Is that banner ad following me? Thoughts About Personalized Online Marketing
Ever been on a website and have an ad appear that just so happens to be for an item you were recently searching for? That’s no accident, it’s personalized advertising. Marketers target user online behavior to align their product or service with your online shopping or search activity. Another name for it is behavioral targeting and the tactic, when used correctly, can be highly effective in targeting consumers. I myself have been delighted to see a jacket I was searching for last winter pop up on Pandora, on sale. However, not everyone is so thrilled. It has many consumers wondering just how much of their personal information and internet habits are being used in the name of advertising.
One example of personalized advertising that you may have noticed is the automated system Gmail is now using. By filtering your emails through this system, Gmail can detect which emails are most important (based on things like who sent them, which ones you normally read, and keywords). From the emails that have been deemed “important” by Gmail, the system is able to show users ads that are specified to their interests or lifestyle. Additionally, because of this improvement in the type of ads Gmail shows a user, they have in effect been able to use about a third less ads than they used to.
Another thing that advertisers do is attach cookies to the emails they send consumers. This method is part of a tactic called “retargeting”. Consumers are targeted the first time when they get sent an email, and then once they open it, they are retargeted, as advertisers now know they are interested. As a result, the consumer may then see a banner ad pop up on a news site, or even on a search engine. One company in particular that has experienced success with this method is MetLife. “Of people who engage with MetLife because of display ads, about 75% now come through retargeting,” to Rick Heffernan from MetLife. Pretty impressive.
It was always believed to be a “truism” that personalization automatically increases relevance and therefore increases conversions…however, this isn’t always true. In a recent study done by MIT with data from an online travel firm, it was found that highly specified ads were generally no more effective than generic messages. The study showed the key difference between successful personalized ads and ones that just had average performance was whether or not the consumer had developed well-defined product preferences. To be exact, how close a consumer is to an actual purchase. For example, if a consumer is just browsing travel options versus looking for a hotel room in a specific city on certain dates. The further along in the sales funnel a consumer is, the more likely a personalized ad will be effective. For marketers, this means they should be aware of when to use personalized advertising techniques so as not waste resources when generic advertising would be just as affective.
Aside from personalized advertising being effective or ineffective, the bigger question is, “Is it ethical?”. In a survey done by The Pew Research Center earlier this year, it was found that two-thirds of internet users viewed having their behaviors tracked and analyzed in the name of targeted online advertising negatively.
The good news is, for those who dislike the practice of behavioral targeting, there are increasingly more ways to avoid it. The majority of online ads now include “ad choices” where users can click to “opt out” of seeing ads. Web browsers such as Mozilla and Yahoo have incorporated a “do not track” header/feature that users can implement. At a much higher level, the Federal Trade Commission is working towards passing “do not track” legislation that would allow consumers to avoid online behavior tracking all together. The Digital Advertising Alliance and other groups are working hard to implement recommendations that the FTC put forth in 2010 in hopes of avoiding the need for such legislation. Additionally, World Wide Web Consortium is in the process of developing standards for all sites.
While many consumers have an appreciation for targeted messages, some they feel that the cookies or automated systems used to monitor their internet behavior are an invasion of privacy. On the other hand, some advertisers argue that personalized advertising is nothing but beneficial to consumers. By providing them with tailored messages, less of the consumer’s time is wasted viewing advertising that does not apply to them.
Before venturing into the world of personalized advertising, companies need to consider multiple factors; they need to be smart about targeting consumers in the right environment, under the right circumstances, but also allow consumers the opportunity to “opt-out”.
How do you feel about behavioral targeting?
Meagan Southmayd is an Account Coordinator at Griffin York & Krause.