Targeted advertising is a way for marketers to present consumers with ads that reflect their specific traits, interests, and shopping behavior. This is generally done by using customer data to segment audiences by factors such as basic demographics, shopping interests, or browsing behavior, and then creating unique advertisements tailored to each audience segment.
For digital marketers and ecommerce brands, targeted advertising is an essential tool for cutting through the noise of ads that internet users constantly experience, serving personalized content where users will see and engage with it. Targeted advertising also includes retargeting, which further hones ad personalization and encourages customers to continue down the conversion funnel.
Benefits of Targeted Advertising
- Hitting the right audience
- Advanced personalization
- Lower cost
- Instant results
- Higher ROI
- In-depth analytics
- Re-engagement
How Does Targeted Advertising Work?
To place a targeted ad online, you need to set up a campaign on an advertisement network. Those networks show ads to users based on their data – demographics, buying history, or digital behavior.
Advertising platforms can collect data from different sources. The most common of them are cookies on the websites you’ve browsed. Cookies are tiny files that store information about your on-site actions or purchases and transfer them to the CRM or third-party services.
Another source of information about you is search engines. They analyze search queries and users’ habits to employ this data for showing them paid ads on the search engine results page.
Finally, advertising platforms get your data from social media profiles. Social networks store information about your age, gender, beliefs, preferences, and so on.
Knowing your main characteristics and online behavior, advertising platforms can show you targeted ads on different websites. For instance, if you often browse makeup products on the Lookfantastic website, you may see ads from other cosmetics retailers on various online platforms.
Brands often use targeted ads to show you the products you’ve looked through before. This tactic is called retargeting. It helps businesses spark your interest in returning to their websites and purchasing the product.
As you can see, brands use a whole lot of data about you to target their ads. Based on the information used, we can distinguish different types of targeting. Let’s delve deeper into them.
Types of Targeted Advertising
- Demographic targeting. This type of targeted advertising focuses on the audience’s characteristics – age, gender, salary, nationality, and more.
- Behavioral targeting. The core of this type is potential customers’ on-site and purchasing behavior. Platforms assemble data on the items users browse through and show ads according to it.
- Contextual targeting. Contextual targeting implies displaying ads based on a website’s content. For instance, a publisher may show toy advertising on a parenting website.
- Geographic targeting. This type focuses on the potential buyer’s location.
- Time targeting. The base for these ads are periods when users show the highest online activity. For example, ads occur from 4 PM to 8 PM, when people typically travel home from work.
- Device targeting. Advertisers can target potential customers according to the device they use.
Targeted Advertising Statistics
- 27% of internet users consider targeted ads to be a convenient way to learn more about appealing products. Meanwhile, 51% of respondents believe this type of advertising is an inappropriate use of personal data.
- Young audiences are the most positive about targeted advertising. 41% of respondents aged 18-24 like discovering new goods through this promotional channel.
- In 2018, contextual advertising was the most popular type of targeted advertising. Thus, 80% of European businesses preferred it over behavioral and geographical targeting.
- In 2016, 90% of the digital display advertising market growth came from formats and processes that use behavioral data.
- Behaviorally targeted ads proved to be the most cost-effective type of advertising. Their average click-through rate was 5.3 times higher than in advertising, which does not use behavioral data.
References
IHS Markit. (2017, September). THE ECONOMIC VALUE OF BEHAVIOURAL TARGETING IN DIGITAL ADVERTISING. Datadrivenadvertising.Eu. https://datadrivenadvertising.eu/wp-content/uploads/2017/09/BehaviouralTargeting_FINAL.pdf
Internet advertising of businesses – statistics on usage of ads – Statistics Explained. (2018, December). Eurostat. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Internet_advertising_of_businesses_-_statistics_on_usage_of_ads&oldid=316853
Lau, W. (2021, June 15). What Is Targeted Advertising? AdRoll Blog. https://www.adroll.com/blog/marketing/what-is-targeted-advertising
Richter, F. (2019, May 23). Targeted Ads: Interesting or Intrusive? Statista Infographics. https://www.statista.com/chart/18146/view-of-targeted-online-advertising-among-americans/
What is Targeted Advertising: Guide – Definition. (2021, March 19). SendPulse. https://sendpulse.com/support/glossary/targeted-advertising