Targeted Advertising

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An example of Facebook's Ad Preferences page. Retrieved from: https://www.online-tech-tips.com/computer-tips/how-to-change-your-facebook-ad-preferences/

Targeted advertising is a subset of advertising that focuses on reaching customers based on characteristics that line up with the product an advertiser is selling.[1] These characteristics can be demographic: targeting race, gender, age, income, education, and/or employment; psychographic: targeting values, interests, personality, lifestyle, and/or opinions; or behavioral: targeting recent searches, purchases, clicked ads, or other online actions.[2][3] Advertisers can use these characteristics through tracking consumers' behavior and data.[1]

Advertisers are falling out of favor with untargeted ads such as billboards, print, and radio ads. Due to cheaper cost and higher return on investment, they have turned to more "relevant" targeted advertising.[4] Targeted advertising falls heavily into the purview of surveillance capitalism and is one of the main drivers of the commodification of consumer data.[5] The main draw is the elimination of wasted advertisements. The main agents are tracking based advertisements to advertise based on historical demographic and behavioral data that align with product demographics, and contextual advertisements, which involve matching product demographics to the content of the advertisement's host.[2]

Methodology

Using consumer data, online advertisers seek to define a profile for each user and deliver advertisements that suit their interests, particularly to counter the decline in clickthrough rate on online advertisements.[6] These profiles are compiled and advertisements are delivered through three main methods: contextual targeting, re-marketing, and behavioral targeting.

Contextual Targeting

Contextual targeting aims to reach consumers by matching ads to the context of their locations, and ignores the profile of the user viewing the ad. For example, a car maintenance service running ads on a car blog or magazine, under the premise that viewers of this site own cars and would use their service; or a pet store running ads on a pet adoption clinic's website, under the premise that viewers of this site own pets or are soon to own pets. This method operates based on assumptions about user demographics based on the pages they visit.[7]

Re-Marketing

Re-marketing is the lowest level strategy for using behavior tracking to make advertising choices. Advertisers target consumers who show very specific interest in a product or service, such as a user who started a credit card application then didn't finish it, or a user who habitually purchases a given product. These consumers can then be issued "re-marketing" ads, that exploit narrow signals by advertising for those products in which consumers have already shown particular interest.[2]

Behavioral Targeting

Behavioral targeting is the most pervasive and persistent method for targeted advertising. On any given page, it selects a "related" ad from a much larger catalog that could be shown to a consumer. "Relatedness" is based on the interest profile of the consumer, and computed by the advertising network (a company that connect advertisers to hosts). This method is more invasive than contextual targeting or remarketing, as it presents ads relative to long-term online behavior, rather than the current behavior or one instance of previous behavior. This data is additionally collected over a long period of time, and has been a source of controversy for users seeing ads related to them, but unrelated to the page they on which they see the ad.[7]

Mediums

Targeted advertising sees a wide reach from physical to digital media, and presents itself anywhere that different consumer interests lead to different consumer behaviors. Different mediums lend themselves to different methods of advertising, but the practice lends itself to any information medium.

Magazines

Historically, targeted advertisements contained within magazines have been contextual. Fashion magazines see fashion ads and sports magazines see sports ads. These contextual targeting patterns prevail into modern times, but are changed in relation to the advent of the internet. Magazines have seen a decrease in the efficacy of each advertisement in terms or revenue returned for each print ad. However, they have come to see consumers as more valuable when they know them to be multimodal in their engagement habits. This is to mean that even the opportunity to advertise to one reader in both a print and digital medium makes that consumer and related ad worth more.[8]

Radio

Even as far back as the 1990s, radio broadcasters saw the high targeting potential in radio based advertising. Broadcasting advertisements again fall under the purview of contextual advertising, with context tied to the content of a given station or program. Targeting included demographics, geographical placement, interests, and even psychological make-up. Not only the content of a program, but also its timing and location affect advertising choices. Other choice advantages to advertisers included low cost, high frequency, and high creativity. At their advent, the cost per consumer reached was a dramatic improvement over print advertising costs. Today, radio and TV are on par for cost per consumer, but radio sees an advantage in repetition per purchase.[9] Given similar budget a radio ad can run over 10 times more frequently than a TV or print advertisement. Radio additionally gave advertisers the opportunity to revolutionize the field. Audio stimuli in advertisements allowed writers to add emotional components to their work and make more memorable, impactful pieces.[10]

Television

Moving on to television advertising, TV advertisers hoped to take advantage of benefits of targeted advertising to become competitive with the internet's advantages in cost and specificity. TV advertisements had already enjoyed advantages including similar cost per capita to radio ads, easy reusability, and another option for emotionally and visually memorable advertisements. In competition with other advertising media, cable networks took advantage of user data to air advertisements specific to zip codes, neighborhoods, or even individual homes. The data compiled for TV ads can stretch beyond an internet footprint, and may include information about party affiliations, past voting history, marital status, or criminal records. In some cases targeted TV ads cost over three times what non-targeted ads cost, but their introduction has undone some of the economic loss to streaming competitors.[10][11]

Internet Service Providers

Internet service providers (ISPs) play a large role in the surveillance capitalism aspect of advertising. They collect immense amounts of data from users and households nation-wide, and often can feed that information to parent companies or subsidiaries to drive targeted marketing decisions. Collected data include Device Specification, Service usage information, Browsing information, and Location data. Device specifications tell the ISP about the types of devices on each network, which can yield demographic information on users in a household. Service usage information includes bandwidth usage by device and by time of day, which can help advertisers with time based targeting. Browsing information includes where information is being sent and received from which devices. All of these categories provide advertisers dense information with which to categorize consumers.[12]

Search Engines

Search engines allow advertisers to reach users through their interactions with just the search engine interface of the web. Google's own ad support says advertisers can reach consumers based on who consumers are, their interests, active search habits, or past searches or interactions with ads.[3] These advertising techniques fit behavioral targeting and re-marketing via search engines. Additionally, techniques like AdWords -- which match advertisements to key search terms -- fill the role of contextual targeting, giving search engines access to all vectors for targeting their ads.[13] Researchers for the 2009 World Wide Web conference found behavioral targeting to be massively effective in advertising surrounding search engines, for over sixfold click-through rate (interaction with an ad) improvements.[14]

Streaming Services

Video and TV streaming services (e.g. YouTube, Hulu, HBOMax) serving as advertising hosts gives advertisers another avenue to serve their product to consumers, and, like search engines, hold a wealth of knowledge on the consumers that they serve ads to. During the Coronavirus pandemic of 2020, TV/Video streaming services saw unprecedented growth.[15] As these platforms' popularity continues to grow, advertisers are drawn to them for more consumer reach. Through ISPs and their own collection efforts, advertisers benefit from browsing data, watch history, demographic, and geographic information to understand a user from multiple angles.[16][4]

Social Media

Advertising on social media follows similar policies and principles to a very personal extent. Platforms such as Facebook collect data from what users interact with, what they post, where they are, and the behaviors of other users with similar demographics.[17]

Ad Spots

Marketers take advantage of personalized groups, timing, and behaviors to deliver highly relevant ads to engage specific segments of an audience. Among different social media platforms, advertisers can place their messages directly in targeted users' feeds.[18][19]

Self-Media

Self-Media encompasses user decisions to follow companies or celebrities. Celebrities garner massive followings on social media platforms. Marketers leverage this self-media to put their product in front of the millions of eyes on celebrity pages. They achieve this through two means. First, integrating their product into celebrity lives, which results in attention from the celebrity's daily activities. Second, brands pay celebrities for sponsored advertisements to endorse their products.[20]

Collaboration Media

Collaboration social media sites like Reddit or Yahoo! Answers let users organize the content they follow by their own values and interests. Successful advertisements on these sites frame their product as a solution to a problem. They then make that solution relevant, and place themselves in circles that face that problem.[20]

Benefits and Challenges

Targeted Advertising carries advantages and disadvantages for each party involved. These generally center around tradeoffs among safety, convenience, privacy, and trust. The prevalence of these ads and invasiveness of user data collection are the most common axes along which these tradeoffs are made.

Advertisers

Advertisers are the agents taking advantage of targeting techniques in their delivery of targeted advertisements.

Benefits

Personalized marketing allows brands to stand out among competition and connect with their target consumers, ensuring that they reach the users most likely to have interest in their products. With a more specific reach, advertisers see a higher return on investment, and can grow their reach incrementally. [21]

Challenges

Some consumers feel the data collection to support targeted advertisements is a violation of privacy, this has prompted governments to legislate consumer privacy laws, and companies to introduce features to opt out from data collection.[21] As users become more aware of platforms' functions as data mining and advertising services, advertisers must balance consumers' ethical and privacy discomforts with these widely applicable advertising techniques.[22]

Consumers

May 2019, US adults appear to find targeted advertisements more inappropriate than beneficial. Retrieved from: https://www.marketingcharts.com/advertising-trends/creative-and-formats-108479

Consumers are the agents receiving the advertisements throughout the various media in which targeted advertisements are delivered.

Benefits

Targeted advertising enhances the consumer shopping experience. It delivers products tailored to users' specific needs and wants.[21] In research, consumers have reported enjoyment of relevant advertisements that feel fitting to their desired online experience, qualified by discomfort with 'overly aggressive' targeting.[23] However, consumers also hold an advantage over platforms through their comfort level with advertisements, and influence media decisions on the trade-offs between user volume and advertising margins.[24]

Challenges

Consumers do fear the misuse of information, particularly in areas including fraud and hacking. Among the most pervasive fears is the uncertainty about what and how much information is collected. Additionally, users often feel invaded by advertisements that are too personal, and unprotected from desiring unneeded things.[23]

Platforms

Platforms are the agents that host advertisements and collect the data about user behavior. Platforms compete for both consumers and advertisers, and thus must balance advertising effectiveness with privacy considerations and competing platforms.[24]

Benefits

Paid advertisements are a large source of profit for any platform that hosts them. Offering targeted advertising options, especially with many users, draws advertisers to a platform because it increases their return on investment for their marketing costs and reaches audiences receptive to their products.[25] Moreover, a platform that effectively targets its advertisements and collects higher revenue from advertisers may become more competitive to consumers through higher quality or low subscription prices (if applicable).[26]

Challenges

Platforms work to find an equilibrium between advertiser and consumer desires to maximize their profits. They compete for advertisers through costs per ad and targeting capabilities, and platforms and advertisers are dependent on each other for growing their profits. Platforms also compete for users because advertisers will seek platforms with higher user counts.[24][26] Pleasing users comes at a balance between enough relevancy in ads to add value to the user experience, but limiting collection to not scare users away.[23] Limiting collections to favor consumers is at odds with increasing targeting to please advertisers.

Intelligence Agencies

Intelligence agencies are government agents that collect, analyze, and exploit information in order to support national security efforts.

The National Security Agency uses tracking technologies provided by advertisers for surveillance purposes. The data collected for the purposes of targeted advertising serves their purposes of security by providing user data, device data, and location data for potentially malicious actors.[27] Intelligence agencies share the same pitfalls of trust that platforms and advertisers face, as citizens face discomfort with tracking choices from all angles.[21]

Controversy of Data Collection

The main consumer discomfort in targeted advertising lies not in receiving a tailored advertising experience, but in the massive amounts of harvested data in the hands of corporations. People worry who has their data and what they can do with it.

Privacy and Security Concerns

According to the Pew Research Center, as of 2019 over 6 in 10 Americans believed it was impossible to go through their day without companies or the government collecting data about them. And a strong majority felt a lack of control, a lack of understanding, and a surplus of risk regarding this data collection.[28] As consumers gain an awareness of the commodification of their own information, they find it more important to protect their data and understand its current use. These concerns bleed into government and company decisions to allow limits or denials of personal data collections.[29] Criticisms of these legislative efforts argue their reach is too limited; no law standardizes when a company must notify users of data breaches or leaks, and nothing prevents the spread of data across a web of third parties.[30]

Discrimination

Targeted advertisements show the potential for discrimination in advertising through 'attribute based targeting mechanisms' offered by advertisement hosts. Some platforms possess the ability to exclude people from an advertisement's audience based on 'ethnic affinity.' And researchers also found that intersections of free-form attributes of a user such a political affiliations and interests could be used as a proxy for sensitive attributes like race.[31] Another example found Google advertisements for employment being disproportionately shown to male users, which brought up questions of why and how males were being shown the adds more frequently. Possible "whys" included explicit discrimination by either Google or the Advertiser based on an independent evaluation of the appeal to each sex; indirect discrimination by other intersecting categories serving as a proxy for gender; discrimination by other advertisements influencing who Google determined that ad served; or clickthrough rate by each gender demonstrating that males were more likely to interact with that advertisement.[32]

References

  1. ↑ 1.0 1.1 Froehlich, N. (2022, October 12). Council post: The truth in user privacy and targeted ads. Forbes. Retrieved February 10, 2023, from https://www.forbes.com/sites/forbestechcouncil/2022/02/24/the-truth-in-user-privacy-and-targeted-ads/?sh=2cf9d0b8355e
  2. ↑ 2.0 2.1 2.2 Jansen, B. J., Moore, K., & Carman, S. (2012, July 17). Evaluating the performance of demographic targeting using gender in sponsored search. Pennsylvania State University College of Information Science and Technology. Retrieved January 24, 2023, from https://faculty.ist.psu.edu/jjansen/academic/jansen_gender_ppc.pdf
  3. ↑ 3.0 3.1 Google. (n.d.). Targeting your ads. Google Ads Help. Retrieved February 10, 2023, from https://support.google.com/google-ads/answer/1704368?hl=en
  4. ↑ 4.0 4.1 Lau, Y. (2020, January). A Brief Primer on the Economics of Targeted Advertising. Retrieved February 11, 2023, from https://www.ftc.gov/system/files/documents/reports/brief-primer-economics-targeted-advertising/economic_issues_paper_-_economics_of_targeted_advertising.pdf
  5. ↑ Meaker, M. (2023, January 5). The slow death of surveillance capitalism has begun. Wired. Retrieved February 10, 2023, from https://www.wired.com/story/meta-surveillance-capitalism/
  6. ↑ Farahat, A., & Bailey, M. C. (2012). How effective is targeted advertising? Proceedings of the 21st International Conference on World Wide Web. https://doi.org/10.1145/2187836.2187852
  7. ↑ 7.0 7.1 Liu, B., Sheth, A., Weinsberg, U., Chandrashekar, J., & Govindan, R. (2013). Adreveal. Proceedings of the Twelfth ACM Workshop on Hot Topics in Networks. https://doi.org/10.1145/2535771.2535783
  8. ↑ Chandra, A., & Kaiser, U. (2014). Targeted advertising in magazine markets and the advent of the internet. Management Science, 60(7), 1829–1843. https://doi.org/10.1287/mnsc.2013.1830
  9. ↑ Lesonsky, R. (2017, March 2). Should You Advertise on Local Radio? U.S. Small Business Administration. Retrieved February 10, 2023, from https://www.sba.gov/blog/should-you-advertise-local-radio
  10. ↑ 10.0 10.1 Bray, H. (2018, November 5). With New Tech, TV election ads get personal - the Boston Globe. BostonGlobe.com. Retrieved February 10, 2023, from https://www.bostonglobe.com/business/2018/11/05/with-new-tech-election-ads-get-personal/NuPUy32veySgi4PC3ZN0pI/story.html
  11. ↑ Flint, J. (2020, November 10). WSJ News Exclusive | Targeted Ads Headed Soon to Network TV. The Wall Street Journal. Retrieved February 10, 2023, from https://www.wsj.com/articles/targeted-ads-headed-soon-to-network-tv-11605016201
  12. ↑ Federal Trade Commission. (2021, October 21). A Look At What ISPs Know About You: An FTC Staff Report. Retrieved February 11, 2023, from https://www.ftc.gov/system/files/documents/reports/look-what-isps-know-about-you-examining-privacy-practices-six-major-internet-service-providers/p195402_isp_6b_staff_report.pdf?ref=hackernoon.com
  13. ↑ What is Adwords? definition of adwords, Adwords meaning. The Economic Times. (n.d.). Retrieved February 10, 2023, from https://economictimes.indiatimes.com/definition/adwords
  14. ↑ Yan, J., Liu, N., Wang, G., Zhang, W., Jiang, Y., & Chen, Z. (2009). How much can behavioral targeting help online advertising? Proceedings of the 18th International Conference on World Wide Web. https://doi.org/10.1145/1526709.1526745
  15. ↑ Forrester. (2022, November 9). Post-pandemic media consumption: Online streaming accelerates a new content experience. Forbes. Retrieved February 10, 2023, from https://www.forbes.com/sites/forrester/2021/06/28/post-pandemic-media-consumption-online-streaming-accelerates-a-new-content-experience/?sh=61f6c7c018cf
  16. ↑ Fourberg, N., Tas, S., Wiewiorra, L., Godlovitch, I., De Streel, A., Jacquemin, H., Bourguigon, C., Jacques, F., Ledger, M., Lognoul, M., Hill, J., & Nunu, M. (2021, June). Online advertising: The impact of targeted ... - european parliament. Retrieved February 11, 2023, from https://www.europarl.europa.eu/RegData/etudes/STUD/2021/662913/IPOL_STU(2021)662913_EN.pdf?ref=hackernoon.com
  17. ↑ Matsakis, L. (2018, April 25). Facebook's targeted ads are more complex than it lets on. Wired. Retrieved February 10, 2023, from https://www.wired.com/story/facebooks-targeted-ads-are-more-complex-than-it-lets-on/
  18. ↑ TikTok Placement. Business help center. (n.d.). Retrieved February 10, 2023, from https://ads.tiktok.com/help/article/tiktok-placement?lang=en#
  19. ↑ About Meta ads placements. Facebook. (n.d.). Retrieved February 10, 2023, from https://www.facebook.com/business/help/407108559393196?id=369787570424415
  20. ↑ 20.0 20.1 Froehlich, N. (2022, October 12). Council post: The truth in user privacy and targeted ads. Forbes. Retrieved February 10, 2023, from https://www.forbes.com/sites/forbestechcouncil/2022/02/24/the-truth-in-user-privacy-and-targeted-ads/?sh=41c1d9b9355e
  21. ↑ 21.0 21.1 21.2 21.3 Froehlich, N. (2022, October 12). Council post: The truth in user privacy and targeted ads. Forbes. Retrieved February 10, 2023, from https://www.forbes.com/sites/forbestechcouncil/2022/02/24/the-truth-in-user-privacy-and-targeted-ads/?sh=41c1d9b9355e
  22. ↑ Jacobson, J., Gruzd, A., & Hernández-García, Á. (2019, March 20). Social Media Marketing: Who is watching the watchers? Journal of Retailing and Consumer Services. Retrieved February 10, 2023, from https://www.sciencedirect.com/science/article/pii/S0969698918307744
  23. ↑ 23.0 23.1 23.2 Ruckenstein, M., & Granroth, J. (2019, February 11). Algorithms, advertising and the intimacy of Surveillance. Taylor & Francis. Retrieved February 10, 2023, from https://www.tandfonline.com/doi/full/10.1080/17530350.2019.1574866
  24. ↑ 24.0 24.1 24.2 Gal-Or, E., Gal-Or, R., & Penmetsa, N. (2018). The role of user privacy concerns in shaping competition among platforms. Information Systems Research,29(3), 698–722. https://doi.org/10.1287/isre.2017.0730
  25. ↑ Hao, C., & Yang, L. (2022). Platform advertising and targeted promotion: Paid or Free? Electronic Commerce Research and Applications, 55, 101178. https://doi.org/10.1016/j.elerap.2022.101178
  26. ↑ 26.0 26.1 Kox, H., Straathof, B., & Zwart, G. (2017). Targeted advertising, platform competition, and privacy. Journal of Economics & Management Strategy, 26(3), 557–570. https://doi.org/10.1111/jems.12200
  27. ↑ Peterson, A., Soltani, A., & Gellman, B. (2021, December 6). NSA uses Google Cookies to pinpoint targets for hacking. The Washington Post. Retrieved February 10, 2023, from https://www.washingtonpost.com/news/the-switch/wp/2013/12/10/nsa-uses-google-cookies-to-pinpoint-targets-for-hacking/
  28. ↑ Auxier, B., Raine, L., Anderson, M., Perrin, A., Kumar, M., & Turner, E. (2020, August 17). Americans and privacy: Concerned, confused and feeling lack of control over their personal information. Pew Research Center: Internet, Science & Tech. Retrieved February 10, 2023, from https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/
  29. ↑ Goswami, S. (2022, October 12). Council post: The rising concern around consumer data and privacy. Forbes. Retrieved February 10, 2023, from https://www.forbes.com/sites/forbestechcouncil/2020/12/14/the-rising-concern-around-consumer-data-and-privacy/?sh=775b682487e8
  30. ↑ Klosowski, T. (2021, September 6). The State of Consumer Data Privacy Laws in the US (and why it matters). The New York Times. Retrieved February 10, 2023, from https://www.nytimes.com/wirecutter/blog/state-of-privacy-laws-in-us/
  31. ↑ Speicher, T., Ali, M., Venkatadri, G., Ribeiro, F. N., Arvanitakis, G., Benevenuto, F., Gummadi, K. P., Loiseau, P., Mislove, A., Friedler, S. A., & Wilson, C. (2018). Potential for Discrimination in Online Targeted Advertising. Retrieved February 10, 2023, from http://proceedings.mlr.press/v81/speicher18a/speicher18a.pdf.
  32. ↑ Datta, A., Datta, A., Makagon, J., Mulligan, D. K., Tschantz, M. C., Friedler, S. A., & Wilson, C. (2018). Discrimination in Online Advertising A Multidisciplinary Inquiry. Retrieved February 10, 2023, from http://proceedings.mlr.press/v81/datta18a/datta18a.pdf.
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