U.S. Markets close in 5 hrs 4 mins

IBM, Facebook strike big data partnership

Aaron Pressman
IBM will use "deep analytics," on top of Facebook's anonymized and aggregate audience data, to give marketers a clearer picture of their target audiences, statement says (AFP Photo/Stan Honda)

As retailers increasingly turn to IBM (IBM) for data analysis to help boost their marketing efforts, IBM is turning to a leading source of information about retailers' customers for that data: Facebook (FB).

It's a natural fit between two partners who don't compete directly. Under the deal announced on Wednesday, retailers and other advertising customers of Facebook, like banks or phone companies, will be able to tap data about the giant social network's users for use in IBM's "big data" analysis service.

No money is changing hands between the companies, IBM says. But the joint effort should make life easier for customers of both companies by "helping clients solve real problems," says Deepak Advani, general manager of IBM's Commerce unit that offers big data analysis.

The analysis could uncover, for example, that a particular promotion from a department store chain appeals to customers with certain demographic traits. The retailer could then use IBM's analysis to find Facebook users with similar traits and offer them the promotion on the social network.

The combined effort is the latest move by IBM under CEO Ginni Rometty to use a partnership to fill a void in the company's offerings instead of acquiring or building in-house businesses that don't play to IBM's strengths. The most prominent example was Rometty's decision last year to partner with Apple (AAPL) and make enterprise apps for the iPad instead of selling its own line of tablets.

The IBM-Facebook partnership comes as retailers are relying ever-more on analyzing customer data to inform marketing and promotional campaigns. One IBM customer, Kohl's (KSS), spent $1 billion over the past few years upgrading its analytics, e-commerce and other IT and fulfillment infrastructure.

Big store chains have long kept information about what customers purchase and combined it with demographic profiles obtained from data brokers. But lately, they've also been able to tap data from smartphone apps, whether their own or from third-parties like Facebook, to collect even more information about customer habits.

Data used in the partnership will be subject to the same privacy safeguards that applied when it was collected, although that may not be enough to satisfy some privacy advocates. Facebook has been criticized for its extensive collection of data about its users, as well as frequent changes to its privacy policy and privacy settings. Last year, a group of more than 25,000 users sued the company in the European Union for improperly handling their data.

IBM is also offering help with securing the data, after many retailers -- including Target (TGT) and Home Depot (HD) -- have suffered breaches by hackers.

"Privacy is absolutely top of mind for a lot of our clients," says Advani. "If customers start losing trust in a brand, they're going to switch."

Facebook will also join IBM's retailing data research effort, called the Commerce THINKLab, IBM said.

Related Video: