World Business News: December 2019

Online Advertising

Online deals vs. In-store deals

There are different types of discounts available online versus in the stores. On-shelf couponing: Coupons are present at the shelf where the product is available. * On-line couponing: Coupons are available online. Consumers print them out and take them to the store .Although discounts can be found online and in stores, there is a different thought process when shopping in each location. For example, “online shoppers are more price-sensitive because of the readily available low search cost and direct price comparisons”. Consumers can easily go to other websites and find better deals as opposed to physically going to various stores. In addition, buyers tend to refrain from purchasing bonus packs online because of the skepticism (of fraud and scams) that may come with the deal. Since “…bonus packs are more difficult than price discounts to process online, they are more difficult and effortful for the consumer to understand”. For example, a buy-one-get-one-free deal on a website requires more work than the same bonus pack offered in a store. Online, consumers have to deal with payment processing, shipping and handling fees, and days waiting for the products’ arrival, while in a store, the products are available without those additional steps and delays.

Trade sales promotion techniques

Trade allowances: short term incentive offered to induce a retailer to stock up on a product.
Dealer loader: An incentive given to induce a retailer to purchase and display a product.
Trade contest: A contest to reward retailers that sell the most product.
Point-of-purchase displays: Used to create the urge of "impulse" buying and selling your product on the spot.
Training programs: dealer employees are trained in selling the product.
Push money: also known as "spiffs". An extra commission paid to retail employees to push products.

Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function .

Retail Mechanics

Retailers have a stock number of retail 'mechanics' that they regularly roll out or rotate for new marketing initiatives.

Buy x get y free a.k.a. BOGOF for Buy One Get One Free
Three for two
Buy a quantity for a lower price
Get x% of discount on weekdays.
Free gift with purchase

Consumer Thought Process

Meaningful Savings: Gain or Loss

Many discounts are designed to give consumers the perception of saving money when buying products, but not all discounted prices are viewed as favorable to buyers. Therefore, before making a purchase, consumers may weigh their options as either a gain or a loss to avoid the risk of losing money on a purchase. A “gain” view on a purchase results in chance taking For example, if there is a buy-one-get-one-half-off discount that seems profitable, a shopper will buy the product. On the other hand, a “loss” viewpoint results in consumer aversion to taking any chances. For instance, consumers will pass on a buy-three-get-one-half-off discount if they believe they are not benefitting from the deal. Specifically, consumers will consider their options because “…the sensation of loss is 2.5 times greater than the sensation of gain for the same value”.

Impulse Buying

Impulse buying results from consumers’ failure to weigh their options before buying a product. Impulse buying is “any purchase that a shopper makes that has not been planned… [and is] sudden and immediate”. For example, if a consumer has no intention of buying a product before entering a store, but purchases an item without any forethought, that was impulse buying. Product manufactures want to promote and encourage this instant purchase impulse in consumers. Buyers can be very quick to make purchases without thinking about the consequences when a product is perceived to be a good deal. Therefore, sales companies “increasingly implement promotional campaigns that will be effective in triggering consumer impulse buying behavior” to increase sales and profits

Comparing Prices

Many consumers read left-to-right, and therefore, compare prices in the same manner. For example, if the price of a product is $93 and the sales price is $79, people will initially compare the left digits first (9 and 7) and notice the two digit difference. However, because of this habitual behavior, “consumers may perceive the ($14) difference between $93 and $79 as greater than the ($14) difference between $89 and $75”.As a result, consumers often mistakenly believe they are receiving a better deal with the first set of prices based on the left digits solely. Because of that common misconception, companies capitalize on this sales pricing strategy more often than not to increase sales.

Right Digit Effect

The right digit effect focuses on the right digits of prices when the left digits are the same. In other words, prices like $45 and $42 force consumers to pay more attention to the right digits (the 2 and 5) to determine the discount received. This effect also “implies that consumers will perceive larger discounts for prices with small right digit endings, than for large right digit endings. For example, in a $32-to-$31 price reduction, consumers will believe to have received a greater deal than a $39-to-$38 price reduction. As a result, companies may use discounts with smaller right digits to mislead consumers into thinking they are receiving a better deal and increasing profit. However, consumers also are deceived by the infamous 9-ending prices.“The right digit effect [also] relates to consumers’ tendency to identify 9-ending prices as sale (rather than regular) prices or to associate them with a discount.For example, a regular price of $199 is mistakenly viewed as a sale or discount by consumers. Sales companies most commonly use this approach because the misinterpretation of consumers usually results in an increase of sales and profit.

