When advertising on Facebook, advertisers have access to a massive amount of data that they can use to precisely target their ads. A user's Facebook can be viewed as a massive database they create over a period of time—detailing their interests, networks connections, and how these things change.
At the most basic level, advertisers can target ads based on demographic factors: the age, gender, and location of users. This can give advertisers better tools for targeting consumers in specific demographics; thus they decrease the odds of paying money to advertise to someone who will be completely disinterested in a product.
However, the kinds of tracking and targeting used by advertisers can go much further. In a famous example of targeted advertisements, Target once created a system to analyze customers' buying patterns in order to tell when a customer had become pregnant in order to start sending them coupons for pregnancy-related items. The automated system was so effective it discovered...
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