Have you ever opened up Facebook and noticed an ad popping up on the right hand side that seems to be eerily similar to something you were looking at/shopping for on a completely different website? Fortunately (or unfortunately, depending on how you look at it), Facebook isn’t reading your mind – instead it’s reading your browser history for behavior that aligns with one of the thousands of different ads it offers on its new Facebook Exchange (FBX) advertising platform. This particular method is called “retargeting” and is similar to technologies used by Google and Yahoo in their ubiquitous ad platforms.

Prior to the launch of FBX, Facebook sold ads based upon its extensive demographic database – advertisers could target their ads across dozens of traits including geography, age, sex, marital-status, etc. – all based upon the data that it’s 1 billion users freely share with the service in their quest to stay connected with friends and family. This method allowed Facebook to generate nearly $5 billion in ad revenue a year, but since the launch of FBX and the use of retargeting, Facebook’s new shareholders have at least one piece of good news: FBX retargeting ads are proving to be much more effective that ads sold around all the demographic data it’s been gathering for years, which means that advertisers can expect to start paying a lot more for those clicks.

What this means for you:

Let’s face it: internet advertisements are here to stay, especially since people like getting things for “free.” The savvy among you know that nothing in life is ever free, and obviously we pay for these free services with our eyeballs, and on occasion, our patronage of an advertiser. As the folks at Facebook, Google and Yahoo continue to improve the accuraccy of their advertising platforms, you can count on ads will becoming so finely tuned to their viewers, it will be like the internet was a window on our heart’s very own desires. There are add-ons you can install in Firefox and Chrome (check out the ever-popular AdBlock Plus) that will block/hide advertisements, but as websites become increasingly dependent on advertising revenue to continue delivering “free” services they will continue to find ways to make viewing advertising unavoidable. In some cases, using an adblocker will make some sites completely unusable without a lot of fiddling with settings and whitelists. If you insist on drawing a hard line in the sand about being targeted, disabling cookies will go a long way to making it impossible for sites like Facebook to track your browsing behaviors, but it will also make surfing the web a constant barrage of password prompts, preference setting and other annoyances that cookies made bearable. You can also look at services like PrivacyFix which can help you understand and control the privacy settings for the more popular sites that track your browsing history.