Framing Effect

The Framing Effect is “the phenomenon that occurs when there is a change in an individual’s preference between two or more alternatives caused by the way the problem is presented”. In other words, the format in which something is presented will affect a person's viewpoint. This theory consists of three subcategories: risky choice framing, attribute framing and goal framing.Risky choice framing references back to the gain-or-loss thought processes of consumers. Consumers will take chances if the circumstance is profitable for them and avoid chance-taking if it is not. Attribute framing deals with one key phrase or feature of a price discount that is emphasized to inspire consumer shopping. For example, the terms “free” and “better” are used commonly to lure in shoppers to buy a product. Goal framing places pressure on buyers to act hastily or face the consequences of missing out on a definite price reduction. A “limited time only” (LTO) deal, for example, attempts to motivate buyers to make a purchase quickly, or buy on impulse, before the time runs out.

Outside Forces

Although there are aspects that can determine a consumer's shopping behavior, there are many outside factors that can influence the shoppers’ decision in making a purchase. For example, even though a product's price is discounted, the quality of that product may dissuade the consumer from buying the item. If the product has poor customer reviews or has a short “life span,” shoppers will view that purchase as a loss and avoid taking a chance on it. A product can also be viewed negatively because of consumers’ past experiences and expectations. For example, if the size of a product is misleading, buyers will not want to buy it. An item advertised as “huge,” but is only one inch tall, will ward off consumers. Also, “the effects of personal characteristics, such as consumers’ gender, subjective norms, and impulsivity” can also affect a consumer's purchase intentions. For example, a female will, generally, purchase a cosmetic product more often than a male. In addition, “some…shoppers may be unable to buy [a product]…because of financial constraints” .Neither a discounted price nor a bonus pack has the ability to entice consumers if they cannot afford the product.

Political issues

Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the United States. For example, the United Kingdom formerly operated under a resale price maintenance regime in which manufacturers could legally dictate the minimum resale price for virtually all goods; this practice was abolished in 1964.

Most European countries also have controls on the scheduling and permissible types of sales promotions, as they are regarded in those countries as bordering upon unfair business practices. Germany is notorious for having the most strict regulations. Famous examples include the car wash that was barred from giving free car washes to regular customers and a baker who could not give a free cloth bag to customers who bought more than 10 rolls.

Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.

Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions.

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.

Sales promotion is implemented to attract new customers, to hold present customers, to counteract competition, and to take advantage of opportunities that are revealed by market research. It is made up of activities, both outside and inside activities, to enhance company sales. Outside sales promotion activities include advertising, publicity, public relations activities, and special sales events. Inside sales promotion activities include window displays, product and promotional material display and promotional programs such as premium awards and contests.

Sale promotions often come in the form of discounts. Discounts impact the way consumers think and behave when shopping. The type of savings and its location can affect the way consumers view a product and affect their purchase decision. The two most common discounts are price discounts (“on sale items”) and bonus packs (“bulk items”). Price discounts are the reduction of an original sale by a certain percentage while bonus packs are deals in which the consumer receives more for the original price. Many companies present different forms of discounts in advertisements, hoping to convince consumers to buy their products.

Sales promotion represents a variety of techniques used to stimulate the purchase of a product or brand. Sales promotion has a tactical, rather than strategic role in marketing communications and brand strategy, it is also a form of advertisement used within a short period of time. Researchers Farhangmehr and Brito, reviewed the definitions of sales promotions in marketing texts and journals and identified a set of common characteristics of sales promotion, including:

Short-term effects and duration;
Operates and influences only the last phase of the purchase process;
Exhibits a secondary role in relation to other forms of marketing communication;
Performs an accessory role regarding the products core benefits
Is not a single technique, rather it is a set of techniques used for a specific purpose

Cokecaps is a manufacturer-sponsored sales promotion targeted at consumers

Both manufacturers and retailers make extensive use of sales promotions. Retailer-sponsored sales promotions are directed at consumers. Manufacturers use two types of sales promotion, namely:

1. Consumer sales promotions: Sales promotions targeted at consumers or end-users and designed to stimulate the actual purchase

2. Trade promotions: Sales promotions targeted at trade, especially retailers, designed to increase sales to retailers, to carry the product or brand or to support the retailer in consumer-oriented promotions

Consumer sales promotions are short term techniques designed to achieve short term objectives, such as to stimulate a purchase, encourage store traffic or simply to build excitement for a product or brand. Traditional sales promotions techniques include:

