We all notice the ads that seem to know exactly what you were just talking about. The websites that are just so customized.
This type of targeting has undeniably changed marketing and advertising, fueling the online advertising industry’s growth to $540 billion globally.
But it turns out there’s also a broader impact to targeting like this.
One that’s a little concerning.
The truth about behavioral targeting and consumer welfare
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A recent New York Times article sheds light on how tech firms track our online behavior, develop profiles of our interests, and sell data to advertisers. This is of course what makes digital advertising so powerful. Advertisers know who we are so they’re able to send us content that’s relevant and personalized.
But there’s another side to it all. In the article, Julia Angwin discusses a study by researchers at Carnegie Mellon and Virginia Tech. The study challenges the notion that behavioral advertising truly benefits consumers, arguing that while the success of behavioral advertising is measured in terms of clicks or conversion rates, there is little evidence on the actual benefits to customers.
To address this gap, the researchers conducted two online experiments with over 1,000 participants and 7,000 data points. They assessed the quality of products advertised through behavioral targeting, plus the awareness and pricing of these products compared to other online options. The findings were surprising, to say the least... The products shown were 10% more expensive than what users could find in an online search and twice as likely to be sold by lower-quality vendors.
So, how should marketers be thinking about behavioral targeting?
- Don't rely solely on clicks to measure success. While typical metrics may indicate short-term effectiveness, they don't necessarily reflect the true impact. Like what it means for your brand to be associated with lower-quality sellers.
- Don't underestimate the power of contextual targeting. Contextual advertising, which selects relevant content to serve ads, can be a more privacy-friendly and effective alternative to behavioral targeting. Think creatively about how you can reach your audience in contextually relevant ways without compromising consumer privacy.
- Stay informed about the latest research on behavioral advertising. This is a rapidly evolving field, and keeping up-to-date with the latest news can help you make informed decisions about your advertising strategies.
Key Takeaway: While behavioral advertising has undeniably transformed the online advertising landscape, it's important for marketers to critically evaluate its impact. By exploring alternative targeting methods and staying informed, marketers can create campaigns that are both effective and responsible.
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