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Ecommerce Developments
Targeting consumers online is evolving
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It’s a common occurrence nowadays.
You Google a topic of personal interest on your computer, smartphone or tablet. Let’s say, for example, the name of your favorite band. You want to see when their latest tour will bring them to your hometown.
You key in the name and then, for weeks afterward, you get served--with advertisements that is. An ad imploring you to buy the group’s latest album is seemingly following you around the Internet, popping up on nearly every site you visit.
It's known as "behavorial targeting" and is becoming more common as the Internet continues to evolve from a receptacle for information and a forum for private communication to a gold mine of self-provided, public data about its users, thanks largely in the part to the advent of social media sites, including 845-million-users-strong Facebook.
From a marketer's standpoint, advances in online ad-serving technology provides the ability to deliver a message with greater precision, narrowing in on consumers who may be most interested in--and likely to purchase--a product or service.
Many consumers, though, are uneasy about the collection of their personal information by online heavyweights such as Facebook and Google, which use it to target search results or deliver targeted ads.
“With the future of the web, really you have two sides to the equation,” says Dan Gordon, owner of Samuel Gordon Jewelers in Oklahoma. “You have the users, us, posting our pictures of (family events). And then you have the other side, the people that are purchasing advertising to pump out to the users.”
He cites an interview last summer in which Google Chairman and former CEO Eric Schmidt called Google+, the search engine giant’s answer to Facebook, an “identity service,” an admission for which he was widely criticized.
In the end, though, Schmidt was just being honest. Gordon says both Google and Facebook are, in a sense, identity companies that double as advertising platforms. They give people the ability to communicate and share online. In turn, that information is used to try to reach people and sell them products and services.
It is “identity companies” such as these that, Gordon says, are going to be the winners on the Internet in the end.
“We’re going to get served ads. But what if we got the right ads? What if we got the ads we wanted to see?” he asks.
Ready, aim, ads
Fruchtman Marketing’s Vice President of Media Rachel Wengrow said the targeting capabilities available for online display advertising, which had its start around 1994, have increased over the years. “Technology has become more advanced to allow us to do much more with it,” she says.
It started with geo-targeting, when marketers began using a computer’s Internet Protocol (IP) address--the unique number assigned to each device connected to the Internet--to reach out and touch consumers based solely on their location.
Over time, layers of increased specificity have been added on, such as demographic targeting, serving people ads based on their age or gender.
Now, marketers have the ability to target consumers based on sites they visit and their activity on those sites--called behavioral or contextual targeting.
Marketers no longer just know where you live and what age bracket you fall into, but they’re also aware of what sites you visit and what topics you enter into search engines, thanks to “cookies.” Cookies, as defined by the Interactive Advertising Bureau, are small pieces of information stored on a browser for the purpose of identifying that browser during audience activity and between visits or sessions.
Wengrow is getting married and spends some of her free time online trolling the web for wedding shoes. Retailers have taken notice and begun serving her ads for footwear designed for the big day. “I can tell I’ve been targeted based on my behavior and what I’ve been doing online,” she says.
This screen shot from currency conversion website Xe.com was taken following a visit to online clothing and accessories retailer Zappos.com, where the user searched for “silver shoes.” After visiting the site, ads for Zappos.com popped up on other sites, displaying other shoes that user might like based on their previous search.
There’s also what’s known as re-targeting.
Wengrow says once consumers have been exposed to a message or visited a certain website, they’ll receive other messages along the same lines or from the same advertiser. She says in her searches for wedding-day footwear, she once keyed in “purple sneakers” on Zappos.com. Zappos began serving her banners on other websites showing purple shoes.
For independent retailers, however, Wengrow acknowledges that all this layering--starting with location and adding on demographics, behavior and re-targeting--can get expensive.
She says she recommends retailers with limited budgets for online marketing focus on geo- and demographic targeting. It is an effective way to send a message in the correct area and reach the people jewelers want to speak to, engagement ring customers in particular.
Behavioral targeting and re-targeting then can be layered in as budgets allow, she says.
‘Facebook first’
The same ability to hone in based on demographics and interests are also available via paid search and on Facebook, where a wealth of information about users--including their “relationship status”--is made readily available by consumers themselves.
“With social media, for all intents and purposes, what we focus on for independent jewelers is Facebook first,” says Fruchtman Marketing’s Director of Social Media Shane O’Neill. “If you’re not doing Facebook well, we don’t suggest you move on to other platforms.”
And like online display advertising, it’s an area where the ability to target consumers is gaining precision.