Price deal: A temporary reduction in the price, such as 50% off.
Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards.
Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package.
Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). This is another type of deal “in which customers are offered more of the product for the same price”. For example, a sales company may offer their consumers a bonus pack in which they can receive two products for the price of one. In these scenarios, this bonus pack is framed as a gain because buyers believe that they are obtaining a free product. The purchase of a bonus pack, however, is not always beneficial for the consumer. Sometimes consumers will end up spending money on an item they would not normally buy had it not been in a bonus pack. As a result, items bought in a bonus pack are often wasted and is viewed as a “loss” for the consumer.
Coupons: coupons have become a standard mechanism for sales promotions.
Loss leader: the price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales
Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
Checkout dispensers: On checkout the customer is given a coupon based on products purchased.
Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption.
Online interactive promotion game: Consumers play an interactive game associated with the promoted product.
Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer.
Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
Point-of-sale displays:-
- Aisle interrupter: A sign that juts into the aisle from the shelf.
- Dangler: A sign that sways when a consumer walks by it.
- Dump bin: A bin full of products dumped inside.
- Bidding portals: Getting prospects
- Glorifier: A small stage that elevates a product above other products.
- Wobbler: A sign that jiggles.
- Lipstick Board: A board on which messages are written in crayon.
- Necker: A coupon placed on the 'neck' of a bottle.
- YES unit: "your extra salesperson" is a pull-out fact sheet.
- Electroluminescent: Solar-powered, animated light in motion.
Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased.
Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not.

New technologies have provided a range of new opportunities for sales promotions. Loyalty cards, personal shopping assistants, electronic shelf labels, and electronic advertising displays allow for more personalised communications and more targeted information at the point of purchase. For example, shoppers may receive alerts for special offers when they approach a product in a specific aisle.

Reference: https://en.wikipedia.org/wiki/Sales_promotion

Influencer Marketing

Influencer marketing (a.k.a. influence marketing) is a form of social media marketing involving endorsements and product placement from influencers, people and organizations who have a purported expert level of knowledge or social influence in their field. Influencer content may be framed as testimonial advertising; influencers play the role of a potential buyer, or may be involved as third parties. These third parties can be seen in the supply chain (such as retailers or manufacturers) or as value-added influencers, such as journalists, academics, industry analysts, and professional advisers.

Most discussions of social influence focus on social persuasion and compliance. In the context of influencer marketing, influence is less about arguing for a point of view or product than about loose interactions between parties in a community (often with the aim of encouraging purchasing or behavior). Although influence is often equated with advocacy, it may also be negative.^[3] The two-step flow of communication model was introduced in The People's Choice (Paul Lazarsfeld, Bernard Berelson, and Hazel Gaudet's 1940 study of voters' decision-making processes), and developed in Personal Influence (Lazarsfeld, Elihu Katz 1955)^[and The Effects of Mass Communication (Joseph Klapper, 1960).

Influencer marketing is also important through social comparison theory. As psychologist Chae reports, influencers serve as a comparison tool. Consumers may compare influencer lifestyles with their imperfections. Meanwhile, followers may view influencers as people with perfect lifestyles, interests, and dressing style. As such, the promoted products may serve as a shortcut towards a complete lifestyle. Chae's study finds women with low self-esteem compare themselves to the influencers. As such, they elevate the status of influencers above themselves. When using an influencer, a brand may use consumer insecurities to its benefits. For this reason, influencer marketing may lead to faulty advertising.

Market-research techniques can be used to identify influencers, using predefined criteria to determine the extent and type of influence.Activists get involved with organizations such as their communities, political movements, and charities. Connected influencers have large social networks. Authoritative influencers are trusted by others. Active minds have a diverse range of interests. Trendsetters are the early adopters (or leavers) of markets. According to Malcolm Gladwell, "The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts". He has identified three types of influencers who are responsible for the "generation, communication and adoption" of messages:

Connectors network with a variety of people, have a wide reach, and are essential to word-of-mouth communication.
Mavens use information, share it with others, and are insightful about trends.
Salesmen are "charismatic persuaders". Their influence is the tendency of others to imitate their behavior.

Most current information about influencers focuses on consumer, rather than business-to-business, markets. Word-of-mouth communication is prevalent in a consumer environment. In business marketing, influencers affect a sale but are typically eliminated from the purchase decision. Consultants, analysts, journalists, academics, regulators, and standards bodies are examples of business influencers.

