Interest-Based Advertising

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Respect your customer, and online advertising can help you increase click-throughs from a more targeted audience.

By Genie Barton And Jon Brescia

Remember the last great newspaper ad you saw? Have you picked up a physical copy of the Yellow Pages to find a repairman lately? Not likely. We have all gone digital. We now consume media, search for information and interact with one another on our Internet-connected devices — desktop PCs, laptops, phones, and tablets. And many of the ads that previously ran on TV, in newspapers and in phone books have followed our eyes to these new devices.

Unlike a print ad or a traditional TV spot, online ads can be customized to fit what companies know (or think they know) about you from your web viewing habits. You may have looked at a pair of shoes or searched for a hotel in Hawaii and found ads for the same shoes or for things to do in Hawaii as you scrolled through your favorite news site. Wherever you went the shoes seemed to follow. This kind of advertising is known as “interest-based advertising.”

When we were primarily desktop users, interest-based ads were most often served through our browsers using “cookies.” Today, most of us have more than one device — a personal laptop, tablet and smartphone, as well as an office computer. In many homes, connected devices outnumber family members. With the sophisticated technologies of today, interest-based ads go where we go on our mobile devices. As we move from device to device, often ads for products and services we like are served to us on each device along the way.

With the unprecedented pace of technology, interest-based advertising is poised to bring new opportunities to both consumers and businesses. But it also poses challenges if businesses do not explain to consumers what is going on and give them a choice about personalization.

The Benefits to Consumers

Fewer Unwanted Ads: If you hate seeing ads for “weird tricks” and irrelevant products, then interest-based advertising is not only refreshing, but also can be helpful. Because these customized ads are selected for you, they are more likely to show you products or services you actually want to buy.

Real-Time Deals: Because companies can reach out to you anywhere you carry your smartphone, you can be alerted to deals that are happening near you in real time. From flash sales at retail outlets to free coffee at a local roaster’s café, timely and convenient coupons and offers are just a tap or swipe away.

Smart Incentives: When you have looked at an item or put it in your shopping cart but decided the time wasn’t right to make a purchase, the merchant knows that you are interested and may come back with a more tempting offer.

The Benefits to Businesses

Increase Click-Throughs: When businesses are looking to reach their target audiences, interest-based advertising is a huge boon, as evidenced by the 100-percent plus increase in click-through rates on interest-based ads over random ads in the desktop environment. Interest-based advertising is even more effective on smartphones. With more than 64 percent of American adults already using smartphones, and even higher percentages of millennials and other demographics accessing the web primarily on their mobile devices, mobile is the new hot spot for interest-based ads. 

Fit in Better: Businesses can also combine interest-based advertising with so-called “native ads,” which are designed to fit the look and feel of the website or app where they are placed — think sponsored posts on social media websites. Native ads also provide a demonstrable increase in click-through rates, beating out traditional banner ads in test after test. Importantly, native ads perform almost twice as well on mobile devices as compared with desktop or laptop computers.

Gain More Accurate Insights: As the technology that powers interest-based advertising becomes ever more sophisticated, companies can also gain more accurate insights into what consumers like by linking what they know about each individual’s devices into one big profile. In some cases, a user might log in to a company’s website on both devices, allowing that company to correlate them with the account. In other instances, companies can use statistical measurements to make surprisingly accurate guesses about which devices belong to the same person or household. So, don’t be shocked if you see ads on your smartphone for things you searched for on your desktop computer. There’s no spooky magic behind these ads, just some math.

The Key: Respect the Customer

All of these facts together mean that businesses can greatly increase their return on investment for advertising if they tailor native ads to match consumers’ interests and then serve those more-relevant ads on consumers’ mobile devices.

But a word of warning: businesses need to respect their customers’ preferences. Consumers care about their privacy and the security of their data. In poll after poll, responses show that consumers want to be told what data is being collected through their devices, how that data is being used and how they can control it. Indeed, in one poll, 91 percent of respondents said they wouldn’t do business with companies that they believe do not protect their privacy. So, what are some things that businesses can do to take advantage of modern advertising technology while respecting consumers’ privacy?

Build Privacy in From the Start: When developing an app, hiring an advertising vendor or integrating third-party code into your own software, consider the possible consumer privacy issues at the very first stage of the process, not as an afterthought. Make sure your marketing, IT and legal teams all communicate with one another so that nothing slips through the cracks.

Follow Industry Standards: To ensure consumers are provided with insight into interest-based advertising and the opportunity to control their participation in it, the digital advertising industry has crafted a set of robust, evolving self-regulatory standards that companies should follow. Established by the Digital Advertising Alliance, these principles set out requirements for providing timely, meaningful notice to consumers about how companies collect and use data for interest-based advertising. The rules also require companies to point consumers to easy-to-use tools for opting out of interest-based advertising altogether. These rules apply across the board to companies engaged in interest-based advertising, on both traditional desktop and mobile devices.

By working together, businesses and consumers can leverage the tiny supercomputers we call mobile phones to buy, sell and interact in amazing ways. And with Council of Better Business Bureaus standing watch, they can do it all with confidence.

Genie Barton is Vice President of Council of Better Business Bureaus and Director of its Online Interest-Based Advertising Accountability Program. She created the Accountability Program in 2010. Barton is a well-known speaker on digital privacy issues, participating in over 20 conferences and seminars in 2015.
Jon Brescia currently serves as the Technology Compliance Specialist for the Online Interest-Based Advertising Accountability Program at Council of Better Business Bureaus. Brescia manages monitoring and investigation of digital companies to ensure that they comply with the Digital Advertising Alliance’s cross-industry interest-based advertising and multi-site principles.