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Facebook explains ad moves to try to prevent privacy freakout

The social networking giant's privacy engineer says it has taken many steps to safeguard users' information, including substituting "hashes" for e-mail addresses in its Custom Audiences feature.

Facebook, responding to worries about some of its recent advertising changes, shared some details about how it safeguards user information and said it created its new features with "privacy in mind."

Joey Tyson, Facebook privacy engineer, said yesterday in a blog post that while Facebook has designed its site to show ads that "help people discover products that are interesting to them," it also realizes that users trust the company to protect their information.

"Maintaining that trust is a top priority as we continue to grow," he said.

Tyson took pains in his blog post to explain how the new features -- such as Facebook Exchange and Custom Audiences -- gather user data and share information with advertisers. For some, that includes substituting a user's private information with so-called hashes so marketers don't actually possess a person's data.

Both before and after its IPO in May, Facebook faced questions about its ability to expand and to make money. It has rolled out several new advertising features over the past few weeks to boost it revenue, but it has also faced criticism about some of its efforts to attract advertisers to its site.

Facebook last month said it would partner with Datalogix to find out which ads lead to purchases, but the move led privacy advocates to ask federal regulators to scrutinize the deal. The company also has fielded questions about Facebook Exchange, which lets advertisers better target users on Facebook by tracking what else they do across the Web. And its Custom Audiences feature -- which allows advertisers to target users by e-mail address, phone number, or Facebook user ID -- has also caused some concerns.

Here's a rundown of some of Facebook's privacy steps, according to the blog:

Facebook Exchange
Tyson said that for Exchange, Facebook and an approved third-party service provider agree on an ID number for each visitor's browser that's separate from a user's Facebook ID number. When the browser visits Facebook, the site notifies the service provider, who then tells Facebook when a marketer wants to show a particular ad. Tyson said the steps allow marketers to show ads that are relevant to the existing relationship without requiring any personal information about the user.

He also noted that each ad includes a link to let users provide feedback, as well as a link to provide more information and opt out of future ads from the particular service provider. And Facebook only works with providers that agree to "technical and policy requirements that protect the privacy of personal information," Tyson said.

Custom Audiences
Custom Audiences allows marketers to reach people on Facebook using information they already have, Tyson said, such as a shoe store showing a special offer to users who have already been customers. The store provides Facebook with "hashes" of its customers' e-mail addresses so that it can show those same people the ad without the store having to send Facebook the actual e-mail addresses.

The hashes are bits of text that unique identify information, such as an e-mail address, but are designed to prevent reverse engineering that would reveal the data. Facebook and the store use the same process so Facebook can show the ads to any group of users that match. If a hash doesn't match any at Facebook, it discards the hash without discovering the corresponding e-mail address, and it deletes hashes it matches when it no longer needs them.

Datalogix to measure advertising performance
Like Custom Audiences, the relationship with Datalogix also makes uses of hashes. Facebook compares hashes of some Facebook data with hashes provided by Datalogix. It then is able to send corresponding data in large-scale ad campaigns, which Datalogix uses to create reports comparing product purchases by large groups of people who did or did not see an ad.

Facebook hired an "industry-leading audit firm" to evaluate the privacy implications of the process, Tyson said. It confirmed that Datalogix is not allowed to learn more about users from their Facebook profile information, and it doesn't send Facebook any purchase data. Datalogix also only sends the marketer aggregate information about large groups of people, not data about an individual Facebook user.

"Advertising keeps Facebook free," Tyson said. "We believe we can create value for the people who use our services every day by offering relevant ads that also incorporate industry-leading privacy protections. In our view, this is a win-win situation for marketers and for you."