance, in looking at their digital data, their first-party, third-party data, the activity they’re doing on Facebook and Twitter and other digital environments and tying that all the way through to this next generation of Coke machines. To be able to show an ID to a machine and have the machine know that that user is a heavy Coca-Cola user because the machine can access the CRM platform means that that user can receive some kind of a message right at the machine which maybe offers them a flavor that they haven’t tried before. That’s when you’re using data and personalized data, a lot of which evolves from social, in a very powerful way.

The other thing is that we think it’s much more interesting for a brand to know the impact digital had on actual off-line sales or in-store through the data matching we’re talking about. If I’m a movie studio, what I want to know is, if I spend money on Facebook, am I driving off-line sales? Put aside awareness, consideration, favorability. We spend a lot of time and energy building systems to tie back and to help people understand how effective their marketing is in actually driving off-line sales. That’s business value. We want to drive business outcomes.

With this integrated data, can you, at this point, assess, okay, this person saw this ad on Facebook and we know that it turned into a soap purchase at Target? Can you get to that level?

Yes. That right there encapsulates exactly the reason that we’re having so much success in the consumer packaged goods space. We’ve published a number of white papers and reports that show pure ROI tied in with media mixed modeling and everything else. That’s exactly what we’re building and exactly what we have done for probably three years now with most of the world’s largest packaged goods brands.

What are the barriers that you see keeping companies from using this data effectively?

The one area where there’s lots of discussion taking place is around privacy, which I think is legitimate. It’s something that we think about very carefully on a regular basis.

For instance, the kind of digital media we’re seeing a lot of asks-for from agencies and from clients and from media companies is around chatter data. Chatter data is what people are talking about when they’re watching television or when they’re watching a sporting event. What kind of reaction are they having? Are brand mentions included? How are brands representing themselves in that kind of chatter? What kind of, say, hair color? That might affect a hair care company.

That kind of real-time knowledge and opening up pipes for brands or their agencies and consultants and others to access that data to inform decision making is key. But privacy will always be the primary underlying consideration, which everybody has to consider because the consumer backlash if they find you using their data inappropriately is significant and quick.

When we started this conversation, you said that Facebook, which has 1.2 billion users, is becoming a much more global company, with strong expansion in emerging markets. Can you talk about how people in different countries are using social and digital media differently?

The world operates very differently in different regions. I’ve seen it just in my role launching most of the businesses around the world for Facebook. How consumers use Facebook in Italy is very different than how they use it in Germany versus the U.S. versus Singapore. It’s based in culture and, quite frankly, on the systems or the networks in place — or not in place.

A great example is that in most markets around the world, Facebook is now predominantly accessed via mobile. In Brazil, it’s the exact opposite, and the reason is 100% driven by tariff. The cost of data in Brazil is very high, so people access Facebook more on the desktop than on the mobile device. That’s a network effect versus a cultural effect.

In India, 80% of the access on Facebook is on mobile phones, although not on smart phones. The user experience is very, very different in India and Indonesia. Facebook is their Internet, and that’s because the local telecommunication providers that we’ve worked with, the carriers themselves, have built plans that allow people to have discounted rates against Facebook when they access. So people’s first experience with the Internet is Facebook.

In Italy, people are much more open, so the messaging, the sharing, has enormous volumes — the index is high versus anywhere else almost in the world — whereas in Germany, people do not share a lot. Cultural impact. Germans are much more privacy-sensitive than the Italians. That’s just sheer cultural, that’s how they’ve been raised. It goes all the way through to the government and regulatory environments and everything else around privacy.

Do you see a lot of different attitudes towards social among executives globally regarding what social can do for their business?

Yeah. Absolutely. As a company, we’re 10 years old. From a commercial perspective, Facebook has only been outside the U.S. for seven [years]. We’ve really only been in some of these emerging markets for a couple of years. We’ve spent a lot of time educating businesses in the U.S. and Western Europe. The U.S. is probably the furthest along, with having great measurement tools in place, going back to the example of being able to prove ROI. The minute you can start introducing measurement capabilities into a market, it makes it much easier for executives to get to shift.

But in a lot of the markets, those capabilities don’t exist. It’s much, much harder to get access to purchase-level data, much less giving time to Facebook or impressions or exposures or slot exposures. For some of the CPG [consumer packaged goods] companies in Mumbai, it’s very difficult for them to think, “I’m going to shift a significant percentage of my budget over to digital.”

Business results have been driven a certain way for a long period of time, and it takes time to move that. So, yeah, in certain markets, there’s a certain skepticism. We have to work hard with them, almost brand-by-brand, to help them through that.

But I do think companies are getting it. In the time that I’ve been in there, which is kind of through the history of the company, we’ve gone from being one of the bright shiny objects, the new thing on the block, to being a place where I think you’d be hard-pressed as a brand, or a brand manager, or an agency, to not have Facebook as part of your communication plan. I think we’ve become part of the must-haves.