What is Targeted Advertising, and its Benefits for both Customers and Manufactures: What are the effects of so much advertising on people? Ads can be seen almost anywhere, and it has become commonplace to see ads that are not related to a person’s needs at all. Manufactures need to advertise in order to sell their merchandise, yet many are producing the same product, or something closely related. They increase their advertising efforts to attract consumer to their brand. Targeted advertising can solve many of these problems. Consider the fast food industry. Every one knows MacDonald’s, Sub Way, In-N-out, etc., and all these companies provide almost the same, or very similar food products, yet they must advertise more and more in order to attract consumers, and try to set themselves apart from the competition. It’s an advertising tug-of-war to create a different impression on the consumers in order to make people believe that they are different, better, faster and tastier.
With so much advertising going on, the job of the marketer has become more difficult to reach the consumers. Additionally, consumers become frustrated with so much competing advertising they encounter on a day-to-day basis that the marketing has the opposite effect the companies were expecting. One solution to all these advertising wars is targeted advertising. This paper will review the history of targeted advertising, then it define what targeted advertising is, refute some positions about it, and finally it present a possible solution to ad clutter. The solution to the clutter of advertising is targeted marketing, but raises some questions and concerns, mostly about privacy and how marketers take advantages of this method. Targeted advertising is a solution to the new era of advertising by helping manufactures to only reach potential consumers interested in their products by attracting consumers to free services that display their ads.
Let’s review the history of advertising and see how targeted marketing come into existence. America has been one of the leaders in technology since the last century. Pioneering in technology and demands for the most efficient type of advertisement lead to a series of events that started in the early 1930s to the present time, which makes targeted advertising as efficient as possible. At first, Marketers shifted their campaign from focusing on product to focusing on consumer behavior in the 1920’s, then they discovered Psychographics not long after, and finally by the advent of modern web by the 1990’s, targeted advertising became more practical and usable for marketers.
Advertising has been around as long as trading and selling has existed. According to Canavan, “Archaeologists have uncovered evidence of advertising from ancient Rome and Pompeii in the form of painted signs on the walls of buildings” (41). It means that humans have known how to advertise in order to sell products even in ancient times. Also it means that humans developed their skills of advertising during that time to become real expert in marketing. Although human advertises for a long period of times, marketing was not so intense as the twenty centuries advertising. According to professor Sut Jhally “there has been never this much effort to advertise and advertise base on the strategy to completely persuade consumer to buy the product like twenty century.”
As mentioned above, before the 20’s advertisers were focusing on the product characteristics, and the reason for this focus was corporations were non-existent and advertising was not as important in the corporate era. Canavan, goes on to explain, in the 1890s and the first years of the twentieth century, thousands of small firms merged to form corporations owned by stockholders and managed by people unrelated to the original owners. One result of this shift was that corporations’ advertisement took on different appearances and message styles from those previously produced by the traditional entrepreneur.
The results of the shift from small businesses to the corporations were to advertise in a way that can sell more products to the consumers. Marketers changed their strategy around the 20’s.
Based on Professor Sut Jhally, “Since the 1920s, advertising stopped talking about advantages of goods and services and began connecting
relationship of objects to social lives of people.” Before the 1920s, advertiser and ads were focused on the features of the products only. For example, if the marketer were making an ad for soap, he would say that this soap would clean your hands and smells good. The picture is another example, and it is taken from beautiful life. It is the ad for Coca Cola advertising campaign before 20’s.It is obvious that the ad focuses only on the products characteristics.
After 1920s, the game changed. Marketers focused on consumers’ behavior and offered them products based on their lifestyles and social
status. For instance, in marketing the same soap, marketers might say, “If you want to keep your friends and even find new ones, use our soap.” Marketers tried to connect person’s personality with the product. This picture is taken from the beautiful life, and it shows Coca Cola ad campaign after 20’s. The tag line for this picture is Have a Coca-Cola = You’re my kind. By this tag line Coca-Cola tries to say, by having Coca-Cola the person is superior to other and can be friend with the lady in the picture. Comparing this picture with the picture above, shifting from product characteristics to the consumer relation with product is obvious.
