Facebook (NASDAQ:FB) developed its own system to track users across devices by using their Facebook IDs. Since almost everyone has Facebook installed on a smartphone, it's capable of using that ID for tracking Web habits. Twitter (NYSE:TWTR), too, has improved its cross-device targeting, particularly with the acquisition of TellApart earlier this year.
But Facebook has a huge advantage over its competitors when it comes to tracking its users on other websites: It requires people to use their real identity instead of hiding behind a screen name.
The real-name advantage in the comments section
When a webmaster needs an authentication system for something like a comments section, Facebook will often rise to the top of the list. Systems such as Twitter and Google, where users remain relatively anonymous, can lead to more spam and harassment on comments sections and message boards.
Twitter has notoriously fought harassment on its own platform, indicating that using a Twitter ID to log into a comments system could lead to a nightmare scenario for a webmaster. You can also create multiple Twitter accounts, and the company will even help you manage them all with its tweetdeck app. Google users can also create new accounts at will, leading to the potential for anonymous harassment and spam.
Meanwhile, big websites such as The Huffington Post, ESPN.com, and USA Today all switched to Facebook comments in the past two years or so. TechCrunch started with Facebook, switched to LiveFyre, and switched back to Facebook within a year. Facebook's comments section is taking over the Web.
Note that Facebook has gotten into a bit of hot water over its real-name policy. The issue mostly stems from how people identify themselves, however, not from the idea that people want to remain anonymous on the Internet. As long as people consistently identify themselves on Facebook and the real world, Facebook's advantage will stay intact.
With more and more developers using Facebook authentication for their sites and apps, Facebook sees a couple of benefits. Facebook sees higher engagement rates because users are able to log in on more websites. While Facebook can't advertise against those users, it can use the information from those comments to inform how it presents its News Feed to those users when they log into Facebook proper -- and that's the big benefit.
While Twitter and Google can track users with cookies and targeting pixels that webmasters embed in their sites, Facebook gets the benefit of detailed information about what a user is reading on the Web and how that user feels about those articles. It can use that to show the user more interesting news articles in the News Feed and target ads more accurately. That information also travels across devices, since it's always tied to a Facebook ID, not a Web browser.
Likewise, it can use that targeting information on any app that uses Facebook for authentication and uses the Facebook audience network for advertising. Facebook has ensured that using one makes it easy to use the other with its Parse development kit. What's more, the system feeds back into itself, so Facebook can use data from those apps to target ads in other apps.
Facebook's biggest asset
With a collection of over 1.5 billion users all using their real names (or whatever they want to be called), Facebook holds a huge asset that many other companies desire. And Facebook is so nice that it's willing to let other companies use that asset, and it only asks for a little bit of data in return -- data it can use to make its site more engaging and more profitable.
Facebook also plans to use its identity layer to help monetize Messenger by connecting businesses with users with verified IDs. Nobody else has a collection of IDs the size of Facebook's, which makes it the best choice for both webmasters and marketers, and Facebook knows how to capitalize on that.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.