Influencers may be further categorized by the number of followers they have on social media. They include outside celebrities with large followings and internet celebrities on social-media platforms such as YouTube, Instagram, Facebook, and Twitter. Their followers range in number from hundreds of millions to 1,000. Influencers may be categorized in tiers (mega-, macro-, micro-, and nano-influencers), based on their number of followers.

Businesses pursue people who aim to lessen their consumption of advertisements, and are willing to pay their influencers more. Targeting influencers is seen as increasing marketing's reach, counteracting a growing tendency by prospective customers to ignore marketing.

Marketing researchers Kapitan and Silvera find influencer selection extends into product personality. This product and benefit matching is key. For a shampoo, it should use an influencer with good hair. Likewise, a flashy product may use bold colors to convey its brand. If an influencer is not flashy, he will clash with the brand. Matching an influencer with the product's purpose and mood is important.

Reference: https://en.wikipedia.org/wiki/Influencer_marketing

What is Native Advertising?

Native advertising is a type of advertising that matches the form and function of the platform upon which it appears. In many cases it functions like an advertorial, and manifests as a video, article or editorial. The word "native" refers to this coherence of the content with the other media that appear on the platform.

These ads reduce a consumers' ad recognition by blending the ad into the native content of the platform, using somewhat ambiguous language such as "sponsored" or "branded" content. They can be difficult to properly identify due to their ambiguous nature.

Product placement (embedded marketing) is a precursor to native advertising. The former places the product within the content, whereas in native marketing, which is legally permissible in the US to the extent that there is sufficient disclosure, the product and content are merged.

Despite the ambiguity surrounding native advertising's invention, many experts do consider the Hallmark Hall of Fame, a series which first aired in 1951 and still runs today, as among the earliest instances of the technique. According to Lin Grensing-Pophal, "The award-winning series is arguably one of the earliest examples of 'native' advertising—advertising that is secondary to the message being delivered, but impactful through its association with valued content."

This 1901 advertisement for patent medicine begins by looking like an editorial on political developments in China.

Contemporary formats for native advertising now include promoted videos, images, articles, commentary, music, and other various forms of media. A majority of these methods for delivering the native strategy have been relegated to an online presence, where it is most commonly employed as publisher-produced brand content, a similar concept to the traditional advertorial. Alternative examples of modern technique include search advertising, when ads appear alongside search results that qualify as native to the search experience. Popular examples include, Twitter's promoted Tweets, Facebook's promoted stories, and Tumblr's promoted posts. The most traditionally influenced form of native marketing manifests as the placement of sponsor-funded content alongside editorial content, or showing "other content you might be interested in" which is sponsored by a marketer alongside editorial recommendations.

Most recently, controversy has arisen as to whether content marketing is a form of native marketing, or if they are inherently separate ideologies and styles, with native market strategists claiming that they utilize content marketing techniques, and some content market strategists claiming not to be a form of native marketing.

In most recent years of the millennium, the most notable form of native advertising has been sponsored content. The production of sponsored content (sometimes abbreviated as "sponcon") involves inclusion of a third party along with a management company or a brand company's personal relations and promotional activities team in reaching out to aforementioned considerably popular third party content producers on social media, often independent, deemed "influencers" in an attempt to promote a product. Often quoted as the predecessor to traditional endorsed and/or contract advertising; which would instead be featuring celebrities, sponsored content has indubitably become more and more popular on social media platforms in recent years likely due to their cost-effectiveness, time efficiency, as well as the ability to receive instant feedback on the marketability of a product or service.

A technique often used in traditional sponsored advertising is direct and indirect product placement (embedded marketing). Instead of embedded marketing's technique of placing the product within the content, in native marketing, the product and content are merged, and in sponsored content the product, content and active promotion occurs simultaneously across a number of platforms.

Unlike traditional forms of Native Advertising, Sponsored content alludes to requirement of and desire for transparency and thrives on the concept of preexisting and/or built up trust between consumer and content producer rather than creating a masked net impression, which is a reasonable consumer’s understanding of an advertisement. The underlying motives of sponsored content, however, is similar to that of native advertising- which is to inhibit a consumers' ad recognition by blending the ad into the native content of the platform, making many consumers unaware they are looking at an ad to begin with. The sponsored content on social media, like any other type of native advertising, can be difficult to be properly identified by the Federal Trade Commission because of their rather ambiguous nature. Native advertising frequently bypasses this net impression standard, which makes them problematic.

