What is
Behavioural
Targeting?
A type of targeted
advertising, it is“[a]
practice which includes
techniques used by
advertisers to capture
users’ online behavior
patterns that benefit them
to segment users based on
their behavior”
Although behavioural targeting can provide firms with a competitive advantage, there may be significant drawbacks in the privacy concerns held by consumers
Traditional mass advertising was used
because firms lacked information about
consumer habits and had no way to only
reach prospective consumers
Behavioural targeting allows businesses to differentiate their advertising between various groups of consumers since there are so many specialized media outlets through which to communicate
The key behind behavioural targeting is that the
advertisers can show ads only to users within a
demographic of high value
How Does it Work?
Websites create advertisements
based on your purchasing,
search history, and browsing
habits
Social networking websites may
place ads on the side of the
page based on what your
friends are doing (for example,
which pages they “like” on
Facebook)
By targeting customers who value the firm’s product or service, the firm can maximize not only its sales, but also the margin it makes on each sale, since customers can be charged prices closer to their maximum willingness-to-pay
“The business that’s made the effort to anticipate my question –and been generous enough with its expertise to try and answer it – will have the best chance of being found in search, and may well predispose me towards a sale too”
- Catherine Toole, “Brands as Publishers: Inside the Content Marketing Trend”
The Push for Digital Advertising
“Simultaneous to the “pull” of information by the consumer [via visiting retailer sites] is the digital “push” by marketers, who spent more than $43 billion on digital advertising in 2013”
- Gian M. Fulgoni, “Omni-Channel Retail Insights and the Consumer’s Path to
Purchase”
Good News for Firms
“If a firm can tell its own loyal customers apart from those of its competitor, it can set lower prices so as to target aggressively the rival’s customer base. As the other firm will act likewise, competition will increase”
- Paul Belleflamme, “What to think of targeted advertising?”
There are incentives for firms to share customer data that can be used for price discrimination, and studies show it can be a “profitable strategy for competing firms”
- Paul Belleflamme, “What to Think of Targeted Advertising?”
As targeted advertising becomes more
widely used, many consumers worry that
everything they do online is being tracked
The Growing Concern…
A Canadian Study on Behavioural Ads
Of 1500 Canadians polled in 2014, 73% said they feel they have less protection over their information than they did 10 years ago
58% of those surveyed reported having turned off location tracking on mobile devices because of privacy concerns, up from 38% in 2012
A Canadian Study on Behavioural Ads
“81% of participants said they would do
business with a company specifically
because of its reputation for privacy”
Facebook “Social Context” Advertising Scandal
“[Facebook] allowed advertisers to post
updates on users’ feeds to notify their
friends of their commercial activity
at participating retailers”
- Sidneyeve Matrix, Module 02 Lecture 01 “Advertising Strategies,”
FILM 240, 2017.
Some people had
their surprise
engagement plans
revealed by
notifications sent to
their friends that
they had recently
made a large
purchase at a
jewelry store
Similarly, Facebook’s use of “sponsored stories” meant that if a user “liked” a page on Facebook, his or her friends were told about it in the form of an advertisement
Many users felt this was
an encroachment on their
privacy, and the result was
a $20M class action
lawsuit in 2014.
What is the Best Approach?
Behavioural targeting can be a very effective way for businesses to advertise to specific groups of people and ensure profit maximization
However, an important part of marketing for businesses is called Marketing Ethics, or promoting “honesty, fairness, and responsibility in advertising,” and it is often a complicated topic
Is Behavioural Targeting “Ethical”?
There is no agreed-upon answer, but there may be some
solutions to make it more welcomed by consumers
For many users, the solution may be as simple as having access to more information on how their data is used and collected
By being more transparent about their privacy
policies, firms can allow consumers to understand
what is being done with the data collected, allowing
them to be more comfortable in using their services
56% of Canadians surveyed said that they did
not feel they had sufficient knowledge to
properly protect their privacy
SourcesBelleflamme, Paul. "What To Think Of Targeted Advertising? | Ipdigit". Ipdigit.eu. N.p., 2013. Web. 17
Feb. 2017.
Ben Elhadj-Ben Brahim, Nada, Rim Lahmandi-Ayed, and Didier Laussel. "Is Targeted Advertising Always Beneficial?". International Journal of Industrial Organization 29.6 (2011): 678-689. Web.
Chauhan, Sonam and Shubhangini Rathore. "Ethics In Behavioural Targeting:". International Journal of Online Marketing 4.2 (2014): 45-61. Web.
"Ethical Marketing | What Is Ethical Marketing?". Marketing-schools.org. Web. 19 Feb. 2017.
Fishman, Andrea. "Privacy Vs. Security: What's Behind Ad-Targeting Concern?". Cmo.com. N.p., 2012. Web. 15 Feb. 2017.
Fulgoni, Gian M. "“Omni-Channel” Retail Insights And The Consumer's Path-To-Purchase". Journal of Advertising Research 54.4 (2014): 377-380. Web.
Hendricks, Drew. "Facebook To Drop Sponsored Stories: What Does This Mean For Advertisers?". Forbes.com. N.p., 2014. Web. 16 Feb. 2017.
Matrix, Sydneyeve. “Module 02: Promotional Media | Lecture 01 Part 01: Advertising Strategies,” FILM 240, Queen’s University, February 2017.
Phoenix Strategic Perspectives Inc.,. 2014 Survey Of Canadians On Privacy. Ottawa: N.p., 2014. Web. 15 Feb. 2017.
All photos have Creative Commons License CC0, sourced from Google and Pexels.com
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