A Beginner’s Guide to Ad Targeting

DIG-INSIGHTS_BeginnersGuide-Ad-Targeting-01A few years ago, a Facebook ad featuring a pair of shoes from an Amazon search seemed like magic. But these days, it’s routine for apps and websites to remember consumers’ likes and dislikes, just like a great salesperson remembers a loyal customer’s dress size or whether he takes cream in their coffee. By managing this data, websites and apps can take personalized communication far beyond simple retargeting, taking what they know about consumers and using it to tailor custom messages for unprecedented ad effectiveness.

But for companies without a data management strategy, the world of targeted advertising may seem too complex to even try. Luckily, ad targeting doesn’t have to be overwhelming. Here’s an introductory lesson in how businesses find, collect and use data to deliver personalized ads to every viewer.

Three different kinds of data

First-party data is all of the information a business collects about its customers. Every time a customer visits a website, signs up for a mailing list, or makes a purchase, they’re offering valuable data to your company. Most data is collected using cookies or files that retain information about website visits. Those cookies can be an important tool for helping customers move through the buyer journey.

Say a customer comes to a business’ web page and researches a product without making a purchase. Cookies can remind that customer of the product on social media or even can be used to send an email offering a relevant deal. First-party data is great for showing customers you know them and managing the relationship between buyer and brand.

Second-party data comes from partnerships between brands. For example, a women’s athletic clothing company might partner with a shoe retailer to share data. The assumption is that the same women who buys quilted vests might also be in the market for athletic shoes geared toward trail running. Second-party data is meant to supplement first-party data and attract new audiences rather than maintain relationships with existing customers.

Third-party data is purchased from companies that aggregate data from all corners of the internet and then bundle it to sell on a large scale to publishers. So, should an advertiser want to market to 30-year-old men living on the East Coast who frequently order pizza, publishers can make that happen with the use of vast, highly segmented amounts of third-party data. If second-party data broadens an audience, third-party data explodes it.

Data management platforms

Marketers are privileged with access to more knowledge about consumers than ever before, but the burden of that data can often feel overwhelming. Data management platforms (DMPs) offer an effective way to look for commonalities between customers and deliver personalized messages. DMPs gather first-, second-, and third-party data in one place, so marketers and advertisers can create segmented audiences based on that data. For instance, a DMP could use cookies from a brand’s own website along with data from second and third-party sources to find millennial moms who browsed athletic socks on mobile in Miami. When linked with a demand-side platform (DSP), DMPs can inform actual purchases of ads on ad networks, ensuring that the right customers see the right ads on the right devices. So a Crossfit studio in Miami could use a DMP and a DSP to alert Facebook mobile users who love sports and have kids about the availability of childcare services at its locations.

Using data for 1-to-1 marketing

On some level, most companies have been using 1-to-1, highly personalized marketing for years. Every time a brand sends a happy birthday email or even remembers a client’s likes and dislikes, they’re employing 1-to-1 marketing. But in the data age, simply serving an ad to a customer who likes a Facebook page or retargeting a potential buyer who’s walked away from his or her shopping cart is ignoring the ways data can intersect to create a truly personal buyer/brand relationship. 1-to-1 marketing occurs when marketers combine all data points to serve an ad that takes the buyer’s past, present and future into account.

For example, the parent who bought newborn diapers in June will probably be looking for holiday outfits to fit a six-month-old come November, but a customer in Hawaii is probably going to want much different gear than one in Alaska. A savvy marketer knows how to use different data sets to serve ads both customers will appreciate rather than a broad, catch-all, ineffective approach. This is the power of first-, second-, and third-party data filtered through a data management platform.

This is the golden age of data, and with that data comes audiences who expect businesses to know them before they ever step foot in the door. Using data to segment audiences may seem complicated, but to most consumers, it feels just as natural as a friendly salesperson waiting for them with a fitting room full of clothes and a hot cup of coffee.

Contact us to learn more about how Verizon Digital Media Services’ end-to-end platform, featuring Smartplay by Verizon, our 1 to 1 session management technology, delivers smarter advertising experiences to your viewers.

With contribution from Emily Alford of the Hippo Thinks research network.