Categories of sponsored content

Collaborative content

Collaborative content has become more prominent on video platforms and social media in recent years. Content producers/influencers are usually contacted by companies for their creative input and voice in the makings of a product or provided with a discount code to gain a percentage of the profits after consumers incorporate the code as a part their purchase. Collaborative content may also include a brief or a contract and can vary from client to client- however, there is a degree of flexibility as the finished product is supposedly a representation of the content producer. Notable companies involved in this trade include pixi, colourpop and MAC cosmetics.

Social media platforms with sponsored content

Sponsored content can be found on several platforms with varying levels in production value of the finished product.

Categories of online ads[edit]

The Interactive Advertising Bureau (IAB), the primary organization responsible for developing ad industry standards and conducting business research, published a report in 2013^[15] detailing six different categories for differentiating types of native advertisements.

In-Feed Ad Units: As the name denotes, In-Feed ads are units located within the website's normal content feed, meaning they appear as if the content may have been written by or in partnership with the publisher's team to match the surrounding stories. A category that rose to popularity through sites like Upworthy and Buzzfeed's sponsored articles due to its effectiveness, In-Feed has also been the source of controversy for native marketing, as it is here the distinction between native and content marketing is typically asserted.
Search Ads: Appearing in the list of search results, these are generally found above or below the organic search results or in favorable position, having been sold to advertisers with a guarantee for optimal placement on the search engine page. They usually possess an identical appearance as other results on the page with the exception of disclosure aspects.
Recommendation Widgets: Although these ads are part of the content of the site, these do not tend to appear in like manner to the content of the editorial feed. Typically delivered through a widget, recommendation ads are generally recognizable by words which imply external reference, suggestions, and tangentially related topics. "You might also like"; "You might like"; “Elsewhere from around the web"; "From around the web"; "You may have missed", or "Recommended for you" typically characterize these units.
Promoted Listings: Usually featured on websites that are not content based, such as e-commerce sites, promoted listings are presented in identical fashion with the products or services offered on the given site. Similarly justified as search ads, sponsored products are considered native to the experience in much the same way as search ads.
In-Ad (IAB Standard): An In-Ad fits in a standard IAB container found outside the feed, containing "...contextually relevant content within the ad, links to an offsite page, has been sold with a guaranteed placement, and is measured on brand metrics such as interaction and brand lift."
Custom / Can't be Contained: This category is left for the odd ends and ads that do not conform to any of the other content categories.

Reference: https://en.wikipedia.org/wiki/Native_advertising

What is Target Advertising?

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting. These traits can either be demographic with a focus on race, economic status, sex, age, generation, level of education, income level, and employment, or there can be a psychographic focus which is based on the consumer values, personality, attitude, opinion, lifestyle and interest. This focus can also entail behavioral variables, such as browser history, purchase history, and other recent online activities. Targeted advertising is focused on certain traits and consumers who are likely to have a strong preference. These individuals will receive messages instead of those who have no interest and whose preferences do not match a particular product's attributes. This eliminates waste.

Traditional forms of advertising, including billboards, newspapers, magazines, and radio channels, are progressively becoming replaced by online advertisements. The Information and communication technology (ICT) space has transformed recently, resulting in targeted advertising stretching across all ICT technologies, such as web, IPTV, and mobile environments. In the next generation's advertising, the importance of targeted advertisements will radically increase, as it spreads across numerous ICT channels cohesively.

Through the emergence of new online channels, the need for targeted advertising is increasing because companies aim to minimize wasted advertising by means of information technology. Most targeted new media advertising currently uses second-order proxies for targets, such as tracking online or mobile web activities of consumers, associating historical web page consumer demographics with new consumer web page access, using a search word as the basis of implied interest, or contextual advertising.

Web services are continually generating new business ventures and revenue opportunities for internet corporations. Companies have rapidly developed technological capabilities that allow them to gather information about web users. By tracking and monitoring what websites users visit, internet service providers can directly show ads that are relative to the consumer's preferences. Most of today's websites are using these targeting technologies to track users' internet behavior and there is much debate over the privacy issues present.

Search engine marketing

Search engine marketing uses search engines to reach target audiences. For example, Google's Google Remarketing Campaigns are a type of targeted advertising where websites use the IP addresses of computers that have visited their websites to remarket their ad specifically to the user who has previously been on their website as they use websites that are a part of the Google display network, or when searching for keywords related to a product or service on the google search engine. Dynamic remarketing can improve the targeted advertising as the ads are able to include the products or services that the consumers have previously viewed on the advertisers' website within the ads.

