Category Archives: Targeting

Retargeting: Hooray, it works. Let’s do so much of it we piss people off

There was a really interesting article on digiday this week  about retargeting and how the industry enthusiasm for it is risking the health of retargeting, and increasing resentment for online advertising as a whole.

To give some background, the display ad industry has suffered from a reduction in the perceived value of their ad inventory ever since the industry’s inception. Many cost models now exist (CPC – cost per click, CPA – cost per action) but the original pricing model for online inventory was the CPM (cost per mille, yes I know it’s french but it means cost per thousand to the ordinary person). By cost per thousand they mean cost per thousand impressions, and an impression is counted each time one ad is served (each ad may have multiple images within a loop, a drop down or other engagement and run multiple times, but until the ad itself is clicked, or another link on the page, that still counts as only one impression).

When  I first started in online at MSN in *cough* 1999, we asked for, and (sometimes) received, £26 CPMs for untargeted Hotmail inventory, and £29 for targeted inventory which then was only available based on content, not user demographics or any other criteria. Due to limited availability the MSN business channel was always sold out at a rate card of £29 CPM, while we’d do deals for, say £15 for Run of Hotmail, and run a LOT of house and charity ads.

That was during the dotcom boom, however, and things had to change, if only because all the 19 year olds with random website ideas (and funding) either became gazillionnaires or failed miserably. What remained after the chaos was real businesses doing real things and having to use a proper calculation of profitability to justify their share value. That coincided with added trackability of online, past the point of click and all the way to sales or leads that could be attributed back to a media campaign.

Trackability allowed a realistic value assessment (which became a stick with which to beat the display sector), and the huge growth of consumer usage of the internet meant that billions of available impressions were being added to the inventory of websites each month. Within a couple of years we also had networks brokering deals for massive volumes of blind remnant inventory that the publishers just wanted to make *something* from, and the CPMs kept tumbling.

From a few pounds in the mid 2000s, CPMs kept tumbling to sub £1 levels for large buys, meaning display publishers were constantly struggling to make money from their users, and the “pile it high, sell it cheap” approach was a self fulfilling disaster for advertisers as the vast majority of the inventory was wasted.

As users gradually became blind to the banner (the dominant 468×60 pixel image that held sway for a while), click through rates also fell from single figure %s to less than 0.25% meaning every advertiser and publisher was scrabbling to buy as cheap as possible as this was the only way to make the performance figures add up.

It didn’t help that all this was happening at the same time as the growth of search advertising, which with a CPC (cost per click) pricing model was a lot less risky than display, and also fits into the user journey much closer to the final sale, the death knell of display seemed almost palpable.

and then along came retargeting….

Retargeting hinges on cookies. Basically once you have interacted with an ad (clicked on it) or visited an advertisers’ website – anything that can result in a cookie on your PC, you are potentially identifiable (not personally but as a string of text/numbers) as someone who has done this action. This means that advertisers can either a) serve you a specific ad or b) in some instances decide not to advertise to you at all depending on the actions you’ve taken.

Here’s an example:

Yesterday I went on the BHS website to look at lighting in their sale.
Today when I visit the Huffington Post website, this is the ad I see – featuring the exact products I looked at yesterday:

Image

This is a retargeting ad, and is possible because the cookie on my PC captured data of what I was looking at, and BHS have bought a retargeting campaign, probably from a large provider like Criteo or Struq, stating that they want to target people who’ve been to their site and abandoned items in their shopping baskets, to persuade them to come back and complete the purchase.

Brilliant stuff. This works like a DREAM compared to standard display ads.

Target market – BOOM.

In purchase mode – BOOM.

Relevant products – BOOM.

Happy users – BOOM.

No ad wastage – BOOM.

Inventory gains value – BOOM.

Comparative click through and purchase rates went through the roof, ads are capped to only show 4 times per user to avoid annoying them, suddenly display gets back on the media plan, and everyone’s happy, right?

In theory yes, except like pop ups in the mid 2000s, the most successful ad type gets used to the point of saturation. Many advertisers will now only use display for retargeting, and in their enthusiasm for it, they use multiple providers to serve the same campaign. The result of this is that the frequency capping becomes 4 per network or exchange (and many advertisers use several) so the user can see the ad 20 times+. Plus the complexity of managing this many campaigns means that it’s also unlikely they’re  pulling client 1st party data through to show whether the sale was actually made or not – so, as in my case I’VE ALREADY BOUGHT THE DAMNED THING!

How likely is it that customers enjoy this experience and are encouraged to return another time?

Easy answer. It’s not.

<rant>

Given the amount of times that I see an ad after I’ve bought the product, or an insane number of times you’d think that it was difficult to prevent this happening, but it isn’t at all.

Any agency or advertiser using retargeting who doesn’t manage cross campaign frequency is risking not just their own customers, but increasing resentment for the whole online ad sector. And for crying out loud, drop a cookie when people buy so they don’t keep seeing it ad infinitum.

</rant>.