This is a Facebook advertisement from Michigan retailer Richardson Jewelers, a client of Fruchtman Marketing.
“It’s evolving. It’s changing,” says Brad Simon, who co-owns the marketing firm Internet 4 Jewelers with his wife, Debbie. “We can talk about it now, but we don’t know what Facebook’s going to announce or roll out next month.”
Right now, one area of interest gaining more attention from marketers is targeting Facebook users based on their specific interests.
“This is getting a lot of press for local businesses ... but I haven’t found it working for jewelers,” Simon says. He says when a user enters “jewelry” as an interest, they are often jewelry storeowners themselves or hobbyists who make jewelry. “You are not getting necessarily the people who love to wear jewelry and are interested in buying jewelry,” he says.
Where they have had more success is in targeting specific jewelry to people based on their interests. For example, if a retailer has a store in Pittsburgh and carries Pittsburgh Steelers logo jewelry, they should consider targeting people on Facebook who express an interest in the Steelers.
Simon adds that Facebook has a huge database that stores information every time its users “like” or comment on a post, page or picture. Facebook manages ad placement internally for status updates, pages people like or their interactions with others--this data is not available to marketers right now. These are called “Sponsored Stories.”
This screen capture from Facebook shows two examples of “Sponsored Stories” from jewelry retailers.
(However, O’Neill adds that marketers do have some control, as they can select one of their posts to be that sponsored story or just have Sponsored Stories generate based on what people like or share on their Facebook page.)
At Facebook’s marketing conference in February, the site announced it is now rolling out premium ads, available only to those who spend $10,000 or more a month advertising on Facebook. Though Facebook did not confirm it, Simon says it is widely believed that this type of targeting will be made available to those that purchase premium ads.
While both marketing experts agree that it is important for retailers to invest in Facebook, O’Neill allows that the click-through rate on Facebook ads is “horribly” low. “People aren’t on Facebook to be sold,” he says.
However, the advertisements achieve anywhere from 700,000 to 1 million impressions for every $250 spent and retailers only pay for actual click-throughs. Combine this with the fact that it’s more likely the person clicking on that ad is actually interested in the product and it makes Facebook a unique branding opportunity for retailers, he says.
“Our jewelers typically spend between $250 and $750 per month on Facebook media placement,” O’Neill says. “Compare that to the cost of something like a billboard. We’re not saying abandon this type of traditional media, but rather reallocate some of that traditional spend.”
The ‘Big Brother’ factor
The increasing ability to track people’s online behavior and use it to try to sell them products and services has given rise to the ongoing debate about online privacy.
Just last Thursday, Facebook, in response to criticism of its privacy policies, announced that it was providing users an expanded archive detailing the types of data on individuals that it stores and tracks.
In March, The Pew Research Center published the findings of a study on search engine use as part of its Internet & American Life project. The results showed that 59 percent of Internet users have noticed targeted advertising, and 68 percent said they are “not OK” with it, because they don’t like their online behavior being “tracked and analyzed.”
Only 28 percent said they are “OK” with it, because they like seeing ads and receiving information about products and topics in which they have an interest.
According to the survey, males (62 percent) took notice of targeted online advertising more than females (56 percent). Awareness of targeted advertising also was higher among those between the ages of 18 and 49 (62 percent) than among those 50 to 64 (56 percent) or 65 and over (47 percent).
Younger consumers also were more comfortable with targeted advertising than older Internet users. A total of 36 percent of those ages 18 to 29 reported being “OK” with targeted advertising, compared with 32 percent of those ages 30 to 49, 19 percent of those ages 50 to 64 and 21 percent of those ages 65 and up.
The question the survey didn’t ask, however, was whether or not consumers will be so turned off by targeted ads that they will shun the companies sending them.
“I think it’s still a little bit new to see what kind of behavior people are going to exhibit,” Simon says. He said he expects younger consumers won’t mind--an assertion that supports the Pew findings--while older consumers might not notice that they are being targeted. “And that’s what the advertisers are hoping for.”
“It’s so new yet, we don’t know what the fallout of it is going to be,” he says.
O’Neill likens the debate over targeted advertising to the recent revelations about what constitutes fast-food chain McDonald’s popular Chicken McNuggets.
“You used to love those nuggets, but once you found out how they’re made, you lose your a
ppetite,” he says. “If people truly knew the details of how much of their online behavior was tracked, it might be too ‘Big Brother’ for some. For me, I’ll still eat the nuggets.”
