The targeting methods digital and social platforms use have come under fire, most recently in the form of an exposé about Facebook’s ad platform offering anti-Semitic and racist targeting. It’s a problem in the system that Facebook has taken steps to rectify, both through increased human oversight as well as increasing user-reporting tools.

More broadly, issues like these raise awareness and ethical concerns around how advertisers select and target consumers. I think it’s important for business owners large and small to understand the theory of segmentation and the practice of traditional and digital targeting, to see how this fits into the advertising ecosystem and why it’s a hot-button issue.

Defining a target audience

For any brand, understanding your consumers is paramount. And an important part of that process is classifying and segmenting your target consumers to dive into their motivations, interest in your products and services, and how and where to reach them with the right message at the right time to drive results. The process of segmentation and defining your ideal consumers should inform your marketing strategy, creative campaign development and media planning, but can also inspire your planning teams to develop better products, platforms and services to meet their changing needs.

While there are lots of ways to segment and dozens of proprietary tools and methodologies, the most common slices fall into four buckets:

• Demographics—age, sex, race, education, family status, income, occupation, etc.
• Geography—residence, work location, travel routes
• Behavioral—usage, loyalties, occasions, purchase patterns
• Psychographic—interests, lifestyle, personality, values, attitudes, opinions

Once your segments are defined and prioritized, you should have a solid understanding of who you’re trying to reach, what kind of products and services would be relevant to them, and what kinds of messaging would be most relevant.

The next step is usually a two-part planning process: developing campaigns with to motivate consumers to think and act differently, and developing a media plan for where and how you’ll deliver the messaging. Ideally those activities happen in tandem, because one informs the other; a great media plan will fall flat if the creative team isn’t on the same page; conversely, an incredibly creative idea won’t do you any good if there’s not an effective way to get it in front of the right consumers.

A shift from traditional targeting

Thinking back to the early days of advertising, there used to be only a handful of ways to reach those consumers: posters and billboards, radio and TV ads, print ads and flyers. Those channels are still used to efficiently reach large groups of consumers, but the tradeoff is that while you can buy media based on the likelihood that your target consumer is contained within the viewer group, you’re also reaching a whole lot of people who don’t want or need your products. Everybody in America watching that TV program gets the same ads at the same time for the same brands; print ads will be seen by every reader of the publication who flips to that page; and billboards will be seen by every driver who passes them and glances up. This creates a fair amount of waste and frustrates viewers who see ads that aren’t relevant.

Today’s consumer-product landscape is just too complex to sustain the model. “It made sense when you only had a few channels and a few products—there’s only three kinds of peanut butter [to choose from], which one are you going to buy?” said Simulmedia CEO Dave Morgan in a recent Recode interview, describing his company’s effort to make TV advertising more like digital targeting. “But today when there are thousands of products for a lot of different people sold a lot of different ways, television needs to be made a lot more efficient to work for all the advertisers.”                                                                 

That’s not to say that traditional advertising doesn’t work or that TV advertising is going away, he added; for large brands like Budweiser or McDonald’s, it makes sense to advertise on national programs with a broad range of viewers given the lower cost. TV spots let brands reach more viewers with one spot, and reach all the people without broadband or internet access (both a considerable portion of the U.S. population), making it a good choice for mass-appeal brands. Addressable targeting technology is slowly catching up, and soon most the ads on TV and streaming services will use much narrower targeting to tailor ads to individual viewers. Until then, for brands and companies looking to target smaller segments effectively with relevant messaging, digital is a growing piece of the pie.

Digital segmentation and targeting

Digital and social advertising has grown in large part thanks to its ability to much more narrowly target a specific type of consumer. In fact, eMarketer reported this week that digital ad spend has grown to $83 billion, with Google and Facebook taking the largest chunk of business at 63% of total US digital spend.

And today’s digital targeting ability is largely unprecedented; never before have advertisers been able to track consumer behavior and deliver messages in such a highly targeted way. While traditional media was limited to a few basic targeting options like age, gender, household structure and income, digital tracking and more sophisticated segmentation tools have given brands and media planners much more powerful ways to understand, target and reach consumers.

We’ve gone beyond the basics to tracking what people do online, where they’ve been in real life, what they’ve purchased, what else they’ve interacted with, and even being able to build lookalike models to find more people who think, feel and behave like our best customers. But anyone who’s seen a pair of shoes following them around the internet after abandoning a shopping cart online, or had uncannily accurate behavioral ads served to them on social media based on recent activity, understands the concerns about privacy that come into play. This ability for ad networks and marketing technology companies to track people is a big reason that consumers and advocacy groups are pushing back.

Poor ad experience and increasing privacy concerns are also why we’ve seen such a surge in the use of browser ad blockers, and why consumers cheered (and advertisers protested) Google’s decision to include a Chrome ad-blocker by default in 2018. The ad industry has been responsive at key points, such as the Digital Advertising Alliance (DAA) establishing responsible privacy practices in digital advertising. But consumer demand for transparency and privacy control continues to outpace efforts by the ad industry to address it.

In fact, if you’ve seen all the cookie notices on websites over the past year you’re seeing consumer advocacy at work via the European Union’s General Data Protection Regulation; it goes into full effect in May 2018, and all websites who offer goods to or track EU visitors are required to comply. The ad industry, publishers, and many experts are balking, however, at the proposed ePrivacy legislation that’s up for a vote next week which could ban publishers from running ads. Understandably, they’re concerned that such a ban would not only force publishers to shutter but also gut a huge portion of the digital global economy, which is why the Internet Advertising Bureau (IAB) met with members of Parliament to make a case for further amendments this month.

Creating demand, or chasing consumers?

Smaller organizations such as startups and small businesses need to be aware of the concerns around privacy and ethics in digital advertising, because the whole industry is going in this direction. We’re getting more specific with our targeting, not less, and it’s not hard to imagine a Minority Report future where two people driving in a car see a different billboard ad. Privacy concerns will only grow, alongside the propensity of some advertisers to divert the system for gain regardless of ethical implications. The time to work with consumers to develop a system that works for both sides and delivers relevant, useful advertising is now.

As you plan your 2018-2019 marketing and advertising, think about how the messaging you’re sending can provide value, and how you can reach customers with offers and products they actually want. Most importantly, consider how you can use a deeper dive on segmentation and consumer insights to better understand their needs, wants and desires to redefine your products, services, and platforms to better suit them. The better your brand’s sync with the pulse of consumers, the more demand you’ll create—and the less you’ll have to worry about stalking them across the internet.      

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