Google Adwords have different platforms how the ads appear. The Search Network displays the ads on 'Google Search, other Google sites such as Maps and Shopping, and hundreds of non-Google search partner websites that show AdWords ads matched to search results'. 'The Display Network includes a collection of Google websites (like Google Finance, Gmail, Blogger, and YouTube), partner sites, and mobile sites and apps that show AdWords ads matched to the content on a given page.'These two kinds of Advertising networks can be beneficial for each specific goal of the company, or type of company. For example, the search network can benefit a company with the goal of reaching consumers searching for a particular product or service.

Other ways Advertising campaigns are able to target the user is to use browser history and search history, for example, if the user typed in promotional pens in a search engine, such as Google; ads for promotional pens will appear at the top of the page above the organic pages, these ads will be targeted to the area of the users IP address, showing the product or service in the local area or surrounding regions, the higher ad position is a benefit of the ad having a higher quality score.The ad quality is affected by the 5 components of the quality score:

The ad's expected click-through rate
The quality of the landing page
The ad/search relevance
Geographic performance
The targeted devices

When ranked based on these criteria, it will affect the advertiser by improving ad auction eligibility, actual cost per click (CPC), ad position, and ad position bid estimates; to summarise, the better the quality score, the better ad position, and lower costs.

Google uses its display network to track what users are looking at and to gather information about them. When a user goes onto a website that uses the google display network it will send a cookie to Google, showing information on the user, what he or she searched, where they are from, found by the IP address, and then builds a profile around them, allowing google to easily target ads to the user more specifically. For example, if a user went onto promotional companies' websites often, that sell promotional pens, Google will gather data from the user such as age, gender, location, and other demographic information as well as information on the websites visited, the user will then be put into a category of promotional products, allowing Google to easily display ads on websites the user visits relating to promotional products. these types of adverts are also called behavioral advertisements as they track the website behavior of the user and displays ads based on previous pages or searched terms. ("Examples Of Targeted Advertising")

Social media targeting

Social media targeting is a form of targeted advertising, that uses general targeting attributes such as geotargeting, behavioral targeting, socio-psychographic targeting, and gathers the information that consumers have provided on each social media platform. According to the media users' view history, customers who are interested in the stuff will be automatically targeted by the advertisements of certain products or service. For example, Facebook collects massive amounts of user data from surveillance infrastructure on its platforms. Information such as a user's likes, view history, and geographic location is leveraged to micro-target consumers with personalized products. Social media also creates profiles of the consumer and only needs to look at one place, one the users' profile to find all interests and 'likes'.

E.g. Facebook lets advertisers target using broad characteristics like gender, age, and location. Furthermore, they allow more narrow targeting based on demographics, behavior, and interests (see a comprehensive list of Facebook's different types of targeting options.

Television

Advertisements can be targeted to specific consumers watching digital cable or over-the-top video. Targeting can be done according to age, gender, location, or personal interests in films, etc. Cable box addresses can be cross-referenced with information from data brokers like Acxiom, Equifax, and Experian, including information about marriage, education, criminal record, and credit history. Political campaigns may also match against public records such as party affiliation and which elections and party primaries the view has voted in.

Mobile devices

Since the early 2000s, advertising has been pervasive online and more recently in the mobile setting. Targeted advertising based on mobile devices allows more information about the consumer to be transmitted, not just their interests, but their information about their location and time. This allows advertisers to produce advertisements that could cater to their schedule and a more specific changing environment.

Content and contextual targeting

The most straightforward method of targeting is content/contextual targeting. This is when advertisers put ads in a specific place, based on the relative content present. Another name used is content-oriented advertising, as it is corresponding to the context being consumed. This targeting method can be used across different mediums, for example in an article online, purchasing homes would have an advert associated with this context, like an insurance ad. This is usually achieved through an ad matching system which analyses the contents on a page or finds keywords and presents a relevant advert, sometimes through pop-ups. Though sometimes the ad matching system can fail, as it can neglect to tell the difference between positive and negative correlations. This can result in placing contradictory adverts, which are not appropriate to the content.

Technical targeting

Technical targeting is associated with the user's own software or hardware status. The advertisement is altered depending on the user's available network bandwidth, for example, if a user is on their mobile phone that has limited connection, the ad delivery system will display a version of the ad that is smaller for a faster data transfer rate.

