Mon. Dec 6th, 2021
How 'Targeted Advertising' Impacts Our Behavior

While targeted advertising may sound like something relatively new, the practice has actually been around for almost a century.

General Motors ‘car for every purse and purpose’ scheme revolutionized the way the motor industry thought about advertising.

The brainchild of company president Alfred P Sloan, the idea centered around the ‘aspirational’ element to buying a new car.

A buyer may start with a Chevrolet to get on the car buying ladder, before trading up to better models such as an Oldsmobile, Buick or Cadillac.

The scheme was a direct challenge to Henry Ford’s one-size-fits-all approach with the Model T and soon became commonplace throughout the industry.

Fast forward to the digital era and advertisers have a plethora of ways they can target individuals through targeted advertising.

Ad agencies such as AdSavvy expertly leverage digital tools to provide advertisements based on personal, demographic and behavioral data.

Read on as we take a closer look at how targeted advertising works and assess how it impacts behavior.

Introducing targeted advertising

One of the best recent examples of targeted advertising is Sky TV’s AdSmart which was launched in the United Kingdom in 2014.

It uses household data stored on the Sky viewing card to allow advertisers to display different ads to different households at the same time.

When advertisers set up a campaign, they are required to define the target audience. If a household meets the criteria, the content is downloaded to their Sky box.

The ad is played when an AdSmartable commercial break is viewed, replacing the linear commercial which is screened to other households.

For instance, Joanne is a 33-year-old married mother of two boys. Her household income falls into the middle-class bracket.

By contrast, Tony is an affluent 48-year-old divorcee whose children have grown up. He has an executive managerial position in a marketing business.

In this scenario, Joanne is more likely to be shown an ad for a practical vehicle, while Tony will be shown an ad for a flashy sports car.

The technology also allows advertisers to cap the number of times ads are shown to ensure that content overkill does not come into play.

The ability to target audiences in this way is not only beneficial to advertisers but also provides consumers with much more personalized service.

How targeted ads impact behavior

One of the core elements of targeted ads is their ability to use previous behavioral patterns to shape the future decisions people make.

As highlighted by GM’s innovative car ads in the 1920s, marketers have long known that personalized marketing content delivers more sales.

However, they have not fully understood the consumer psychology that makes this method of advertising so effective.

Research published in the Journal of Consumer Research explored whether behaviourally targeted ads have any unique psychological consequences than other types of targeting techniques.

One study exposed students to an ad they believed to be either behaviorally targeted or non-targeted for a luxury watch brand.

The group was subsequently asked to rate how sophisticated they perceived themselves to be based on their background and current social standing.

The data showed that participants claimed to be more sophisticated after receiving an ad that they thought was individually targeted to them, compared to when they thought it was not targeted.

Participants believed the targeted ad reflected their tastes. Based on their browsing history, the ad told them they were sophisticated.

Targeted ads & behavior in the real world

Researchers at the University of Cambridge took things a step further by assessing how digital footprints can be used to influence behavior in the real world.

The assessed whether targeting consumers with messages tailored to their psychological profile would increase the chances of them taking a specific action.

The study targeted more than 3.5 million users on Facebook by leveraging features of the advertising platform to target ads at consumer segments of different psychological profiles.

Reactions to the ads were measured by counting which ads users clicked on and whether they purchased the product promoted in the ad.

It was found that matching the content of persuasive messages to a person’s psychological characteristics had a massive impact on their behavior.

This methodology resulted in up to 40 percent more clicks and up to 50 percent more purchases than mismatched or non-personalized messages.

The researchers highlighted that tailoring advertising messages to psychological needs can be a force for both good and bad.

For instance, targeted ads from financial institutions could help people save money – perhaps for a dream holiday or a new home.

Conversely, targeted ads could exploit someone’s weakness, particularly people who have an addictive personality or are politically naïve.

The future of targeted ads

Consumers and regulators have raised several questions about the ethics behind targeted behavioral ads and things are undoubtedly in a state of flux at the moment.

Google took a major step to address the concerns early this year by announcing that it will stop enabling cross-site tracking and targeting of individuals outside its own properties.

The company has previously allowed advertisers to target users based on what they do across the world wide web, including the various sites they visit.

The move has been forecast to have a major impact on ad targeting, although it is unclear at this stage how this will manifest itself.

Advertisers buying through Google will still be able to target ads on non-Google sites based on aggregate data using its Federated Learning of Cohorts (FLoC) method.

This enables targeting based on audience cohorts rather than by targeting individual people, although critics have already highlighted several privacy concerns.

Google’s change in policy is the latest step to move away from tracking technologies based around sketchy behavioral profiling.

Many marketers are worried that ads will become less effective, making it more difficult for advertisers to get a return on their investment.

While phasing out third-party cookies has largely been welcomed in tech circles, only time will tell whether the reinvented way of targeting ads will deliver what consumers and advertisers want.

This content is brought to you by Michael Black.

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