Facebook is changing what data advertisers can use to target you with ads

Sheryl Sandberg
Michael Newberg | CNBC

Facebook is going to limit how much data it makes available to advertisers buying hyper-targeted ads on the social network.

More specifically, Facebook says it will stop using data from third-party data aggregators — companies like Experian and a — to help supplement its own data set for ad targeting.

Facebook previously let advertisers target people using data from a number of sources:

  • Data from Facebook, which the company collects from user activity and profiles.
  • Data from the advertiser itself, like customer emails they've collected on their own.
  • Data from third-party services like Experian, which can collect offline data such as purchasing activity, that Facebook uses to help supplement its own data set. When marketers use this data to target ads on Facebook, the social giant gives some of the ad money from that sale to the data provider.

This third data set is primarily helpful to advertisers who might not have their own customer data, like small business or consumer packaged goods companies that sell their products through brick and mortar retailers.

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But now Facebook is changing its relationship with these third parties as part of a broader effort to clean up its data practices following the recent Cambridge Analytica privacy scandal. (Facebook still uses these companies to help with ad measurement, though a source says that the company is re-evaluating that practice, too.)

The thinking is that Facebook has less control over where and how these firms collect their data, which makes using it more of a risk. Apparently it's not important enough to Facebook's revenue stream to deal with a potential headache if something goes wrong.

Facebook's decision to stop using third-party data providers for targeting, had it been made earlier, would not have impacted the outcome of the Cambridge Analytica scandal, in which the outside firm collected the personal data of some 50 million Facebook users without their permission.

Instead, it's indicative of a broader effort by Facebook to clean up its data practices given backlash from users, advertisers and investors. Tech companies are suddenly under more pressure than ever to take their roles as data gatekeepers more seriously, and Facebook appears to be weeding out potential vulnerabilities.