Addressable advertising systems serve ads directly based on demographic, psychographic, or behavioral attributes associated with the consumer(s) exposed to the ad. These systems are always digital and must be addressable in that the endpoint which serves the ad (set-top box, website, or digital sign) must be capable of rendering an ad independently of any other endpoints based on consumer attributes specific to that endpoint at the time the ad is served. Addressable advertising systems, therefore, must use consumer traits associated with the endpoints as the basis for selecting and serving ads.

Time targeting

According to the Journal of Marketing, more than 1.8 billion clients spent a minimum of 118 minutes daily- via web-based networking media in 2016. Nearly 77% of these clients interact with the content through likes, commenting, and clicking on links related to content. With this astounding buyer trend, it is important for advertisers to choose the right time to schedule content, in order to maximize advertising efficiency.

To determine what time of day is most effective for scheduling content, it is essential to know when the brain is most effective at retaining memory. Research in chronopsychology has credited that time-of-day impacts diurnal variety in a person's working memory accessibility and has discovered the enactment of inhibitory procedures to build working memory effectiveness during times of low working memory accessibility. Working memory is know to be vital for language perception, learning, and reasoning providing us with the capacities of putting away, recovering, and preparing quick data. For many people, working memory accessibility is good when they get up toward the beginning of the day, most reduced in mid-evening, and moderate at night.

Sociodemographic targeting

Sociodemographic targeting focuses on the characteristics of consumers, including their age, generation, gender, salary and nationality.The idea is to target users specifically, using this data about them collected, for example, targeting a male in the age bracket of 18–24. Facebook uses this form of targeting by showing advertisements relevant to the user's individual demographic on their account, this can show up in forms of banner ads, or commercial videos.

Geographical and location-based targeting

This type of advertising involves targeting different users based on their geographic location. IP addresses can signal the location of a user and can usually transfer the location through ZIP codes.^[5] Locations are then stored for users in static profiles, thus advertisers can easily target these individuals based on their geographic location. A location-based service (LBS) is a mobile information service which allows spatial and temporal data transmission and can be used to an advertiser's advantage. This data can be harnessed from applications on the device that allow access to the location information. This type of targeted advertising focuses on localizing content, for example, a user could be prompted with options of activities in the area, for example, places to eat, nearby shops, etc. Although producing advertising off consumer's location-based services can improve the effectiveness of delivering ads, it can raise issues with the user's privacy.

Behavioral targeting

Behavioral targeting is centered around the activity/actions of users, and is more easily achieved on web pages. Information from browsing websites can be collected from data mining, which finds patterns in users search history. Advertisers using this method believe it produces ads that will be more relevant to users, thus leading consumers be more likely influenced by them. If a consumer was frequently searching for plane ticket prices, the targeting system would recognize this and start showing related adverts across unrelated websites, such as airfare deals on Facebook. Its advantage is that it can target individual's interests, rather than target groups of people whose interests may vary.

When a consumer visits a web site, the pages they visit, the amount of time they view each page, the links they click on, the searches they make, and the things that they interact with, allow sites to collect that data, and other factors, to create a 'profile' that links to that visitor's web browser. As a result, site publishers can use this data to create defined audience segments based upon visitors that have similar profiles.

When visitors return to a specific site or a network of sites using the same web browser, those profiles can be used to allow marketers and advertisers to position their online ads and messaging in front of those visitors who exhibit a greater level of interest and intent for the products and services being offered. Behavioral targeting has emerged as one of the main technologies used to increase the efficiency and profits of digital marketing and advertisements, as media providers are able to provide individual users with highly relevant advertisements. On the theory that properly targeted ads and messaging will fetch more consumer interest, publishers can charge a premium for behaviorally targeted ads and marketers can achieve

Behavioral marketing can be used on its own or in conjunction with other forms of targeting. Many practitioners also refer to this process as "audience targeting".

Major advantages of Behavioral marketing are that it will help in reaching surfers with affinity, reach surfers that were not exposed to a media campaign, contact surfers close to conversion and in reconnecting with prospects or customers.

Onsite

Behavioral targeting may also be applied to any online property on the premise that it either improves the visitor experience or benefits the online property, typically through increased conversion rates or increased spending levels. The early adopters of this technology/philosophy were editorial sites such as HotWired, online advertising^[34] with leading online ad servers, retail or other e-commerce website as a technique for increasing the relevance of product offers and promotions on a visitor by visitor basis. More recently, companies outside this traditional e-commerce marketplace have started to experiment with these emerging technologies.

