There are over 47 millions display ads clicked on each month.
Before the advent of online advertising, advertisers only had access to rudimentary tools that allowed targeting. Most targeting was contextual. For example, a bank would advertise financial instruments in the finance section of a newspaper. This assumes that every reader of the finance section is a potential customer for the product (or at least a big percentage of readers).
The advertising industry is now moving towards targeting individuals at the right stage along the sales funnel. The internet ecosystem allows companies and websites to collect information about customer’s browsing habits, hypothesize about their tendency to purchase a particular product and serve them with ads. This data allows advertisers to target their potential customers.
Based on data collected, there are 6 widely used methods to target consumers. These methods are not mutually exclusive and marketers should consider using a combination of these techniques to reach their consumers.
1. Contextual Targeting: Advertisers target a context rather than targeting an individual. The nature of this form of targeting is no different from contextual advertising used in the physical world by placing ads in a particular magazine, newspaper, location etc. Contextual targeting can be either static or dynamic.
Marketers should consider this form of advertising when they want to increase general awareness for their products across a wide consumer base. This would typically be in very early stages of the sales funnel.
2. Demographic Targeting: Advertisers target consumers based on their demographic characteristics like age, geography, sex, household income, language etc. Geo targeting is a new sub-dimension of demographic targeting that has become possible because of the availability of user’s geographic location through GPS targeting.
3. Search Targeting: Search targeting uses the search history of a particular user to target display ads on other member websites. This method of targeting is only offered by those networks that also have access to user’s search data. E.g. A user searching for cars on Google could be a potential target for a Hyundai display advertisement on NY Times.
Tip: Advertisers need to identify what kind of information their potential customers may look for on search engines. A campaign using this method of targeting is best combined with a campaign that is focused on traditional search advertising i.e. bidding on search terms. The background research required of marketers is the same for either kind of campaign. Marketers can add intelligence to this method of targeting by building models that predict the kind of information that potential customers would look for. A family searching for movies in the local theater might also be interested in going out for dinner. Hence they could be served with display advertisements for restaurants.
4. Re-targeting: Users are re-targeted based on their recently expressed intent to purchase a product but no complete transaction. E.g. A user who browsed for Converse shoes on zappos.com but did not make a purchase can be re-targeted while browsing another website. Re-targeting is successful when the potential customer is exposed to a display advertisement within a small window of opportunity typically lasting a few hours/days of first expressed intent. Retargeting is a great way to target customers who already have a high awareness level about the brand/ product and remind them about their purchase intent.
Amongst the various methods used to target ads, retargeting currently offers the greatest ROI, though behavioral and psychographic targeting have a lot of potential as networks begin to collect more information around user’s browsing habits.
Source: AdAge.com: Best strategy for targeting ads, July 2009 – March 2010.
5. Behavioral: Behavioral targeting is the most complicated, yet most effective means of targeting consumers online with display advertisements. In this method users are targeted with advertisements based on their online browsing behavior i.e. the websites they visit, frequency of visits, articles read etc. This method of targeting is powered by data that is collected through advertising networks but the most important aspect of this form of targeting is the creation of models that can identify the correlation between a particular kind of behavior and probability of purchase.
Sample set of Segments as defined by one of the value added providers: AudienceScience
6. Psychographic Targeting: This method of targeting is similar to behavioral targeting except in the analytical model used to pick target consumers. Rather than tracking a user’s online activity this method tracks a user’s interests. Advertisers create a mind map for a typical consumer for the product. In this method, advertisers focus on how consumers connect to a brand (example below) or a product, rather than the activities that lead to purchase. Below is a sample of the mind map that Peerset has created for a typical Audi customer.
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