Seventy-one percent of consumers prefer personalized ads. But how do businesses know to serve you that ad about a product you were just looking for? Hint – it’s not magic. You are helping marketers do that through targeted advertising.
Everybody leaves a trace online. Targeted advertising just uses that submitted information to place relevant ads to an already receptive audience by gathering information based on people’s online activities. These targeted ads are working because people show a clear interest in them.
After seeing a personalized ad, 31 percent of people click on an ad, 27 percent search for the product or brand online, 21 percent type the brand’s web address directly into the browser, and 9 percent start their online research about the product.
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Plus, when looking to buy a product online, almost 65 percent of people click on Google ads.
There are several types of targeted advertising: Search engine advertising, social media ads, behavioral advertising, demographic segmentation any many other forms. We will cover the most interesting and important ones in this article, focusing on the benefits and how-tos that can help you grow your business further.
How Targeted Advertising Works
All those cookies you accepted (and no, we don’t mean Grandma’s) play a vital role in targeted digital marketing. Cookies are small snippets of data stored on your browser, containing your data and behavioral information like age, location, gender, interests, behavior on search engines, social media and even on websites.
This is why a product you were looking for on a retail platform may start following you around on other websites (and even on social media platforms). Even when people don’t click on the sponsored ads, they are crucial for lead nurturing, raising brand awareness, and supporting decision-making in the consideration stage of the buyer’s journey.
So, how does target advertising work exactly? When users accept cookies on websites, browsers store this information and send it further to third-party advertising networks.
The information on the cookies is shared with other advertiser platforms and third-party advertiser networks, like Brightroll, Drawbridge, and Yume. These advertising networks will then show you relevant ads whenever you are browsing websites already belonging to them. Basically, cookies store the information and put consumers in a specific group of people with similar online behavior.
How To Choose The Best Advertising Network
Brightroll, Drawbridge and Yume offer different benefits and focus on a specific niche -- which is important for brands because choosing the right advertising network should depend on your campaign goals. Brightroll and Yume are predominantly ad networks that bring amazing results when you need video space.
On the other hand, Drawbridge offers highly targeted advertising specified for cross-device audience reach. Drawbridge excels at retargeting with its display ads, and reaching the customers in the consideration phase, influencing their purchasing decisions by marketing the product they are interested in.
What Is Behavioral Advertising & How Can You Use It To Your Advantage?
As you can clearly see from its name, behavioral advertising has everything to do with consumers’ behavior online. Behavioral advertising is a technique of using already collected information from cookies and web browsing, search engine history, and social media, and then serving ads to a specific group of people. Well-targeted ads have higher click-through rates and bring increased conversions to businesses.
In fact, here are facts that support the benefits of personalized behavioral advertising:
According to Adlucent, 46 percent of surveyed people claim that targeted advertising reduces irrelevant ads.
25 percent of people claim that they love the fact that they discover new products through personalized ads.
19 percent of surveyed people claim that targeted ads make shopping experience and online search faster and easier.
75 percent of people claim that they would prefer a world with fewer but more personalized ads.
How Behavioral Ads Affect Businesses
Targeted ads are twice more effective as non-targeted ads, and retargeted display ads encourage 1000 percent more people to search for a product. But here’s a food for thought and a staggering fact - over 70 percent of marketers fail to target consumers with behavioral data. That’s definitely an area that requires improvement since it’s an untapped source of positive ROI and excellent advertising results.
By offering people what they want – and they do want it since they are already showing interest in those products – behavioral advertising is displaying only relevant products. For example, a John Deere ad probably wouldn’t do any good to an urban city girl in college.
Targeted Advertising Success Stories and Case Studies
Z Gallerie, a home goods retailer, employed personalized ad placement by collecting data through an online personality style quiz. Z Gallerie lacked shopper segmentation, so in this way, they upped the consumer engagement both online and in stores and made data collection both voluntary and fun. After shoppers completed their personality quiz, depending on the category they fall in, they would be shown Z Gallerie’s product belonging to that style.
How this translates to business success? The results are in. Z Gallerie’s personality style quiz was taken more than 100,000 times, which means those are the customers who spent time interacting with the brand, increasing brand awareness. And always-positive test results also increase customer satisfaction. Z Gallery also acquired 40 percent more new customers who never shopped before at their store. Online engagement with the brand was doubled and display ad engagement was 1.5 times better since introducing the quiz.
That means that a targeted advertising campaign brought positive results to the subsequent display ad campaigns. When compared to Z Gallerie’s average results, their ROI doubled, (2.3 times better), and compared to the industry average, their ROI was tripled (3.2 times, to be exact). Existing customers placed 1.4 times larger orders than usual, measured in purchase value.
According to Amazon’s Vice President of Global Ad Sales Lisa Utzschneider, ad personalization and behavioral ad targeting were driving the company’s success since the '90s. Amazon excels at offering the perfectly targeted products just by analyzing online activities and purchase history.
But, they don’t stop there – Amazon analyzes the possible reasons why you’ve come to the decision to purchase a product. By observing how customers browse and select items, Amazon knows how to push products you might like – do you prefer coupons, or you browse customer reviews heavily?
Another thing Amazon does well when it comes to ad personalization and placement displays is providing different creative ad solutions optimized and personally tailored to Amazon customers. Not only is Amazon tailoring the shopping experience per your habits, but it’s optimizing them in real time. In Amazon’s case, personalized behavioral targeting brought them a 23 percent increase in purchase rate, and knowing that they are the leading retailer with close to $178 billion in 2017 alone, that increase represents a hefty chunk of their profits.
When it comes to social media profiles, the truth is out there – literally, it’s on the internet. Everything you post about yourself publicly is visible to marketers and marketing networks, and of course, social media platforms as well.
More than 85 percent of Millennials have a smartphone, and 90 percent of them use Facebook daily.
According to a study from Social Media Examiner about social media advertising, this is how chief marketing officers and decision-makers fare: 84 percent of them use Facebook paid advertising, 41 percent use Google ads and 18 percent pay for LinkedIn ads.
Top Social Media Marketing Companies
In the latest 2017 Social Media Marketing Industry Report, the number of social media marketers using paid ads on Facebook rose to a staggering 94 percent. It’s also interesting that 62 percent of marketers claim that Facebook is their most important social media channel and crucial for achieving their advertising goals.
Facebook remains one of the best platforms for advertising precisely because they offer intricate targeting options and customer segmentation. One guy even pranked his roommate by specifically reaching him with Facebook targeted ads and custom audience filtering – so Facebook targeting is so precise that if set up correctly, you can target even a single person of interest. And the number of businesses that use Facebook ads is on the rise – in 2016, there were 3 million companies that advertised on Facebook, and in 2017, the number rose to 5 million businesses.
Facebook’s success as the most cost-effective marketing platform stems directly from its customer audience segmentation.
What Can You Target With Facebook’s Customer Audience Tool?
Facebook allows you to select the exact radius on a map, and you can choose to target specific cities, countries, or even exclude them if need be. You can also target people who have recently visited a location you are interested in, or they are traveling to it.
This is great for tour guides for example, or product and food delivery companies. There is even an option to target people when they are in the location zone and using Facebook, so if you’re a local restaurant, you can invite people to grab a bite to eat or promote after-work cocktail hour.
It’s easy to select the age group that you wish to target and market products to them based on their age.
Facebook lets you choose whether you want your ad to be shown to female or male users or both.
With relationship status segmentation, you can advertise to people based on their orientation, or target single people, people who are already married, engaged, divorced, and more. It’s all based on their relationship status. For example, it is a good idea to market a dating site for people who are single or recently divorced. Meanwhile, jewelers can offer wedding band ads to recently engaged couples.
Want to market to people speaking a specific language, but residing in a different country? Facebook lets you do that. For example, you can choose to market to Asian or Latino communities living in America.
This filter enables you to advertise to people who are still attending high school, attending or finishing college, individuals who are college grads or have some diploma or college degree. You can also choose to show your ad only to people who possess a certain education level, like associate degree, master’s, doctorate, and more. Facebook lets you delve into personalized advertising by targeting people who went to a specific school, in a specific year.
Looking for executives with deep pockets? This filter lets you segment people based on their net worth and income range. This is great if you want to offer high-end products or luxury services.
This is a very detailed filter and it comes with plenty of segmentation options. You can choose to target people based on the type of home they reside in and their level of ownership - mainly if they are owners or renting.
Facebook also lets you segment user’s household like – newlyweds, young adults, seniors, veterans, teenagers, families, and more. For example, people who are in the remodeling industry or construction can target people whose home was built 20 or 30 years ago and offer repairs. Real estate agencies can target first-time home buyers and renters, and make use of the location targeting as well.
Looking for people with a specific job role in mind? You can target people who are working for a certain employer, or base targeting just on the general industry they work in, and their employment status. If you’re an online publication who writes articles for marketers, you will choose social media managers, marketing executives, copywriters, content writers and others who fall into the same category. You can also poach people from competition by showing the ads only to their employees.
Facebook lets you choose people solely based on their ethnicity.
You can target Baby Boomers, Generation X, Millennials, Generation Z and so on.
This filter comes with many targeting options. There is a whole segment that is dedicated to targeting moms, and an additional segment targeting all parents. This way, you can choose to market diapers to parents with babies, workout classes for new moms, fashion lines to trendy Millennial moms, and maternity clothes for expecting mothers.
When speaking about cost-per-click (CPC), the mom niche -- especially millennial moms -- represent the most expensive niche to target. But that’s not in vain because millennial moms come with a great purchase power, and they spend a lot of time online – more than half of millennial moms make purchases on the go, using their smartphones.
You can advertise to people based on their political preferences.
This is another very important filter that allows you to target people who have already experienced a life event (or will experience it in the future). These events can include new relationships, anniversaries, new jobs, birthdays, people who have recently moved, who are newly engaged, or even any friends of people who have experienced a life event.
This is one of the easiest targeting options. For example, you can target a friend or a family member of a person who will be having a birthday soon, with an ad for a special gift. Or you can push expensive romantic vacations to people who have been engaged for a couple of months, offering them as honeymoon destinations, or offer less expensive options and field trips to people who are in a relationship, already married, or are celebrating an anniversary soon.
Choose people based on their entertainment preferences. You can select people who like watching certain movies, playing games, listening to certain types of music, reading, watching TV shows, etc. For example, target The Walking Dead fans with an article about the show, or market a new zombie book, special merchandise or anything else surrounding the show that might pique their interest.
There’s a lot of interests you can target, from activities, pages people like, topics, and all sorts of related events.
It’s easy to target gym-goers, bodybuilders, people who are into healthy nutrition, or specific health and wellness categories such as yoga, meditation, running or dance. For example, new gyms can advertise group fitness classes or offer promo codes, target individuals hoping to get fit for the summer and more.
Advertise to Facebook users based on their hobbies, like home improvements, arts and crafts, traveling, website design, etc.
This will probably be one of the more relevant filters for businesses, as it allows them to target people and show them the ad if they have recently completed a purchase. It will be easy to market a new product young female adults who like pages like Maybelline and Max Factor, or market a toy to parents whose child is having a birthday soon and have purchases some presents already.
Advertise to people who are following sporting events, games, or enjoy in-season activities like swimming and skiing.
Considering how intricate and detailed these filters are, you can perfect your buyer persona and target to a highly specific group of people.
Targeted Advertising Through AI Image Analysis
It’s simple -- computers can analyze billions and trillions of social media photos to draw conclusions about buyer personas... and such a tool will be a powerful ally for advertisers.
Top AR/VR Companies
However, AI is still relying on humans to teach it what it needs to do, and while this will definitely be the future of targeted advertising, it’s a relatively new technology that needs to be developed further. It’s evolving, but this type of market segmentation still isn’t considered to be in everyday use by marketers. Currently, Crimson Hexagon is one of the tools that use AI for marketing insights.
Search Engine Targeting
Search engine targeting is when you use search engines to look up products or services you are interested in, and then seeing the ads for those products when you leave the search engine. Search engine targeting as a whole is a strong strategy -- Google is responsible for 95 percent clicked ads on mobile devices, according to Business Insider. And, did you know that 95 percent of Google’s revenue stems from online advertising?
Location targeting is quite successful since only 4 percent of advertisement impressions were delivered outside the perimeter of a targeted location, which means that 96 percent of targeted ads were on point. Budgets for location targeting are on the rise by 52 percent -- that's $15.7 billion in the last year. It is estimated that US mobile budgets for advertising will grow from $7.2 billion last year to $30.3 billion total in 2018.
How To Execute Targeted Advertising Successfully
Whether we are talking about Google AdWords or Facebook and social media targeting, the execution principles remain the same. First, you need to gain an insight into your buyer personas: Who they are, where do they live, what do they do and what is their spending power.
If you have access to Google Analytics, you can analyze when your website visitors are landing on a site, how often, what do they do, what pages they visit. Understanding their website journey might help you learn what they are interested in when it comes to your product.
Plus, once you understand who your buyers are, it will be easy to market to them. Define your customer audience as best as you can. This elaborate Facebook guide from AdEspresso will help you get going in the right direction.
We haven’t mentioned Instagram advertising simply because Facebook acquired Instagram and now you can choose to market on both platforms at the same time. When setting up a Facebook campaign, you will be prompted to use Instagram marketing options as well.
According to the Network Advertising Initiative, targeted advertisements based on customer behavior tripled the conversion rates as compared to non-targeted ads. Once you create satisfactory buyer personas, run the campaigns selecting the right filters we described above and analyze the data further. Every campaign can be tweaked further and optimized to bring better results.
Let’s Sum It Up
Targeted advertising will help you place your products in front of relevant people and all the data compiled in this article proves that behavioral and personalized targeting approach works and brings more revenue.
Here’s some advice on how to maximize targeted advertising:
Use retargeting to upsell to existing customers or to help people who are in the consideration phase to choose your product.
Create different buyer personas you can target through social media and AdWords using filters and segmentation tools.
Test your audiences and campaigns – it’s easy to see which type of created audience brings more conversions, and where you should adjust the ad budget accordingly.
Offer new products to people and help them discover their features.
Acquire new customers who have openly declared support for competitors.
Deflate your ad budget spend by creating more narrow audiences.
If targeted advertising is a big bite for you to chew, DesignRush has a list of the top advertising agencies that can help you dominate the market.