Different Types of Targeted Advertising

It's been a long day and you just want to wind down. You’ve been craving pizza all day. The moment you open your phone to check your social media feed, a Domino's pizza ad pops up. No, the phone cannot read your mind. At Least not in the way you think. This is a result of a modern marketing model called Targeted Advertising.

 

Before understanding what targeted advertising is, it is important to understand what advertising itself means.  Advertising itself refers to the process where companies undertake expenditure to make consumers aware of their products. Historically Advertising was based on the product itself and singing its praises. However, modern advertising has taken a new route.

 

With the advent of the digital age and the internet boom, advertising’s focus changed from extolling the virtues of the product to appealing to a consumer. 

 

Business is no longer about making the best product, it's about making a connection with consumers. Advertising now appealed to the individual consumer and thus was the concept of Targeted Advertising born.

 

 

What is Targeted Advertising?

 

Targeted Advertising refers to the process where advertisers create advertisements that tender to a person’s specific traits or interests based on consumer behavior. Based on your search history and other tools, advertisers can use the information to personalise the ads to better market their products.

 

(Speaking of Consumer Behavior, check out Factors Influencing Consumer Behavior)

 

The process of Targeted Advertising is not an easy one. First and foremost, for an ad to be able to be targeted at a particular person, it must have some history or background on the consumer it is targeting. Next, it must be on an online platform such that it can be either altered or changed around based on consumer activity.

 

Lastly and usually the biggest concern with Targeted Advertisements is the privacy issues. When companies launch targeted advertisements, they need data on the consumer they are trying to appeal to. This often results in online overstepping by many enterprises and is discussed later.

 

 

Types of Targeted Advertisements

 

Targeted Advertising has taken over the digital marketing sector. It is the primary source of income for search engines and social media platforms with many even catching flak for their policies.

 

Before understanding the Types of targeted advertisements, it is important to understand the process. When a consumer visits a website, he is first presented with a “cookies” requirement. 

 

Cookies are bits of code that keep track of a consumer’s history when they visit a site. Many times when you visit a news site or other public domain websites, a pop up appears requesting access to your cookies.  

 

These requests often have to be accepted to use the site giving many sites access to your cookies. The Cookies store any and all information you enter into the site and keep it saved. The next time you log in to the same site, it pulls up information from your cookies to better personalise the experience for you.

 

The types of Targeted advertisements are based on the platform used. They are as follows:

 

1. Social media advertising: Ads appear on the side of many social networking sites, such as Facebook. These advertisements vary on Facebook based on what your friends are doing.

 

A "like" button appears in many Facebook adverts. If you click the button, the ad may display on your friends' Facebook sites, along with a remark that you like it. 

 

The ad may display in your main Facebook news feed if enough of your friends "like" it. This type of targeted advertising is known as an "engagement ad" on Facebook. Facebook also uses your status to target advertisements.

For example, if your location in facebook is set as Bangalore, karnataka, facebook might send you ads for Bangalore based enterprises.

Other examples include Instagram. Based on the posts you like and the people you follow, the Instagram algorithm gives you recommended ads and shows you products that you are more likely to purchase.

 

(Speaking of Instagram, check out  AI in Instagram)
 

It is quite common for people to notice that after they follow a fashion page or an Instagram influencer’s page, they end up getting ads directed at clothing or accessories. Meanwhile those who follow technology based pages or financial news pages receive ads regarding mutual funds or banking facilities.

In many cases, before creating an account in a social media platform, a set of terms and conditions have to be acceded to. Somewhere in the terms and conditions is a clause buried stating that your data is open to them for usage.

The fact that these agreements are all prerequisites to joining these social media platforms makes it nigh impossible to circumvent them and often involves many people unknowingly giving up their personal data and privacy to the parent company of the social media platform.

 

(Recommended blog - Social Media Marketing)

 

2. Search Engine marketing: Search engines utilise targeted adverts in a variety of ways, including presenting you ads based on your browsing history. If you search for "solar panels" in a search engine, for example, adverts for solar panels and solar panel installers will display at the top and right of the page.

 

According to an MSNBC survey "How Facebook Steals Your Friends," up to 10% of search engine users click on these tailored internet adverts. Google and other search engines have coe under flak multiple times for their violations of privacy. 

 

This is most notably seen in a case against Google LLC in the United States where the company violated the COPPA which is an American law protecting the privacy of minors. The company had to pay nearly 180 million dollars in settlement fees for the same.

 

The above is just one of the many cases where people’s privacy and other important rights are violated during Targeted marketing and particularly search engine marketing because in these cases consent is often not taken before using the service.

 

3. Cross Site marketing: An extension of search engine marketing, it refers to the process where information from one site is used to create ads in another. Some websites will serve you ads based on your shopping and browsing history.

 

For example, if you use a search engine or website to look for information on new automobiles, or if you buy a new dress online, you may see adverts for cars and dresses on other websites you visit, such as news sites. Ads will follow you from site to site in this manner.

 

4. Other advertisements: Fortunately, there are consensual targeted ads that are slowly seeping into the market. The following instance where a company created a system to give viewers the right to choose their ads to an extent.

 

Houston-based YouData launched a platform that allowed customers to sign up to get adverts in areas of their choice, such as electronics or restaurants. Consumers are paid to view advertisements, and marketers compete to provide the best pricing in the hopes of luring the customer to watch.
 

In 2010, IBM released software that gathered data from your phone and credit cards to allow billboards to display adverts based on previous purchases. Television also uses targeted advertisements. 

 

In 2011, Cablevision, for example, started utilising demographic data to show different commercials to different people viewing the same programme.

 

The Relevance of Targeted Advertising

 

Targeted ads present a new set of possibilities in the marketing world. They allow for ads to appeal to a consumer and provide both what the consumer wants as well as business to the producer. Positive uses of Targeted Ads include Amazon recommendations. 

 

(Recommended blog - How Amazon uses Big Data)

 

If you buy a phone, the algorithm will recommend phone accessories that make the shopping experience a lot easier for you. Similarly, if you purchase furniture, it will recommend alternative furniture. 

However, they also require a lot of data. With the advent of Big Data and AI in Marketing, data has never been this valuable. Without data on their consumers, companies cannot make targeted ads and thus leads to the problem of privacy.

 

Ultimately, companies will have to make a choice whether or not to work on the positives of Targeted Advertising without violating privacy or value business over all else. History tells us that it is more likely for companies to pursue the latter. Cases of data breaches and ransomware attacks makes the data stored by these large enterprises all the more risky.

When a person’s information collected through an algorithm is exposed to the world, that person is exposed to the world putting them in a vulnerable position. Therefore, companies not only run a risk of violating privacy laws but also risk exposing their consumers.

Whether or not legal systems evolve to regulate privacy and keep consumers safe is a question for the future. The question for the present is whether you as a consumer feel safe with such a practice.