Chango unchained. Can this Canadian startup solve Facebook’s privacy woes?

Chango founder Chris Sukornyk“Not sure where you got this photo,” Randi Zuckerberg, sister of Mark, wrote to Vox Media’s Callie Schweitzer recently. “I posted it only to friends on FB. You reposting it on Twitter is way uncool.”

And so began the most embarrassing of Facebook’s recent privacy blunders. There’s a billion of us using the social media giant, and our expectations will forever be matched against the now public company’s need to appease Wall Street, rather than just Main street.

“Uncool” is a term that might also be used to describe 2012 for Facebook, which was mocked as the IPO flop of the year (despite going public at a valuation of $104 billion, and continuing to trade at a more than healthy multiple). Facebook’s efforts to monetize its user base have been lampooned as clumsy (in October the company revealed a feature that would allow users to pay $7 to “promote” their posts) and Facebook management still steers in the wake of the once prominent MySpace, whose failure to honor the users experience above all else opened the door for Zuckerberg et al.

No matter what Facebook does lately, it comes off as the bad guy. And yet new users keep signing up, more than half of all Canadians, at last check. So, how to mine its users’ data (its only serious asset) without appearing to violate the trust they so regularly display by uploading and commenting on personal photos?

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Enter Chango. The Toronto-based company was one of several Demand Side Platform providers added to Facebook’s ad-exchange platform in December to monetize user data in a way that most users won’t notice or hear about.

Chango describes itself as a “search retargeting” company. It allows networks like Facebook to display ads for brands that people have searched for on other sites. The company has proved exceptionally good at placing tailor-made bids for clients on Facebook’s ad exchange, which is called Facebook FBX. Chango is the most important addition to this platform because, as CEO Chris Sukornyk explains, “Chango is the only FBX partner that allows marketers to target individuals inside Facebook based on the searches they’ve done on Google, Yahoo, or Bing just moments before.”

Privacy breaches are a daily occurrence in the world, but Chango says the architecture of how it works makes it different. You may see a Facebook ad for ski poles immediately after searching for them on Overstock, for instance, but Chango knows nothing about you; the search data is stored anonymously in its cookie. Chango says it has already become the second largest source of search data, and is larger than Yahoo and Bing combined. It serves more than 350,000 ad impressions every second of every day.

Will this be enough to satisfy the most hardcore of privacy hawks? Of course not. But it may allow Facebook to make money in a way that the vast majority of its users will simply shrug their shoulders at. For most of us, our relationship to Facebook comes down to this: let the world see my social insurance number, banking information or those risqué pics from that party? Problem. Show me an ad for an iPad after I searched for Apple products on Amazon? Not really a problem.

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