In an effort to attract advertisers, Facebook has partnered with firms such as Datalogix to find out how the social network influences online purchasing behavior. These efforts will likely be ramped up, as TechCrunch reported Thursday that Datalogix has raised $25 million in Series B funding, led by Institutional Venture Partners.
Facebook’s relationship with Datalogix, Acxiom, Epsilon and others have brought about privacy concerns, as now Facebook can tell what users have purchased, even when they’re not on the site. It’s a way for Facebook to show advertisers that users can and do make purchases after seeing or engaging with an ad on the site.
TechCrunch’s Josh Constine explained the Datalogix/Facebook relationship, and how users fit into it:
So for example, let’s say you use your Safeway Card to get a discount on Clorox bleach at the supermarket. Datalogix tells Facebook you’re a bleach-buyer (anonymously by hashing you personally identifiable information). Facebook helps competing bleach company Tide target you with ads because it knows you’re a potential customer. Then Datalogix tells Facebook you started buying $5 worth of Tide bleach per month. Facebook calculates that $1 of Tide ad spend per month on people like you generated $5 in sales, or $4 in ROI. Finally, Facebook tells Tide it can get it a 4x ROI, and Tide shifts more of its ad spend from print ads to Facebook.
Datalogix Chief Financial Officer Tim Connors said that this money will be used to fuel growth throughout the company and expand offices beyond Denver, Colo.
Readers: How do you feel about the work that Facebook is doing with Datalogix?