Online Ad Targeting Creates Opportunities for Publishers and Advertisers

Online ad targeting gains customers for advertisers and at the same time gains revenue for publishers.

It also is a partial answer to the dominance of online advertising by Google and Facebook with their ability to use contextual advertising (which also is a form of ad targeting).

Online ad targeting is the ability to reach consumers based on their demographic, geographic and other types of individual data.

Google’s Ad Manager ad-serving software provides the ability to target by geography and other characteristics.

“(Ad Manager) targets users by their IP addresses. Geo-targeting by IP address is generally very precise and reliable,” a Google document says.

But it can target demographically only by using data collected by the site, such as from user registrations.

Advantages for Advertisers

Ad performance reports in Ad Manager show a correlation between ad targeting and improved click-through rates.

It’s also simply logical.

Let’s say a local online newspaper has of course the ability to reach a large number of people in the local market.

But analytic reports also show quite a few people from outside the market — and even outside the state and country — who reach the site via search engines because they found a random article of interest.

That local advertiser’s ad will offer little to no interest for an outsider who doesn’t shop in that market. As a result, the click rate will be lower.

It benefits the advertiser to target the ad geographically. Targeting options include:

1. Country
2. State
3. City
4. Zip code

Targeting at the zip code level is important for advertisers whose local audiences are nearby, such as a hair salon, doctor or dentist.

A campaign that targets by zip also is much less expensive in total dollars because it is trying to reach fewer people. But it should have a higher cost per thousand because it is targeting such a specific group of people.

A city campaign serves bigger advertisers who want a wider reach such as major events, chains of restaurants or banks, etc.

State-level targeting isn’t as common, but it does occur for certain kinds of campaigns, especially political ones.

Advantages for Publishers

Publishers don’t need to hear from an unhappy client that the ad campaign isn’t delivering clicks or some other kind of response including phone calls or in-store traffic.

It’s hard enough getting clicks because of the flood of Internet advertising. So it benefits the publisher to see a client’s campaign have a higher response rate. A higher response rate improves the chances of getting client retention. That leads to more revenue and less time developing new business.

Targeting also means more efficient use of inventory in one important way.

A site that uses remnant advertising will probably receive a much lower cost per thousand or cost per click with remnant.

A targeted campaign can put higher-paying clients in premium positions, pages and channels while putting remnant ads in less valuable inventory.

As mentioned at the beginning of the article, a local site that attracts search engine visitors from other states or even other countries will want to deliver remnant ads to those visitors. Those ads are more likely to come from national accounts.

Keep in mind that online ad targeting means the amount of available inventory will be smaller than a simple run of site campaign.

It’s tempting to sell 100,000 impressions a month that target zip code XXXXX because clients want that much. But the site might have only 20,000 to sell.

In those situations, it is better to sell several adjacent zip codes rather than just one. It’s especially true if the zips in question have smaller populations.

Competitive Advantages

Google and Facebook dominate online advertising because of their ability to display contextual ads based on the content of the page that the visitor is viewing.

They also target geographically and demographically because of data collected from the registrations and profiles of their users.

Online publishers can take a step toward catching up with them by taking a few simple steps with geo targeting in particular.

The much bigger step takes place next — targeting demographically with user data.

Getting to that point requires more sophisticated ad-serving software and / or a content management system that requires membership to access more valuable content.

Even then, acquiring that kind of personal information runs the risk of users submitting false information to mask their identities.

In the meantime, it benefits publishers to create a better environment for plain contextual advertising. They do it by optimizing site pages, sections and subsections with relevant keywords. They also use the likes to Google DFP values to deliver section or even page-specific advertising.