By the time marketers realized that they could divide consumers based on their social status and behavior, they were able to boost the sale of certain products. They discovered the term “Psychographics” which was the segmenting of consumers based on their interests. According to James F. Engel, The term ‘demographics’ refers to certain physical and social characteristics of people, the term ‘psychographics’ refers to people’s lifestyle personalities. Psychographic advertising started from around the 1960s and became popular around the 1970s. Marketers realized that the emotional and psychological connections people make with particular brands often arise from how well the brand fits into the lives of consumers. As such, market researchers were presented with the challenge of measuring consumer lifestyles and the term psychographics was born.
Marketers understand that it is beneficial to study consumer behavior, social status, relation, gender, and other human behaviors, and to manipulate consumers’ emotions based on their interests. As a result, they use psychographic studies to reach potential consumers.
Marketers were building special marketing lists based on the consumers psychographics and segment their market based on these lists. Thanks to these lists marketers could target potential consumers based on their interests. According to Emanuel H. Demby, one of the founders of psychographics, “psychographics allow us to view a population as individuals with feelings and tendencies in compatible groups (segments) to make more efficient use both of mass media and those that are targeted to particular portions of the population.”
Segmentation gave marketers the ability to segment each of their potential consumers and advertise material goods to them based on their interests. For instance, if someone buys a car he probably likes cars accessories as well, so if marketers send him letters that advertise car accessories, they will probably get a better response. By Segmenting consumers, Marketers were able to sell the right goods to the right population. The problem was the their targeted strategy was not very precise. They were not able to track individuals on a one-on-one basis to know exactly their likes and dislike.
Next, They collected important information like birth dates and anniversaries so they could send consumers product coupons to capitalize on those events. One example of this personalized letters can be seen in Erik Larson’s book. Larson believes that “marketers can track any information about a consumer, so they know exactly what the consumer does, and what their interests are.” He also mentioned, “marketers knew to send birthday and anniversary cards along with coupons to coincide with these shopping events.”(4). This strategy is still working today. The interesting part is that some consumers will be happy when they see those cards and with little concern for privacy.
Although marketers achieved a lot by segmentation in using practical psychographics, they were still unable to offer the consumer the right material goods because they did not have up-to-date information about the person. The creation of the World Wide Web solved this problem. It gave marketers the ability to track consumer behaviors and to sell them the items that they want at the very moment they search for it.
The idea of the Internet was first started as a project from the Department of Defense. According to Congressional Digest “(DOD) issued a $19,800 contract on December 6,1967, for the purpose of studying the ‘design and specification of a computer network’”( 35). Scientists named that project, ARPANET (Advanced Research Projects Agency Network). After a few years of research, they realized that in order to take full advantage of this network and also embrace its power it would be a good idea to connect Universities together in order to transfer information through ARPANET.
At that time, based on Congressional Digest “J.C.R. Licklider envisioned that they could use computers, not as a calculation recourse, but also as a system of communication. Simultaneously, Paul Baran was “researching on the network that can preserve America during nuclear attack” (35). These two projects were fundamentals to the existence of the Internet. After this and around 1968, IMPS contract started. Based on this contract “IMPS would: “Provide the communications capability required for the ARPA computer research facilities but would also be a unique prototype of future communications systems”” (35). In time ARPANET became the Internet. The Web started as simple text files in DOS environment. It did not have graphics or any true interactivity, but within five years the web started to grow as it became more sophisticated and advanced. It was no longer just text, but also images and media.
Thanks to the web’s interactivity, it revolutionized the education system, business, marketing, and many other aspects of human life all around the world. According to Hairong Li “the World Wide Web (Web) emerged as an advertising medium in the early 1990s. It since has been used, not only as an advertising vehicle itself, but also as a platform for new forms of interactive advertising” (13). Since the web is interactive, marketers have the opportunity to show interactive, multimedia, search based, behavior based, and other possible types of advertising. According to Pierre Berthon: The World Wide Web is a new medium, which is characterized by ease of entry, relatively low set-up costs, global reach, time independence, and interactivity. As such, it represents a remarkable new opportunity for advertisers and marketers to communicate with new and existing markets in a very integrated way (43).
