Have you ever been followed around the Web for months by ads for a product that you considered (but decided against) buying from an online retailer? Have you seen ads on Facebook offering some product that a marketer thinks a person like you should need and want?
Many people in the Web advertising community seem to believe that consumers will appreciate this kind of personalized targeting, because we'll only have to look at ads for stuff we're interested in. For many of us, though, that isn't the case at all.
Behind the Web that's visible to us lies a massive and complex advertising machine that wraps virtually every kind of content we see--from mobile games to Web searches to viral videos--in ads. Some of the older machinery may be familiar to you, but some of the new stuff still lurks in the shadows, evidenced only by its product. In this article we'll look in rough outline at some of these advertising systems and how they work, starting with older technology and ending with newly minted stuff that's just coming into use today."
Retargeting (aka Remarketing)
Retargeting/remarketing involves having an advertiser drop a cookie into the consumer's browser that enables the advertiser to follow that person around and show them targeted ads for the product/retailer after they leave the original site. This practice is far from new--it's been going on for about a decade. Many big-name retailers have adopted the practice. Overstock.com may be the most blatant: Click a product at that site, and you might very well see ads for it at other sites for weeks after your Overstock visit. Smaller Web vendors such Tom's Shoes, Blue Nile, Timbuk2 are using the technique, too. Whereas Overstock may follow you around with ads for products that you browsed or left in your shopping cart, smaller retailers just follow you around with a general ad for their brand.
Advertisers (whether businesses or advertisers representing businesses) buy leads from websites based on how groups of consumers behaved at the site. The advertiser can "cookie" the consumer's browser at different places on the site, determining how qualified a sales prospect the consumer might be. For example, Shopper A who merely lands on the homepage of a site (and goes no further) gets one kind of cookie; but Shopper B who lands on the homepage, browses products, puts something in a "shopping cart" and then proceeds to "checkout," receives a different cookie. Shopper B is more valuable to the marketer than Shopper A, because B exhibited browsing behavior that suggests real product interest and a greater likelihood of actually buying something.
A retailer may also drop cookies based on specific products that a consumer browsed at the site. If the consumer doesn't buy, the retailer may pay Google or Bing to target ads for that product at that user. "If you have a category of products that you make more margin on and someone lands on this page, then you may be willing to pay more to get them back as a customer and have them convert since you stand to make more money," explains Meaghan Danielson of the Web advertising firm Adlucent.
Danielson also points out that advertisers don't concern themselves with specific consumers; instead, they "buy audiences" of consumers--thousands of advertising targets that have been grouped together based on the way they behaved online. "There is no tracking back to individual data or anything like that; generally, all of the tracking happens on the back end and is never looked into deeper than creating an audience, so privacy isn't a big issue here."
That's not to say that it isn't annoying. One colleague told me that Groupon followed her around with retargeted ads for nearly a month, and she got sick of seeing them. Mozilla has implemented the Do Not Track standard in Firefox 4, and Adblock Plus remains the most popular extension for the browser. Most advertisers, however, limit the number of impressions that they show to certain audiences so that the ad will show only a certain number of times a day or month, and advertisers usually allow the audiences to expire after about 30 days.
"Social" marketing is the new wave. Social marketing is a much more fine-grained approach to targeting potential customers than relying on the traditional demographics approach (for example, "42-year-old men in Montana often buy Ford trucks").
This new set of advertising techniques uses "social graph" data to determine what products Web consumers might buy. The social graph refers to the highly personalized data that sites like Facebook collect. A Facebook profile may contain your age, sex, and location information. It may also know that you are an avid hiker who attended a Coldplay concert last Tuesday night. It may even know for example, that you recently visited the websites of Fox.com and RNC.com. It may know that you belong to a gay rights Facebook group.
A marketer such as Coca-Cola or Saturn or Nike could analyze this data set, group it with a bunch of other people who have been identified as having similar interests, and then release targeted ads at them. Or a marketer could determine that based on your similarity to people who have already bought its products, you are a good "lead' and should be targeted for advertising.
Facebook's social grid is said to be "closed." In other words the company does not sell chunks of its huge user data set to third parties. But you don't have to buy user data from Facebook to obtain it. Some marketers plant a widget (a small app) at their Facebook page, and then track all of the people who click on the widget. And make no mistake that the companies that post quizzes, lists, and games on Facebook are indeed aggregating the personal data of everyone who agrees to their terms of service. Web marketers can acquire user data in various forms from them, too.
Facebook also collects and makes "public" the list of people who are your Facebook friends. Marketers naturally want to reach people who are likelier than most to buy their product, so it makes sense to target people whose friends have already purchased the product. The tastes and buying habits of your circle of friends, in other words, are much better predictors of what you're likely to buy, than are your age, sex, and location data.
Bringing It All Together
The most up-to-date social marketers combine old-school digital analytics with the new world of social marketing.