If it’s free, you’re the product

Having been in the media industry for *cough* 20 years this year, the scales fell from my eyes a long time ago. I assumed that everyone approached media and advertising with the same slightly raised eyebrow as me, so when people who don’t work in media (and hence probably do real jobs) express righteous anger at Facebook redesigns, their dwindling sense of privacy or misguidedly share one of those annoying “I hereby do not give you right to do blah blah…..” notices I am genuinely surprised that some people really haven’t figured it out.

For the avoidance of doubt, Facebook is a commercial entity, as is Google, as is ITV.

They are not publicly funded like the BBC, therefore their sole reason for creating ANYTHING is to make you use it and watch it – so that they can sell advertising around it. In addition to that, they can get more money for their advertising if they know more about their audience (yes, that’s you).

To give an example – imagine that Disney are selling their new animated kids’ movie. They may be willing to pay a certain amount for their ad to be seen in front of a thousand people. If those people can be proven to be parents, then their perceived value of those eyeballs grows. This makes the newspaper/magazine/TV station/website publisher much happier, and gives them an incentive to find out as much about you as they can, to increase your value to their advertisers.

If there is even further information available about viewers/listeners/users, such as the age of their children, whether they’ve liked other Disney animated films and if they’ve visited one of the Disney Parks in the last 12 months – that value can further grow enormously as it’s a good indicator that they’re more likely to buy the advertiser’s product.

Here’s an example of how it works on Facebook:

Facebook audience targeting

Facebook audience targeting

For the basic UK adult targeting above, Facebook recommends a CPC (cost per click) bid of between 25p to 54p, How much of this you’ll have to pay will depend on how fast you want to spend your budget, and supply and demand at the time you go live.

Now see what happens if you add some extra criteria about family status:

Facebook audience targeting with children

Facebook audience targeting with children aged 4-12.

As you can see, the number of people in the target audience has dropped (to less than 10% of the original number), and the price you’ll have to pay to show them your ads has increased, by about 30%. If these people respond more frequently to the ads and therefore the advertiser sells more DVDs, then it’s evidently still worth their while to pay a bit more, so everyone’s still happy.

But how much do they really know about me?

Well traditionally “brand” advertising has been sold around content, so you’ll see different ads around America’s Next Top Model than you do around Wheeler Dealers. The assumption is that certain types of people (gender, age bracket, purchasing habits) trend towards certain content.

Direct advertising, and especially since the growth of the internet is more likely to be sold around what we know about the person themselves.

ACORN advert for regional classification

ACORN advert for regional classification for advertisers

The 80s saw the launch of ACORN (A Classification of Regional Neighbourhoods) in the States, which segmented all US areas into demographic types – which was used to help advertisers to accurately target their direct mail and later TV, and now online across most countries.

Clearly people living in areas classified as “02 – Affluent working families with mortgages” will be worth more to the advertiser than “48 – Low incomes, high unemployment, single parents”.

It has ever been thus and means that where they can, advertisers will use the most detailed criteria available to increase the response to, and decrease the wastage of their advertising activity.

Social media, and people’s increasing willingness to share personal data has led to an explosion in the levels of targeting that an advertiser can access. To continue the Disney/Facebook example:

Facebook targeting options, Disney

Facebook targeting options, Disney films

There are so many targeting criteria that can be used to target the Facebook audience, and all these options make the audience more valuable to the advertiser (and to Facebook). Disney films, parks and characters can be added to the interest category, and these people set up as a segment so that they will see the ads that are most targeted to them.

If the advertiser wanted to target grandparents also – say in the run up to Xmas, they can add extra age criteria to make it more relevant and tweak the ads even further.There is a segment called “babyboomers” who can be lured with nostalgic references to childhood toys of their youth.

Spooky?

Those who see the level of detail advertisers can access for the first time often react with horror – OMG!! They’re going to sell me stuff!!

Well my answer to that is

a) did you really think you get anything for free, really? and

b) at least the stuff they’ll try to sell you is vaguely relevant.

I’d be very bored very quickly if all the ads I ever saw were for golf equipment and incontinence pads (neither of which I have a need for, incidentally).

If you feel worried about your privacy then there are always ways you can prevent advertisers from knowing more about you.

  • Firstly, don’t be hanging around on Facebook. It’s like carrying a sandwich board around with you telling them how to sell to you, and when. If you must do, then set your posts to automatically show to “friends” only (not public), and don’t like/share ridiculous images that *obviously* aren’t going to suddenly start moving if you write a comment
  • While you’re at it, tick the “opt out” box on every form you ever fill in 
  • Delete your cookies after every online session
  • Go and live in the desert, although you may just end up re-classified as “Self sufficient, rejecter of society, interested in green issues”.

Frankly, it’s a part of the world we live in, and whether you engage with it or not is your choice. You will see ads around every media you interact with, but you only make the advertiser’s job easier if you volunteer information to them. Choose wisely and carefully what you share with the public and commercial entities, and remember:

Never write anything online that you wouldn't put on a postcard

Never write anything online that you wouldn’t put on a postcard