All these features lead marketers to extensively use the web as an advertising medium.
Since manufactures have ability to track their advertising they can easily refine their ad campaigns and also target interested consumers instead of blindly through the ads that can’t show them tracking results. In the beginning, websites offered advertising space based on monthly subscription that was relevant to their content. Thus, ads were targeting users, but they were not very sophisticated to target the right users, or give much insight about their performance.
When the web started, there were no real search engines at that time to profile consumer behavior and offer them goods based on their interests. In the 90s there were only a few directories that could help visitors find what they were looking for, but no real search indexing. They categorized most subjects into directories and the end user had to click on each directory to access the desired information. At that time, directories’ revenues were from marketers that sponsored them and put their ads on the directories. Yahoo was the first company to actually crawl the web for the first time and find relevant results.
Although Yahoo was the dominant site in the Internet, it did not update with technology so fast and give its position to Google. Around 1998, Google became popular as a real search engine. It “crawled” the entire web to show relevant results to a visitor’s search enquiries. In the beginning, Google was not very complicated either and it did not have the ability to track customer behavior. Based on Google: On October third 2000, Google Inc., developer of the award-winning Google search engine, today announced the immediate availability of AdWords(TM), a new program that enables any advertiser to purchase individualized and affordable keyword advertising that appears instantly on the google.com search results page. The AdWords program is an extension of Google’s premium sponsorship program announced in August.
Google AdWords opened a new door to marketers. In the past, marketers had to pay for their advertising no matter if it worked or not. Sponsored sites did not care about the ad position; number of clicks that ad received, or ad performance. After the introduction of Google AdWords, marketers only needed to pay when the consumer’s clicked on the ads. For example, one ad may show up in the Google’s networks more than a thousand times, but since no one clicks on it, the marketer is not charged, but he understand that his ad is not converting into sales either, so they can change, or alter the ad to get better performance results. Google AdWords helped marketers a lot, but it still has some problems. For instance, a visitor searches for something one time and he gets what he was looking for, but AdWords cannot know that, so it still showed him ads based on his previous search. Moreover, sometimes end users don’t know exactly what they want, so a search cannot completely help the person find the right item. This problem was solved by invention of social media.
According to Nicole B. Ellison “the first recognizable social network site launched in 1997. SixDegrees.com allowed users to create profiles, list their Friends and, beginning in 1998, surf the Friends lists”( Ellison). Before SixDegrees.com, other sites had offered profiling and listings, but not until SixDegree.com came along to combine all of these things together was there a real social network. According to Nicole B. Ellison “The next wave of SNSs began when Ryze.com was launched in 2001 to help people leverage their business networks.” And finally after many other sites, Facebook was launched in 2004 as a Harvard Social network site. According to Nicole B. Ellison “in order to join Facebook people had to have a Harvard.edu account,” so in the beginning, Facebook was a closed social network. Since 2005, Facebook began expanding and including other institutes in its membership. Facebook soon became the dominant social media powerhouse of the Internet.
It decided to use its users’ personal data to show display ads based on their interests. If Facebook utilized its users personal data in order to target them with the right ads, it can make a more precise type of advertising campaign. Facebook has its members private data and access the their users search results, so it can easily display products and services based on their browsing interests. According to Jessica Guynn, “Facebook doesn’t have to guess who its users are or what they like. Facebook knows because users share this information freely.” Also “This event was targeted squarely at the big-brand advertisers, the kind of companies that spend millions of dollars a year on online advertising, and Facebook wants to get more of that money,” according to EMarketer analyst, Debra Aho Williamson. The best way to achieve their goal is to use social media and search history and apply Psychographics to it. As a result, the combination of Facebook and Google Ad Words makes targeted advertising as precise as it could ever be.