Future Trends Volume 18 - The future of targeting

As Tim Elkington, CSO, IAB UK states recent IAB research sheds some light on the relationship that people have with targeted online ads. The Consumer Usage and Attitudes study carried out by YouGov in July 2016 showed that roughly one-third of internet users (30%) said they were comfortable with their online behavioural information being used to offer them more relevant advertising online. However, we still must think of the other percentage that are not comfortable with behavioural targeting. 

 •Sakshi Dewan, Senior Digital Strategist, PHD talks about broad targeting and brands and how being relevant in communications has never been more crucial than today; when consumers are constantly bombarded with messages

 •Tim Elkington, CSO, IAB UK writes on the back of The Consumer Usage and Attitudes study about factors such as the differences in attitudes between the age groups and the ability of media owners to properly explain the value exchange.  

Targeting for brand growth in a world of data dominance,

Sakshi Dewan, Senior Digital Strategist, PHD 

 “Hyper-targeting” and “Hyper-relevance” are buzzwords that dominate today’s data-driven digital landscape. So, when the world’s biggest ad spender, P&G, makes headlines for moving away from targeted ads, it’s a bellwether for a dramatic shift. But is a new era of targeting really upon us or have we simply come full circle? 

The success of commercial comms was built on the high reach that TV offered. The ability to speak to a large audience at scale is something that brands have always valued. The rise of digital media heralded the age of precision targeting with its promise of reaching a brand’s most desired customers. The general obsession with targeting led to every data signal being mined to pin point the exact customer profile for a brand. So choosing to eschew data-drivenhyper-targeting in favour of broad reach in this age is a bold stance. It may be a bold stance, but it is certainly well informed. The effectiveness of aiming for broad reach has now been established through empirical evidence and research. 

In order to explain why broad targeting works, I will start with Professor Byron Sharp’s findings in his seminal work, “How Brands Grow”.  In this book, he argues that brands can only grow by increasing their market share through targeting light or non-buyers, rather than by trying to retain existing customers. From a communications perspective, this means speaking to as many potential customers as possible, by aiming for high reach amongst a broad audience. Focusing on small targeting segments of heavy buyers or those exhibiting similar signals does not contribute to brand growth and is as such usually ineffective. In addition, these efforts cost more due to premiums associated with targeting and often create wastage through excessive exposure. The good news is that platforms like Facebook, that can offer large-scale online, have recognised the need to target a broad audience while managing frequency through tools like Reach and Frequency Buying. 

If broad targeting leads to brand growth, then what is the role of data-based targeting that the digital medium has to offer? The truth is that scale of digital media combined with sophisticated data signals makes it a potent tool in a marketer’s repertoire. Being relevant in communications has never been more crucial than today; when consumers are constantly bombarded with messages. It is these sophisticated data signals that allow marketers to understand and respond to consumers’ needs and mind sets with relevant messaging. For example, an ice-cream brand would definitely benefit from targeting a broad demographic as it is a widely consumed product. But using temperature targeting to upweight media on hot days heightens relevance for consumers and drives salience for the product.

As marketers and media practitioners become more aware of the pitfalls of over using data for narrow targeting, it is important that they do not to lose sight of how data can be used effectively to maximise relevance and drive resonance with consumers. 

Consumer attitudes and the future of targeting,

Tim Elkington, CSO, IAB UK 

How could consumer attitudes to targeting inform future developments in this space? Recent IAB research sheds some light on the relationship that people have with targeted online ads. The Consumer Usage and Attitudes study carried out by YouGov in July 2016 showed that roughly one-third of internet users (30%) said they were comfortable with their online behavioural information being used to offer them more relevant advertising online. This compares with 62% who were not comfortable. Within this,there is some variation by age group with 33% of 18-14’s being comfortable compared to 26% of those aged 55+.

These findings seem to be consistent with a more detailed research project that we carried out looking at Consumers and Online Privacy in 2012 carried out by Kantar Media, which although four years old, does still have some useful insights. In 2012 59% agree that they would rather see a low number of relevant ads online than a high number of less relevant ads and 55% said they would rather see advertising online that is relevant to their interests. 

As well as targeted advertising, the research also explored the ‘value exchange’ – the concept that in exchange for accessing free content and services users have to consent to being shown ads (the other option of course, would be paying for those services). Over half the sample (55%) said they were happy to see relevant advertising if it meant that they sites they visited offered quality content, though rather less (45%) said they were happy to see advertising that was relevant to their interests if it was based on their previous browsing behaviour. The age differences were also apparent in this research with 58% of 16 – 24-year-olds being happy to see relevant ads based on browsing behaviour compared to only 38% of those aged 55+.

The research shows that people are reasonably cautious about targeted advertising but I think there are two issues at play here in terms of the future of targeting.

Firstly – differences in attitudes between the age groups mean as younger users move through the age bands the general acceptance of online targeting is likely to increase as these users have a more positive outlook towards the technique. They are the ‘native generation’ when it comes to the relationship between advertising and content online and have grown up with the concept of exchanging one for another.

Secondly and most importantly – is the ability of media owners to properly explain the value exchange (or more colloquially the trade off ) - if you’re happy to see these ads then you can continue to enjoy this free content. Ultimately the July 2016 research shows that people buy into the value exchange – 74% said they would prefer to have free websites and see ads while only 10% said they would prefer to pay for websites and have no ads. If media owners are able to express the value exchange effectively and expand on this basic concept to explain the necessity for targeted advertising then over time any consumer resistance to targeting should decrease. This is doubly true if the whole digital media industry can come together to improve the consumer experience, for example by frequency capping re-targeted ads, through initiatives such as the proposed new IAB ad portfolio and the Coalition for Better Ads.