Targeted advertising
Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting.[1]
These traits can either be demographic with a focus on race, economic status, sex, age, generation, level of education, income level, and employment, or psychographic focused on the consumer values, personality, attitude, opinion, lifestyle, and interest.[2] This focus can also entail behavioral variables, such as browser history, purchase history, and other recent online activities. The process of algorithm targeting eliminates waste.[3]
Traditional forms of advertising, including billboards, newspapers, magazines, and radio channels, are progressively becoming replaced by online advertisements.[4]
Through the emergence of new online channels, the usefulness of targeted advertising is increasing because companies aim to minimize wasted advertising.[4] Most targeted new media advertising currently uses second-order proxies for targets, such as tracking online or mobile web activities of consumers, associating historical web page consumer demographics with new consumer web page access, using a search word as the basis of implied interest, or contextual advertising.[5]
Targeting aims to improve the effectiveness of advertising and reduce the wastage created by sending advertising to consumers who are unlikely to purchase that product. Targeted advertising or improved targeting may lead to lower advertising costs and expenditures.[68]
The effects of advertising on society and those targeted are all implicitly underpinned by the consideration of whether advertising compromises autonomous choice.[69]
Those arguing for the ethical acceptability of advertising claim that, because of the commercially competitive context of advertising, the consumer has a choice over what to accept and what to reject.
Humans have the cognitive competence and are equipped with the necessary faculties to decide whether to be affected by adverts.[70] Those arguing against note, for example, that advertising can make us buy things we do not want or that, as advertising is enmeshed in a capitalist system, it only presents choices based on consumerist-centered reality thus limiting the exposure to non-materialist lifestyles.
Although the effects of target advertising are mainly focused on those targeted it also affect on those not targeted. Its unintended audiences often view an advertisement targeted at other groups and start forming judgments and decisions regarding the advertisement and even the brand and company behind the advertisement, these judgments may affect future consumer behavior.[71]
The Network Advertising Initiative conducted a study[72] in 2009 measuring the pricing and effectiveness of targeted advertising. It revealed that targeted advertising:
However, other studies show that targeted advertising, at least by gender,[2] is not effective.
One of the major difficulties in measuring the economic efficiency of targeting, however, is being able to observe what would have happened in the absence of targeting since the users targeted by advertisers are more likely to convert than the general population. Farahat and Bailey [73] exploit a large-scale natural experiment on Yahoo! allowing them to measure the true economic impact of targeted advertising on brand searches and clicks. They find, assuming the cost per 1000 ad impressions (CPM) is $1, that:
Research shows that Content marketing in 2015 generated 3 times as many leads as traditional outbound marketing, but costs 62% less[74] showing how being able to advertise to targeted consumers is becoming the ideal way to advertise to the public. Other stats show that 86% of people skip television adverts and 44% of people ignore direct mail, which also displays how advertising to the wrong group of people can be a waste of resources.[74]
Controversies[edit]
Targeted advertising has raised controversies, most particularly regarding privacy rights and policies. With behavioral targeting focusing on specific user actions such as site history, browsing history, and buying behavior, this has raised user concern that all activity is being tracked.
Privacy International, a UK-based registered charity that defends and promotes the right to privacy across the world, suggests that from any ethical standpoint such interception of web traffic must be conditional on the based on explicit and informed consent, and action must be taken where organizations can be shown to have acted unlawfully.
A survey conducted in the United States by the Pew Internet & American Life Project between January 20 and February 19, 2012, revealed that most Americans are not in favor of targeted advertising, seeing it as an invasion of privacy. Indeed, 68% of those surveyed said they are "not okay" with targeted advertising because they do not like having their online behavior tracked and analyzed.
Another issue with targeted advertising is the lack of 'new' advertisements of goods or services. Seeing as all ads are tailored to be based on user preferences, no different products will be introduced to the consumer. Hence, in this case, the consumer will be at a loss as they are not exposed to anything new.
Advertisers concentrate their resources on the consumer, which can be very effective when done right.[80] When advertising doesn't work, the consumer can find this creepy and start wondering how the advertiser learned the information about them.[25] Consumers can have concerns over ads targeted at them, which are too personal for comfort, feeling a need for control over their data.[81]
In targeted advertising privacy is a complicated issue due to the type of protected user information and the number of parties involved. The three main parties involved in online advertising are the advertiser, the publisher, and the network. People tend to want to keep their previously browsed websites private, although users 'clickstreams' are being transferred to advertisers who work with ad networks. The user's preferences and interests are visible through their clickstream and their behavioral profile is generated.[82]
Many find this form of advertising to be concerning and see these tactics as manipulative and a sense of discrimination.[82] As a result of this, several methods have been introduced to avoid advertising.[4] Internet users employing ad blockers are rapidly growing in numbers. The average global ad-blocking[83] rate in early 2018 was estimated at 27 percent. Greece is at the top of the list with more than 40% of internet users admitting to using ad-blocking software. Among the technical population ad-blocking reaches 58%.[84]