Ged Egan, research specialist at TNS, analyses the use of targeted advertising by marketers
As more of us willingly post personal information onto websites and pass details onto third parties, it’s not surprising that companies are increasingly using this information for targeted advertising.
But questions of privacy and transparency have arisen, as more consumers become aware of adverts that have been tailored specifically for them based on information they have not consented to be used. Whilst targeted advertising is likely to be more effective, for some consumers its use can reduce trust in the brand. Marketers therefore need to strike a balance between tailoring campaigns for individuals while still retaining their loyalty.
Marketers are getting mixed messages though on what consumers really think. There is research that states that 65% of consumers think targeted advertising is an abuse of their privacy. Conversely our research suggests that 64% of consumers think that advertising tailored more to their own tastes and interests is a good idea.
Attitudes towards advertising largely come down to how it is positioned to the consumer, who will benefit from it and whether the consumer or company is ultimately in control of marketing. At the moment, targeted advertisers have not fully understood this.
A common mistake many companies make is using behavioural data in isolation. Adverts that use basic information such as marital status or date of birth tend to make assumptions about what advertising would be best suited without considering wider research. Although it’s powerful to understand what consumers are doing, this needs to be combined with market research to understand why they are doing it. This helps to overcome false assumptions that could potentially damage customer relations and brand reputation.
With 64% of consumers wanting adverts individually tailored, it is fair to say that mass media marketing approaches of building awareness are open to challenge. Consumers wish to feel a connection to their advertising; however there must be a level of control. Transparency surrounding the use of data is significant; people need to feel in control of their own information. The key to successful marketing is consumer engagement and getting customers to opt in to a two-way beneficial relationship rather than bombard them with messages.
By allowing customers to opt in, companies empower consumers to choose to enter into a dialogue with their brand rather than using the traditional interruption-based monologue which only serves to alienate. Opt-in methods will also educate consumers about targeted advertising, which should serve to reduce levels of concern regarding privacy.
Despite the current negativity and confusion surrounding targeted advertising the future looks bright for marketers. Some 84% of 16 to 24 year olds would exchange personal information for incentives; suggesting that issues over invasions of privacy may be transitory. As a generation that is accustomed to technology and advertising it appears that they are more accepting of developments in these areas providing the relationship is reciprocal. Cashback proved to be the most popular incentive for those researched, with 49% of UK adults saying they would be willing to exchange personal information for cash.
Targeted advertising is likely to develop greatly over the next few years. With the development of networks such as Facebook and Twitter consumers are already able to establish a relationship with particular brands that they like. Brands are then able to post status updates in the newsfeeds of those Facebook or Twitter users who have opted in by clicking ’like’ on their brand.
Technologies that access consumer locations will also greatly assist marketers. Some manufacturers are looking to incorporate ’Near Field Communication’ technologies (which allow data to be transmitted when a mobile device passes close by to a billboard, for example) into their handsets. We are already using video as part of one of our research applications that allows us to test adverts in combination with location. Knowing where people are will allow marketers to not only understand their consumers but identify target areas for their brands.
Similarly the development of applications that allow consumers to scan products and receive product information such as pricing and reviews will give marketers greater insight into consumer behaviour and this knowledge can be applied, with market research, to targeted advertising.
The younger generation is more in tune with these developments, and provided brands establish reciprocal relationships, they are likely to benefit. When combined intelligently with the right market research targeted advertising can be a real hit with marketers.