Some examples: Media6Degrees has made a business of finding (and scoring) similarities in the social data of different groups of people, yielding a "social graph" of preferences. Phillips says that one of his company's clients may provide Media6Degrees with a list of its customers, and then ask Media6Degrees to find people with similar social graphs from within its database of roughly 20 million people, the assumption being that similar people with similar tastes are likely to buy similar things--that they share a "common brand affinity."
Other marketing firms, like 33Across, license the user data collected by blog sites, social media sites, and app developers. If the company identifies a segment of users who seem likely to buy a particular product, it may drop a cookie into the browsers of those users on behalf of one of its clients. 33Across can also acquire a list of its client's current customers, and then direct targeted ads at those customers' social network friends, on the theory that like minds buy alike (or at least similarly).
Search Advertising Getting Social
Pretty much everybody knows about search-based ads. Google, Bing, and others place ads at the right of the search page that are related in some way to the thing you searched for. Google and Bing are now in an arms race to add new social elements to search and search advertising.
Bing announced a historic tie-in with Facebook last year that has brought a social element to the task of searching for online content. Bing deepened the partnership with a bunch of new social search functionality in May. When you're signed in to Facebook and you search for something on Bing, you can see whether some of your Facebook friends have "liked" what you're searching for. This information is extremely valuable to marketers, and it's the principal reason why Bing is gaining ground on Google in the search ad market.
Marketers have long known that word-of-mouth recommendations are extremely powerful influencers over people's decisions to buy in the real world. Bing and Facebook are trying to bring that influence to bear on consumers when they search for a product or service online. Research has shown that consumer ratings (Facebook "likes") and reviews are among the most powerful influencers of online buying. If you own or sell that product or service, the promise of focused "word of mouth" is a good reason to advertise on Bing.
Google and Bing currently allow some very basic demographic advertising where advertisers bid for the right to target specific ads to specific demographic groups. How are Google and Bing gathering enough information about their users to put them into demographic categories? A good guess would be that they are both scraping social graph information and associating it with search users. Bing, for example, may be leveraging Facebook user data to define its demographics.
URL Shorteners, Too
Even sites like Bitly are getting into the Web advertising game. Suppose that you want to post a link to an article or product on Twitter, and you go to Bitly to do it. Does Bitly simply forget about the URL that it just shortened for you for free? No. Though Bitly doesn't collect your demographic data, it keeps statistics on the URLs that it shortens for you. These stats can be sold to content creators, for example, who may tailor their content offerings in response to whatever seems to be hot on social networks at the moment. PCWorld might pump up its coverage of Windows 8 if it knew that Windows 8 article URLs were being shortened and shared by thousands of readers on a particular day.
Then there's Bre.ad (now in beta), which moves URL shortening to another level. Bre.ad users sign up and upload a picture of themselves. When they have a link--say a new Lady Gaga video--that they want to share, they create a little page (called a "toast page") at bre.ad about the video. The toast page contains a banner ad for Lady Gaga and a little message (a "toast") from the user. When somebody clicks the shortened URL on Twitter or Facebook, they get sent first to the "toast" page for 5 seconds and then on to the video. Bre.ad says the toast page is not an advertisement, and that it isn't being paid to display the banner.
Consumer as Marketer?
Some new advertising tech companies are even enlisting social-network users to shill for advertisers. A new company called Virurl.com (not yet launched) provides a platform where users of Facebook or Twitter can share links to products, services, or content; whenever a recipient clicks one of those links, the Virurl user gets paid. This mercenary arrangement might spoil one of the coolest things about social networking--the idea that you can easily get honest referrals from your like-minded friends about things you should see, read, hear, or eat. If I know that my friend is getting paid to refer things, I will regard his motives as suspect.
And that, in a nutshell, is the whole problem with most "social advertising" that is not opt-in. People like social networks because a certain amount of trust exists among a group of friends, explains Judy Shapiro of social marketing firm EngageSimply. The moment money is introduced into the equation without the user's consent, things change. That's one of the reasons that Facebook ads have not performed terribly well for marketers: Most people don't want to mix social interaction with commerce. Shapiro's company, EngageSimply helps companies engage customers via social media on an opt-in basis.
For many of us, the main result of all this innovation is a less trustworthy, more irritating Web. Much of the advertising world seems dazzled by and obsessed with the new tools available to them for targeting specific types of Web consumers. The latest technology's level of sophistication is impressive, but advertisers that fall in love with it seem to miss the point that just because they can pull out all the stops doesn't mean they should.
In truth, much of the marketing industry is still rooted in the old world of digital banner ads and cookies, and has been slow to comprehend the new social Web. "Marketers are not experienced in the new world of social interaction because they are still in the mindset of the old world of one-to-many advertising," Shapiro says. "In the new world, they are playing catch-up."
The result has been costly for brands and advertisers, and it may get costlier if consumers respond with increasing ill will. The more proficient advertisers become at targeting online ads to our specific demographic and interests, the more creeped out we get with them.
This story, "Help! A Web ad is stalking me" was originally published by PCWorld.