Facebook Seeking To “Close The Loop” With Offline Sales Data

The “holy grail” of online measurement has always been tracking to offline sales. Indeed, 95 percent of retail sales happen in stores and clicks are often a poor proxy for those in-store activities (comScore has long made this point regarding online display advertising). Accordingly there are now multiple initiatives going on to try and “close the loop” between online ads and offline sales.

Google Wallet and Offers have online-to-offline tracking as one of their long-term objectives. And the advent and growth of smartphones has made online-offline tracking more feasible generally. Facebook is now moving to join the club through a partnership with a company called Datalogix, according to a Financial Times report appearing on CNN.com.

The company says on its website that its tracking approach “measures the actual offline sales lift resulting from your paid, earned and owned digital media across a universe of over 100MM consumers at the 1:1 level.” The methodology is based on email and loyalty card/program matching at the POS:

Datalogix has purchasing data from about 70m American households largely drawn from loyalty cards and programmes at more than 1,000 retailers, including grocers and drug stores. By matching email addresses or other identifying information associated with those cards against emails or information used to establish Facebook accounts, Datalogix can track whether people bought a product in a store after seeing an ad on Facebook.

The emails and other identifying information are made anonymous and collected into groups of people who saw an ad and people who did not. Datalogix compiles a report for Facebook and its advertisers to measure which creative approaches and demographic targeting persuade people to buy specific products offline.

The article also says initial campaign tests with Datalogix indicate that in “70 percent of cases, for every dollar a marketer spent on Facebook it earned an additional $3 in incremental sales.” This is obviously a great metric for Facebook to promote to advertisers.

The FT article raises privacy concerns about online-to-offline tracking, even though it’s generally anonymous. This year there were a couple of consumer-data privacy bills that largely stalled in Congress. The Obama administration has also been trying to get internet companies to comply with tougher, but voluntary, rules under the existing FTC regulatory framework.

However as more online-offline tracking becomes possible and marketers increasingly “close the loop,” there will likely be some sort of stricter privacy regulation that comes into existence.

Postscript: According to CNET the Electronic Privacy Information Center (EPIC) will ask the FTC to “investigate the new Facebook-Datalogix deal and determine whether [it] complies with the terms of a recent $9.5 million agreement Facebook reached with the FTC to settle privacy complaints.”

Stock image from Shutterstock, used under license.