The Link Between Behaviorally Targeted Ads and Ad Performance
As social media usage continues to surge, customizable online content grows in parallel, and marketers now have better insight into who their consumers are, and what they like to do. We have known for a long time that obtaining this information leads to increased accuracy and effectiveness in both clicks and conversions, but now we know why.
The Journal of Consumer Research recently published an article exploring the link between behaviorally targeted ads and ad performance. Behaviorally targeted ads, versus demographic or non-targeted, deliver digital ads to individuals based on their activity, such as searches or online shopping and purchases. Using four studies, they found that these behaviorally targeted ads act as an implied social label, which then leads the consumer to make changes to their self-perceptions in order to match the label given to them. While these labels are not expressly stated, the research has found that when consumers know that an ad has been targeted specifically for them, they are more likely to believe that an inference has been made about them and their past actions and therefore act according to those inferences. Consumers know that they are being behaviorally targeted when marketers use the AdChoices icon in the upper right-hand corner of the ad.
"Across four studies, we demonstrate that the behaviorally targeted ad functions as an implied social label, leading consumers to adjust their self-perceptions to match the implied label. These self-perceptions then impact behavior including purchase intentions for the advertised product and other behaviors related to the implied label..."
In one study, consumers are shown an ad for an environmentally friendly speaker. Once they understood that the ad was targeting them based off of past online behaviors, participants were more likely to later describe themselves as "green." Even further, they were more inclined to donate to environmentally friendly causes when prompted by the researchers.
According to a survey conducted by the Network Advertising Initiative, the conversion rates for targeted ads are 6.8 percent compared to non-targeted at 2.8 percent. This research is not as clear-cut as it may sound, though. Changes in self-perception and purchasing intention only happen when the "label is plausibly connected to consumers' prior behavior (i.e., when the targeting is at least moderately accurate)."