You think about it and it pops up on your screen – ready to buy. How does it work?

Targeted ads are so common that most of us do not give it any second thought. But these adverts are precisely the reason why digital companies have the massive values they do today – and why most social media platforms are completely free for users.

Whether you want to be a savvy business strategist or a more aware consumer, knowledge of how ads are targeted is helpful.

The Digital Presence

Before understanding ad targeting, you need to understand how you fit into the digital realm. Just two decades ago, the internet was accessible to a few, and used for even fewer things. Today, it is almost impossible to live in an urban landscape without a digital presence.

Even when you stay off social media, you leave a mark – through payments, registrations with businesses and institutions, your employees who keep online records of you, and through the daily cycles of emails, search engines, and hundreds of other online traces.

Think about it – if services like Google and Facebook are free, then how come these massive companies are worth billions and able to provide such humongous services? That’s because when you sign up on them, you, as a consumer, agree to part with something other than money – data.

You Want The Right Audience? We Got The Right Audience

Digital companies run by selling ad spaces and ads. So, it’s not us, we as the consumers, do not directly pay for the platforms, their employees, their servers, and the big fat salaries of their CEOs. Rather, it is the businesses, small, medium and large, who pay. And why do they do so?

Traditional advertising was sort of a shot in the dark. For example, you knew that the youth were most likely to tune into sitcoms during the 90s, so your hot new t-shirt company advertised during this time slot. But not all of this youth wanted hot new t-shirts.

Some just had enough t-shirts. Others preferred shirts and loafers. Some simply did not had the money. So, you ended up paying hundreds of thousands of dollars for a few seconds of airtime, in the hope that some of these youth liked what you were selling.

Not with ad networks and ad targeting. Suppose now you advertise your business through an ad network or through say a digital platform like Facebook. Now, Facebook’s algorithms know that there is a certain section of the population with enough money, and an interest in edgy t-shirts.

Facebook will find them, and advertise your products to them. Now, you have a much higher return on investment for a fraction of the price. That’s the beauty of ad targeting.

Benefits of Ad Targeting 

Ad targeting is perhaps one of the most revolutionary changes for companies and their marketing strategies. They provide unprecedented benefits to businesses, which include –

• These ads are often low cost, and can be placed in a very flexible manner. Thanks to digital analytics, businesses can know when their advertisements are likely to yield the best results, and when a particular campaign is slagging.
• Thanks to ad targeting, companies now only need to focus on the creative aspect of marketing. Reaching out to customers is something automatically taken care of by these digital platforms – after all, that’s what businesses are paying for.
• Companies can also get very flexible campaign payment modes. Most social media platforms use pay-per-click or pay-per-purchase models, where the platform gets paid only when a user clicks on the advertisement or actually makes a purchase.
• Above all, ad targeting help companies cut through the chase and reach directly to the people who are most likely to buy their products and services.

Data Driven Ad Targeting  

Some issues with data management has come to the forefront in the recent years, especially with a series of significant data breaches that came to sort of a culmination with the Cambridge Analytica.

It is one thing for t-shirts and shampoo makers to use the data for ad targeting. It becomes a completely different ball game when campaign managers, consultants, PR firms and other policy-shapers are allowed such unprecedented access to public data.

For a very long time, social media and other digital platforms have treated all advertisers and data-users as the same – they pay, they get access, they are allowed to do whatever they want with the data.

But the.repercussions of this have begun to make it’s presence felt in various ways with unprecedented and invasive data mining, and an increasingly justified paranoia of Big Brother. The problem is not just for consumers.

Advertisers often pour millions into ad targeting, eschewing traditional methods of sale in the hopes of capturing a large share of the digital pie. However, the metrics that platforms so proudly display have been found to be hollow.

Facebook, for example, has been found to inflate views on its video advertisements. Companies, such as New York Times and Proctor and Gamble have significantly reduced their online advertising budgets and have found no change in their revenue.

However at the same time, as the ad networks and the digital platforms act as an intermediary and manage both sides, they help make things easy and fast when both parties interact through them.

What’s The Future of Data Driven Ad Targeting?

A lot of the internet’s future is on the shoulders of US lawmakers and civil society, as most companies dominating the digital sphere today operate out of the Silicon Valley. Many nations and alliances have already begun to limit the way their citizen’s data can be collected and used, and this trend is likely to continue.

Businesses may lose out heavily if ad targeting is removed or limited. That is the belief of all the stakeholders involved, who say that the ultimate wellbeing of all is in the further refinement of ad targeting offered by these ad networks and most other digital platforms.

So awareness, ethicality and creative advertising well supported by data driven ad targeting will be definitely helpful. Ad targeting basis geo – country and city, day-time, frequency capping, device targeting, IP targeting and more helps improve the ROI for advertisers.

Thus ad targeting makes it a win-win for advertisers, the digital platforms and publishers, as well as the intermediary ad networks. What are your opinions friends?