Last Fall, A Yahoo Source Said Facebook Was Working On A Product That 'Kills Us' - It's Here

He said:

"There's a story brewing about a next very big business it's building—one that competes with one of Yahoo's flagship ad products and would kill us."

That product is finally here.

It's called "partner categories."

It allows Facebook advertisers to show ads to people who have purchased, or have shown interest in purchasing, specific categories of products offline — from consumer packaged goods to cars and more.

Facebook can do this thanks to a partnership with a firm called Datalogix.

Datalogix tracks usage of loyalty cards in offline retail stores.

Facebook can, in a privacy-sensitive way, tell who purchased about 50% of all consumer-packaged goods sold in the US.

Datalogix can also track people who have given over identifying information to merchants, asking for more information about their products.

So, for example, Facebook knows which of its users have asked Chevy for brochures on its new Camaro.

The implications of this capability are obviously huge.

Imagine how valuable it will be for Gillette to put ads in front of men who bought new razors, or for Ford to stick a Mustang ad in front of those Camaro shoppers.

That kind of targeting — based on a consumer's signalled intent — is nearly as valuable as Google search targeting, where a consumer has told Google exactly what he or she is looking to buy.

No wonder our Yahoo source was so nervous.

Here's Facebook's blog post announcing the feature:

Today we’re launching partner categories, a new way to target ads to more categories of people. For example, a local car dealership can now show ads to people who are likely in the market for a new car who live near their dealership. To date, advertisers have been able to show ads to people based on their expressed interests on Facebook. Now with partner categories, they can also show ads to people on Facebook based on the products and brands they buy across both desktop and mobile.

Partner categories uses data from select third parties including Acxiom, Datalogix, and Epsilon. No personal information is shared between Facebook, third parties or advertisers. Partner categories work the same way all targeting on Facebook works. The advertiser only knows the size of the audience and can’t access any information about individuals included in a category. For more on this, see our post here.

Companies have long used this type of targeting off of Facebook, and we are excited to make this available to advertisers of all sizes on Facebook.

At launch, partner categories includes more than 500 unique groups. In addition, partner categories works with other Facebook targeting options, so advertisers can further refine their campaigns to reach only the right people. Ads that are well targeted benefit the advertisers who run them by driving higher return on investment and are a better experience for people who see more relevant ads.

Partner categories will be available to US advertisers in Power Editor and through the API starting today. Here's a preview: