Have you ever had an ad show up on your Facebook or Instagram feed that was so perfectly tailored to you, it made you wonder if your phone’s microphone has been listening to your conversations? How often do you spend a few minutes perusing a product listing then have that exact product show up in an ad a few minutes later? When you walk into a Target or a Kroger, do you get a push notification reminding you to check their app for coupons?
For most regular smartphone users, the answer to all these questions is probably yes. Traditionally, targeted advertising has meant placing ads in specific markets, timeslots, websites, or locations. A fitness shake advertising at a gym, for example. With the Big Data explosion in recent years, targeted advertising has become pinpoint accurate. So accurate, in fact, that it can seem a little creepy, and some of the practices used to gather data have raised privacy concerns both in the US and abroad.
Hyper-Targeted Advertising
The modern marketer has a bevy of tools at their disposal that we couldn’t have imagined 20 years ago. Marketers can now gather, analyze, and integrate individual-level data to produce and place behaviorally targeted ads. Tools such as behavioral retargeting (also known as remarketing), content-based targeting, and keyword-based targeting have dramatically improved advertisers’ ability to reach the right consumer at the right time, in the right place, at the perfect moment in their buying journey.
On the one hand, these practices have made advertisements far more relevant and useful for consumers. On the other hand, having an ad pop up based on your recent browsing history or current physical location can feel invasive.
Benefits
Targeted mobile advertising is extremely effective, and for marketers, the practice is only growing. According to an Advertising Perceptions study, “four out of five (82%) advertisers said mobile device identifiers, which are used to pinpoint specific smartphone users, are important for ad targeting.” Fifty percent of those surveyed consider privacy implications an “urgent issue.” In addition, fifty percent of advertisers are concerned about online fraud, saying it will “significantly affect their mobile ad spending.”
Along with the precision big data targeting allows for, the study points out that one of the main benefits of mobile marketing is “the ability to target individual devices with Mobile IDs.” These identifiers allow advertisers to be sure about who they’re targeting. Justin Fromm, VP of business intelligence at Advertiser Perceptions explains, “If advertisers have to target without the benefit of identifiers, they will rely more heavily on algorithms and programmatic buying, and that increases the likelihood of fraud.” Such media buying methods are more vulnerable to fraudulent activity such as “zombie websites” which are embedded with code that generates false ad views or “click injections” that utilize bots or malware on mobile devices to “steal attribution credit and advertising dollars for a genuine app install.”
Privacy Concerns
A quick Google search on advertising and privacy yields a number of instructional articles on how to opt-out of targeted advertising on some sites. You’ll also find quite a few alarming articles declaring that targeted advertising is a danger to your personal information.
With data privacy concerns at the forefront of the public consciousness following data breaches at companies like Equifax and unauthorized sharing in cases like the Cambridge Analytica scandal, the European Union has instituted far stricter data privacy rules to safeguard consumer data.
Consumer concerns about privacy have to inform marketing decisions about data collection methods and transparency. No matter how perfectly targeted an ad, if the user feels their privacy has been invaded, they’re going to come away from the interaction with a negative valuation of the brand.
Finding Balance
The more useful and relevant an ad, the less likely a user is to question it or be turned off by it. That’s not all there is to it, however. A recent Harvard study took a deep dive into the question of convenience versus privacy. Researchers found that consumer perception of advertising practices as acceptable or unacceptable is correlated with their beliefs about “how their information ought to move between parties.” If the flow of information is perceived to violate basic social norms, consumers are likely to be put off.
That determination is often made by where and how the information was obtained. People are more accepting of data gathering within the website they are visiting rather than seeing data transferred from one site to another. Users also prefer to be aware they are providing information, rather than having it collected and also have a preference for ads based on their directly stated interests rather than having an algorithm infer their wants or needs.
The study also examined “the moderating role of platform trust” and found that “when consumers trust a platform, revealing acceptable information flows increase ad effectiveness.”
Transparency can be achieved in several ways and to varying degrees of full disclosure. Facebook, for example, introduced a feature that allows users to see the reasons any particular ad is being shown to them. This allows the user to see if the ad is based on their page likes or ads they have clicked on within Facebook, etc. Following suit, a growing number of advertisers have chosen to voluntarily display the AdChoices icon, which indicates that the accompanying ad is targeted to that user based on their behavior or characteristics. Clicking the icon allows the user to see why this ad was chosen for them. If a user has spent a lot of time reading articles about Star Wars or Marvel, for example, you might see ads for Disney’s new streaming service that launches in November.
In that same vein, many sites now display a banner that alerts users that they use cookies to track their behavior on the site and/or display a “privacy seal,” indicating that privacy standards have been met. These banners serve to indemnify companies from claims that they are gathering information without consumers’ consent. More importantly, however, they offer transparency that engenders a trust-based relationship with the consumer.
Well-targeted ads are more personalized, relevant, interesting, and useful to consumers. They can also serve to introduce new products that are uniquely suited to a consumer’s particular wants, needs, and interests. The trick, for advertisers, is finding a balance and providing transparency into their methods so that trust is maintained.