Personalized advertising has emerged as one of the top trends in marketing over the last three or four years. This fact is not surprising, as there is plenty of data out there to support consumer demand for personalized offers when ads are put in front of them. An Autopilot study from two years ago determined that 72% of over 1,200 consumers polled said they were frustrated and annoyed with generic advertisements.
Global business and technology consulting firm Accenture reports that 75% of the consumers they polled said they would be much more likely to make a purchase with retailers who know them by name, and who can recommend products based on their purchase history and/or search preferences.
Traditional advertising still at most times fails to zero in on customer preferences. Tech research and advisory firm, Gartner Incorporated, believes that as personalization search engines continue to improve, digital businesses can expect to capture 15% more in added profits by as early as 2017.
Our friends at Aurora University’s Online MBA program explain about personalized advertising and how it benefits businesses. Read on.
Personalized Advertising Defined
Personalized advertising targets web users based on their browsing habits, interests, and demographic information. This highly targeted approach to advertising is much different from placement targeted advertising, which is nothing more than placing a random ad in front of the consumer and hoping for clickthroughs.
This type of advertising isn’t just preferable to marketers, who stand a much better chance of landing a sale; it also benefits the consumer, who gets to see more of what they want and less of what they do not. This benefits both the advertiser and the customer. Obviously, from a marketing perspective, the advertiser will enjoy much higher profits when ads are personalized.
Consider a used car dealer who advertises their business on Google. Personalized advertising allows their ad dollars to reach people who have expressed interest in buying used cars, with the additional bonus of Google geo-targeting advertisements to users in the area the business operates in.
Personalized advertising works regardless of the platform a consumer being targeted is using. A prospective customer could be directed to an offer for purebred Bichon Frise puppies while watching a YouTube video about how to knit a dress, for example.
Personalized Advertising: How the Process Works
Alex LePage, vice president of product strategy at Rubicon Project, an advertising agency firm states:
“The more marketers understand consumer intent, the more personalized and effective their ads will be.” Personalized advertising fulfills this goal by showing customers ads based on what they want now or may be planning to do in the future.
We may show you ads based on many factors, including:
- Types of websites you visit, and mobile apps you have on your device.
- Cookies on your browser and the settings in your Google Account.
- Websites and apps you’ve visited that belong to businesses that advertise with Google.
- Your activity on another device.
- Previous interactions with Google’s ads or advertising services.
- Your Google Account activity and information.
- Other signals such as social media likes, tweets, pins, etc.
When showing you personalized ads, we will not associate an identifier from cookies or similar technologies with sensitive categories, such as those based on race, religion, sexual orientation, or health.
This approach is far beyond using keywords input into a search engine to determine user intent, as was the best marketers could hope for a few short years ago. While keyword targeting is still effective, personalized advertising is the future of online marketing.
There’s simply no comparison between blindly trying to figure out what a consumer might want based on a keyword like “cell phones” being typed into Google, when the data used in personalized advertising already knows that consumer frequently researches cell phone deals online, and frequently makes app purchases in Google Play.
Advantages of Targeting Consumers via Personalized Marketing
The obvious advantage for marketers is increased profits now and in the future. Those increases will come in the form of not just higher sales, but decreased advertising expense as much less split-testing is needed to perfect an offer, and fewer impressions need to be purchased to convert consumers.
Advantages of personalized advertising are as follows:
- More conversions in less time: As mentioned, increased conversions are a given when personalized ads are presented to online consumers. Not just in the form of one-off sales, but also in up-sells at the time of the sale, and future sales of similar or related products and services.
- Improves email targeting: Having a better understanding of a consumer’s needs, wants, and overall intent allows marketers to target emails by using personalized topics and content, while also taking advantage of the timing of the correspondence to increase the likelihood of a conversion.
- More highly-targeted sales funnels: Personalized advertising data allows marketers to more effectively appeal to users no matter what level of the sales and marketing funnel they may be in.
- Improves prospecting efforts: Sales managers and their teams can used personalized marketing data to improve their interactions with consumers including emails, phone calls, and sales meetings.
- More unique browsing experience: Using personalized advertising allows webmasters to serve different offers to visitors every time they visit their site. This prevents losing leads because a user has seen an offer so many times they’ve become blind to it.
- Can be used in all forms of online media: Personalized advertising is already in use on social platforms like YouTube, Facebook, Pinterest, Twitter, and others. Ecommerce giants like Amazon and Ebay also used browsing data to better target consumers using their sites and apply that information to their offsite advertising efforts. Once that data is secured all that’s needed for marketers to connect is a few snippets of code from Google or other data giants.
Takeaway: Personalized Advertising in Practice
Lexus took put their stance on the need for advertising to be hyper-relevant in order to be effective to the test using Facebook’s audience segmentation technology with their 1000 to 1 campaign. The luxury brand hatched a plan to deliver one of a thousand different videos to consumers based on their Facebook user profile data including their location, age, income, etc.
The campaign was a raging success, garnering a 315% higher view rate than the company expected, with a 1,673% higher engagement rate with viewers, reaching a grand total of 11.2 million Facebook viewers.
So, what’s your next step? Are you ready to put personalized advertising to practice? If so, please let us know how it goes.