Advertiser reaction to Facebook plans to roll out 'clear-history' tool

Facebook has just rolled out a tool that lets people clear their Facebook history, which will limit one of advertisers' most powerful targeting tools, and it prepared advertisers for the feature earlier this year.

The tool, called “Off-Facebook History,” comes amid growing demand for privacy online and scrutiny of how ad-tech companies collect and use data on users.

Advertisers were already seeking work-arounds ahead of the tool's launch.

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Facebook has begun rolling out a tool that lets people clear their Facebook history.

The “clear-history” tool will limit the amount of targeting advertisers can do by preventing them from using the data Facebook collects on people's off-Facebook activities to build ad campaigns.

The move comes amid growing demand for privacy online and scrutiny of how ad-tech companies collect and use data on users. Facebook has already announced a shift to ephemeral messaging, which will also potentially have profound implications for advertisers on its platforms. Just last week, Google, for its part, said it planned to roll out new controls in its Chrome browser that would let consumers block advertisers from serving ads that use third-party cookies.

Facebook wrote in an earlier blog post that the clear-history tool may influence targeting.

Read more: Advertisers have stuck with Facebook through years of scandals. Here are 6 things that would need to change for them to abandon it.

“When someone disconnects their off-Facebook activity, we won't use the data they clear for targeting,” the post read. “This means that targeting options powered by Facebook's business tools, like the Facebook Pixel, can't be used to reach someone with ads. This includes Custom Audiences that Facebook generates based on people's visits to advertiser's websites and apps. Businesses should keep this in mind when developing strategies for these kinds of campaigns in the second half of the year and beyond.”

That targeting heft is why insiders are saying the Facebook tool could have far wider impact than Google's Chrome move.

“The unchecked ability that Facebook had to retarget people based on preferences, activities, will now be limited by the addition of this tool,” said Jeff Greenfield, the cofounder and chief operating officer of C3 Metrics, which measures advertising's effectiveness on platforms.

How much do people care about privacy, anyway？

One big question mark is how widely the tool will be used. Traditionally, features that people are required to proactively choose have low opt-in rates. In this case, Greenfield said C3 predicted just 10% would opt out.

But with people increasingly twitchy about privacy, others aren't so sure. Facebook's Custom Audiences is one of its most powerful targeting tools, and if people adopt it in big numbers, it could seriously dent the effectiveness of advertisers' campaigns, Marcus Pratt, the vice president of insights and technology at Mediasmith, told Business Insider.

“The current focus on privacy and viral nature of Facebook itself could result in a more significant percentage of consumers activating the feature,” Pratt said. “We will be very curious to see how this rolls out, and how popular the feature is at launch: Will Facebook promote the feature？ Will it be easy to find and activate？”

Winners, losers

Asked for reaction earlier this year, ad agencies said they didn't yet know how wide the impact would be but that they were preparing clients by steering them to other targeting options.

Alex Proujansky, the associate director of social marketplace, product, and operations at Horizon Media, said the agency has started using other targeting methods for advertisers, like buying third-party audiences elsewhere and increasing lead-generation advertising to help advertisers build up their own stashes of first-party data that they can use for targeting.

That shift could benefit the big sellers of third-party audiences like Oracle and Acxiom.

Other winners could be the companies that already have big troves of data on their users, including Google and Pinterest. There's also an opportunity for ad-tech companies like The Trade Desk that help advertisers buy programmatic ads.

Premium publishers and media sellers that have a lot of logged-in users, including streaming services and Roku's advertising business, could also benefit.

“The big winner is traditional media — linear TV and streaming radio,” Greenfield said. “The Spotifys and Pandoras of the world can cash in.”

Finally — and it's just speculation at this point — the Facebook-owned Instagram could be a beneficiary if it lets advertisers target people based on who they're following on Instagram specifically. “There have been rumors this is in development, and you could see this leading a major change for brands and the industry at large,” Benjamin Arnold, managing director, New York, of We Are Social, said.