At its core, digital advertising is audience targeting. It’s what separates digital advertising from traditional advertising. It’s also why the industry is both lucrative and controversial. Since its inception, audience targeting has come in many forms.
Last week we introduced the key parties and how they operate within the digital advertising ecosystem. This week, we delve into how the digital advertising industry targets customers.
First, some history: digital advertising was born in 1994, in the form of a banner ad for AT&T on HotWired, the first commercial web magazine.
In the early days of the internet, audience targeting was limited; advertisers placed ads on websites relevant to their content. If they were trying to advertise hotel bookings, they would buy advertising space on the travel section of websites. This can be considered contextual targeting.
With cookies, behavior targeting became possible. Cookies are a small piece of code sent from a website and stored on a user’s web browser while the user is browsing. It tracks information such as items added to a shopping cart or clicks, logins, and pages visited. When cookies became public knowledge, widespread media attention began focusing on its potential privacy implications, foreshadowing the rise of today’s internet user privacy debates.
Web beacons, or “tracking pixels”, were developed to allow webpages to track how users interacted with a page through graphic requests. Combined with cookies, they transferred and collected information to allow for more precise behavior targeting of users.
At the same time, geographical targeting, through IP addresses, and time targeting were simple ways for advertisers to target audiences with location and time specific ads.
Retargeting uses behavioral targeting to track and follow users after they have purchased goods and services, to ensure that users aren’t shown ads for something they’ve already purchased and to draw attention to similar products and services. By analyzing a user’s consumption activity with their brand, advertisers can place ads more effectively.
With the rise of social media, behavior tracking became much easier, with accounts linked to persistent IDs. These IDs stay with users as they interact with each other on the platform. This allowed for the development of demographic targeting, as users shared their gender, age, location, and other interests with these platforms. However, this user data is stored away in centralized storages, inaccessible by other platforms, resulting in fragmentation of user profile data and running the risk of data leakages, such as the Facebook Cambridge Analytica scandal.
Native advertising has proven to be the most effective and well received method of audience targeting. It is a form of advertising where ads take on the same form and function as the website’s native content. Similar to the principle of product placement, native ads are seamless and do not interrupt a user’s online experience.
With DATx, native advertising is employed to provide users with a smooth browsing experience. With complete user profiles made possible by tracking user behavior across websites, advertisers are able to create ads relevant to users. Users are able to choose who they provide their data to, and with their data being securely encrypted and decentralized, are able to have complete control over it.
