What Is Personalised Advertising?

Date First Published: 4th January 2023

Topic: Web Design & Development

Subtopic: Web Advertising

Article Type: Computer Terms & Definitions

Difficulty Level: 5/10

Learn more about what personalised advertising is in this article.

Personalised advertising, also known as targeted advertising, is the process of delivering targeted ads to users based on their data and past behaviours, like what they have visited before. The main aim of personalised advertising is to deliver relevant ads to users that may interest them. By collecting and using information about users, businesses can target potential customers more effectively. Without any personalised advertising, businesses could spend money on ads that target the wrong audience.

Advantages and Disadvantages Of Personalised Advertising

• It can increase click-through rate (CTR) since more users will see ads that they are interested in and are more likely to click, which will increase sales for advertisers and increase revenue for publishers. This also improves efficiency.
• It improves user experience as when users are seeing ads that are targeted to them and their interests, they are more likely to stay on the site for longer.
• Increased customer loyalty. Ad personalisation can increase customer loyalty. A study by grow.segment.com determined that over 40% of consumers say they will become frequent customers of a business that offers a personalised shopping experience, and 80% of self-identified frequent shoppers only buy from brands that do so.

• Large amounts of personalised advertising can lead to impulse purchases which users cannot afford. This is especially true for users that can be easily convinced.
• The collection of user information by publishers and advertisers to understand and track users to display personalised ads has led to privacy concerns. Users may be worried by advertisers targeting them based on sensitive information, like their financial or health status.

How Do Personalised Ads Track Users?

Personalised ads track users using a cookie or by using the information they provided to the website when they signed up. For example, on a social media site, users specify details, such as their date of birth, gender, occupation, location, marital status, and location. The social media site can use those details to target ads towards users that they may be interested in and if they change those details, the ads will also be updated.

Cookies track what a user has visited before and then use that data to target ads towards them. For example, if a user browsed for running shoes on a shopping website, the shopping website could track that by generating a cookie and using that data to display ads for running shoes. Cookies are basically used to build a profile based on someone’s web activity and browsing habits and advertisers can use this profile to serve ads that are relevant to their interests.

Limitations

Personalised advertising should never target users based on absolutely everything about them. Certain interests are quite sensitive and targeting users based on them can have a negative impact on their overall user experience.

For example, Google Ads has policies in place and advertisers need to abide by them as well as the European Union user consent. Violations can lead to disapproval of the ads or suspension of their account if violations are persistent. Examples of sensitive interest categories include:

• Personal hardships. Ads should never target users in ways that exploit their difficulties. This includes personal financial distress, personal health content, relationship hardships, and abuse and trauma.
• Identity and belief. Ads should never target users based on categories vulnerable to discrimination, such as sexual orientation, political affiliation, personal race and ethnicity, religious beliefs, and transgender identification.
• Sexual interests. Ads should never target users based on private sexual interests or experiences.

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