Personalized Advertising

Advertising is something that you can find everywhere.

Yes, EVERYWHERE.

From a young age, we have been exposed to it. Whether it be visual or audible, blatant or subtle, most of us get the exposure all throughout the day. Whether you are turning off the alarm on your iPhone when you wake up in the morning, squeezing some toothpaste from the Crest tube, getting dressed and choosing between the Levi's or the Old Navy jeans, whether you are going to have Grape Nuts or Cheerios and whether you'd rather wash it down with Minute Maid or Treetop.

As you rush out the door to head to work you getting your car and get on the road. The radio likely is turned on and unless you pay for a premium ad-free streaming service, you likely year some advertisements. You've mounted your phone and you have Waze running giving guidance as to what route will get you there faster - while displaying some ads across the top of the screen or little icons showing different businesses logos. All while you are passing various signs for businesses mentioning specials they have going on. Company vehicles with their signage painted on the side of the vehicle, transit busses with ad placards on most sides of the bus or wrapped completely as an advertisement. And you haven't made it to work yet.

Now, for clarity, I am referring to advertising in one of the broadest of senses.

What is Advertising?

The New Oxford Dictionary defines advertising as:

The root, advertise, is defined as:

Advertising serves a purpose - namely for businesses that have products, services, etc., to sell or as a way to find potential candidates for open positions. Ads can also help to get the word out to the buying public of a new way of doing something; a new tool or process that achieves the end result with greater efficiency and/or lower costs. Advertising can also dance along that fine line between being informative and being deceptive or harmful. Think back to the TV commercials where doctors advertised the benefits of smoking before the US banned such ads.

A challenge that advertisers used to have - and still have to this day - is making sure that they are not wasting their advertising dollars. Unless you are advertising for the long game, you typically would not want to advertise products or services that are beneficial to single-family home owners to people who live in apartment complexes. Most, if not all, apartment managers would not be appreciate their renters installing new HVAC systems in their apartment or putting in a hot tub on the back patio. As an advertiser of those items, apartment renters would not be the best audience for you. So, you need to do some market research to know where to advertise and what advertising method to use.

In the example above, if you were mailing flyers to a particular ZIP code, you would want your mailing service to exclude all addresses that are for apartments. If your mailing service cannot do that, you probably need a new mailing service. Along those lines, if you were going to use a local radio station, you are going to get some cross-advertising. You'll get the folks who live in apartments as well as the home owners. This type of advertising is a broad brush approach that, if the pricing is right, and listeners to that radio station are part of your key demographic, this may be work out well.

What does this have to do with personalized advertising?

Technology has progressed to a point where exists the ability to collect so much data about what each one of us, individually, does throughout the day. Where we go, what we like, what we find out more information about, who our peer groups are, our demographics, and so much more. And, exists the ability to quickly take all that data and make it meaningful to advertisers.

In years past, surveys were conducted of a segment of the population in a particular area to get a sense of their demographics, income, likes/dislikes, shopping habits, etc. That segment was used as a sample and extrapolated to the larger population. Statisticians could talk well about how accurate the results of the extrapolation are. Some were spot on; others not so much. This data - good or bad - was used to identify who bought what in which areas and how much they could spend on it. Advertising media outlets would use this information when trying to sell advertising to businesses. Crafting the extrapolated population of their coverage area to match the target of the advertiser. Previously, this data was used to create an avatar of you and someone like you.

Well today, the survey’s don’t need to be conducted and data extrapolated against the population. We use a variety of different methods to give advertisers a representation of exactly who we are. Think about it for a bit. You enroll in ‘rewards’ programs and use your barcode or phone number to identify yourself before the cashier starts ringing up your purchase. You use your computer or phone to look at different items at different online stores. Sometimes you add items to your cart but don’t always make a purchase at that online store. But you visit another online store which can ‘see’ your cookie and what your were shopping for. You visit the biggest online store to see what they have. They also ‘see’ your other cookies and can modify the search results to get closer to what you were already searching for - if not the exact item; probably at a lower price and with free next-day shipping.

Then you get a ding indicating someone tagged you on Facebook which you have open in another tab. You check out the tag and scroll through your feed where you may or may not notice items that you were searching for showing up in your feed.

This is just a small taste of what is collected about you and readily shared. Advertisers are able to deliver you ads that are personalized to you. Personalized ads have a much greater likelihood of inducing you to complete a purchase. It may not be directly from the ad, but the seed will be planted.

Fortunately, much of the advertising that happens in our daily lives is not consciously paid attention to. The signs you see on your drive to work may be a blur to your conscious mind. Your sub-conscious mind, however, notices. That, in combination with the personalized ads, are great mechanisms to get you to part with your money.

Not long ago, Facebook, among others, raised a bit of a whine when Apple announced that they were going to require App developers to explicitly identify what information they are collecting about their users. Facebook took this as an affront to their business model and that their advertisers were not going to get as much value for ads placed on their platform. Let’s face it, Facebook has a massive trove of information about their users. Most people don’t make the connection between their likes, follows, etc. in their feeds with the avatar they have created of themselves and how Facebook is using this information to sell you to advertisers. While Facebook may be offering a free service where users can connect with family, friends, etc., they are not doing it out of the goodness of their heart. They believe that personalized advertising is what their users want and they make a whole lot of money from it.

Let me ask you, how many times have you asked an advertiser to make an advertisement more personalized to you?

Yeah, I haven’t either.

So, what can be done about it? Well, I’ll go into that in another post.

—Michael.