Targeted advertising is one of the marketing methods to provide advertisements to customers that reflect their characteristics, interests, and buying behavior. Targeted advertising is usually done using customer data to segment audiences based on factors such as basic demographics, purchasing interests, or user browsing behavior.
For digital marketers and e-commerce companies, targeted advertising is essential to reduce advertising costs and make advertising more effective. Targeted advertising also includes retargeting because it further personalizes the ad and encourages customers to make a purchase or take action. This article on the Smart Strategy blog will mention the most important advantages of this type of advertising.
What is targeted advertising?
Targeted advertising means sending ads to web users based on their online behavior in online advertising, demographics, and purchase history. Targeted advertising includes information that users have shared explicitly and data that can be inferred about them through implicit behavioral or demographic characteristics.
For example, you might be reading an article about the benefits of walking and running, and the website you’re visiting shows you a pair of athletic running shoes. Or for example, if your search history on a search engine like Google contains terms like smartphone reviews or the latest mobile technology, they might send you ads for new smartphones. Targeted ads can also consider your geographic location and social media activity.
How does targeted advertising work?
To place a targeted ad online, you must run a campaign on an ad network. These networks show ads based on user data, demographics, purchase history, or behavior.
Advertising platforms can collect data from various sources. The most common of these are cookies on websites you browse. Cookies are small files that store information about your actions or purchases on site.
Another source of information about users is search engines. They analyze search keywords and user habits to use this data to display paid ads on the search engine results page.
Also, advertising platforms receive your data from social network profiles. For example, social networks store information about your age, gender, opinions, preferences, etc.
By knowing your essential characteristics and online behavior, advertising platforms can show you targeted ads on different websites. For example, if you frequently browse cosmetic products on Amazon, you may see advertisements from other cosmetic retailers on various online platforms.
Brands often use targeted ads to show you products you’ve already reviewed. This tactic is also called retargeting. Retargeting helps businesses to attract your interest to return to their website and purchase the product.
As we said, brands use much information about you to target their ads. So based on the user data, we can have different types of targeted advertising in marketing.
Benefits of targeted advertising
Targeted advertising has many benefits for brands and businesses. This section will mention the most important advantages of this type of advertising.
Providing a high level of personalization
Advertising personalization has become one of the most important pillars of digital marketing due to its well-documented effects on customer acquisition and retention, click-through rate (CTR), and customer lifetime value (CLV). Targeted advertising allows brands to send different messages to different users based on the brand’s information about the customer.
The better a brand understands what its customers want and need; the more likely customers will respond to ads and engage with the brand. The research conducted about targeted advertising shows that:
- 71% of customers prefer personalized ads.
- Personalization in digital marketing can increase revenue by 15%.
- Personalization increases repeat purchases, with 44% of customers becoming repeat buyers with customized ads.
Create brand awareness
If a brand’s advertising is generic or weak, it won’t do much for a brand. Filling a user’s browser page with ads that don’t match their interests only hurts a brand’s reputation among users. Conversely, brands can improve their reputation by serving relevant ads and valuable content to audiences. This helps to strengthen the recognition of valuable customers and create a valuable brand.
Streamline your marketing efforts
Targeted advertising maximizes the productivity of a brand’s content. Generic advertising is less efficient and often more expensive than its objective benefits, but targeted advertising helps focus resources on high-value audience groups. This type of advertising takes the bulk of the work out of finding potential customers and attracting them to the brand with basic automation to deliver ads tailored to each audience segment.
Targeted advertising focuses on data already collected about customers, using demographics, interests, and behavioral trends. Leveraging customer data takes the guesswork out of customer acquisition and reduces costs for users who are unlikely to convert. In general, targeted advertising reduces unnecessary activities.
Types of targeted advertising
There are several types of targeted advertising. We will introduce each of these ads here. The most critical types of targeted advertising are:
- Geographic targeting
- Targeting social networks
Targeted text ads help marketers place ad content alongside other content related to what is being promoted. For example, contextual targeting matches the website’s content instead of placing ads all over the websites unrelated to the brand or offered product. As a result, textual ads create a more seamless experience for customers.
An example of text advertising would be for a sneaker brand running an ad on a blog about soccer. Typically, marketers create an ad and match it to specific keywords, then the publisher analyzes it and places it on more relevant pages.
Behaviorally targeted ads are similar to text ads but consider user behavior and browsing activity. In this type of ad targeting, you can target customers based on their search and browsing history. Factors that can shape behavioral targeting include links clicked, purchases, time spent on web pages, and more.
Geotargeting is essential in a marketer’s job, especially for brands that operate locally or in specific locations. Geotargeting serves ads to users based on their geographic location. Geotargeting targeted advertising is also helpful for brands selling a product tied to a particular area or for advertisers marketing services in a specific place.
Targeting social networks
Social media has become such a hot spot for advertising and e-commerce that many shoppers prefer to shop through social media rather than a store’s website. Social media targeting helps brands use consumer behavior on the web, search engines, and social networking sites to deliver ads that reflect user interests. Social media targeting can also be considered a form of behavioral targeting.
Retargeting is essential for digital marketers because it capitalizes on customers who have already shown interest or interacted with your brand. It works by associating sets of advertising messages (display ads, emails, social media ads, etc.) with given behaviors when a customer interacts with a brand. For example, a customer buying sneakers will likely be targeted with advertisements about other sports equipment.
Internet traffic analysis allows you to segment your audience based on interests, location, and other criteria. Targeted advertising is the result of the research that helps us to identify users who are potential consumers of our products or services. These ads create a better identification of the target audience, a higher click rate, and help to save the advertising budget.