The typical approach to this starts by using web analytics or behavioral analytics to break-down the range of all visitors into a number of discrete channels. Each channel is then analyzed and a virtual profile is created to deal with each channel. These profiles can be based around Personas that gives the website operators a starting point in terms of deciding what content, navigation and layout to show to each of the different personas. When it comes to the practical problem of successfully delivering the profiles correctly this is usually achieved by either using a specialist content behavioral platform or by bespoke software development. Most platforms identify visitors by assigning a unique ID cookie to each and every visitor to the site thereby allowing them to be tracked throughout their web journey, the platform then makes a rules-based decision about what content to serve.

Self-learning onsite behavioral targeting systems will monitor visitor response to site content and learn what is most likely to generate a desired conversion event. Some good content for each behavioral trait or pattern is often established using numerous simultaneous multivariate tests. Onsite behavioral targeting requires a relatively high level of traffic before statistical confidence levels can be reached regarding the probability of a particular offer generating a conversion from a user with a set behavioral profile. Some providers have been able to do so by leveraging its large user base, such as Yahoo!. Some providers use a rules-based approach, allowing administrators to set the content and offers shown to those with particular traits.

Network

Advertising networks use behavioral targeting in a different way than individual sites. Since they serve many advertisements across many different sites, they are able to build up a picture of the likely demographic makeup of internet users.^[36] Data from a visit to one website can be sent to many different companies, including Microsoft and Google subsidiaries, Facebook, Yahoo, many traffic-logging sites, and smaller ad firms. This data can sometimes be sent to more than 100 websites, and shared with business partners, advertisers, and other third parties for business purposes. The data is collected using cookies, web beacons and similar technologies, and/or a third-party ad serving software, to automatically collect information about site users and site activity. Some servers even record the page that referred you to them, websites you visit after them, which ads you see and which ads you click on.

Online advertising uses cookies, a tool used specifically to identify users, as a means of delivering targeted advertising by monitoring the actions of a user on the website. For this purpose, the cookies used are called tracking cookies. An ad network company such as Google uses cookies to deliver advertisements adjusted to the interests of the user, control the number of times that the user sees an ad and "measure" whether they are advertising the specific product to the customer's preferences.

This data is collected without attaching the people's names, address, email address or telephone number, but it may include device identifying information such as the IP address, MAC address, cookie or other device-specific unique alphanumerical ID of your computer, but some stores may create guest IDs to go along with the data. Cookies are used to control displayed ads and to track browsing activity and usage patterns on sites. This data is used by companies to infer people's age, gender, and possible purchase interests so that they could make customized ads that you would be more likely to click on.

An example would be a user seen on football sites, business sites, and male fashion sites. A reasonable guess would be to assume the user is male. Demographic analyses of individual sites provided either internally (user surveys) or externally (Comscore \ Netratings) allow the networks to sell audiences rather than sites. Although advertising networks were used to sell this product, this was based on picking the sites where the audiences were. Behavioral targeting allows them to be slightly more specific about this.

Research

In the work titled An Economic Analysis of Online Advertising Using Behavioral Targeting,Chen and Stallaert (2014) study the economic implications when an online publisher engages in behavioral targeting. They consider that the publisher auctions off an advertising slot and are paid on a cost-per-click basis. Chen and Stallaert (2014) identify the factors that affect the publisher's revenue, the advertisers' payoffs, and social welfare. They show that revenue for the online publisher in some circumstances can double when behavioral targeting is used.

Increased revenue for the publisher is not guaranteed: in some cases, the prices of advertising and hence the publisher's revenue can be lower, depending on the degree of competition and the advertisers' valuations. They identify two effects associated with behavioral targeting: a competitive effect and a propensity effect. The relative strength of the two effects determines whether the publisher's revenue is positively or negatively affected. Chen and Stallaert (2014) also demonstrate that, although social welfare is increased and small advertisers are better off under behavioral targeting, the dominant advertiser might be worse off and reluctant to switch from traditional advertising.

In 2006, BlueLithium (now Yahoo! Advertising) in a large online study, examined the effects of behavior targeted advertisements based on contextual content. The study used 400 million "impressions", or advertisements conveyed across behavioral and contextual borders. Specifically, nine behavioral categories (such as "shoppers" or "travelers" )with over 10 million "impressions" were observed for patterns across the content.

All measures for the study were taken in terms of click-through rates (CTR) and "action-through rates" (ATR), or conversions. So, for every impression that someone gets, the number of times they "click-through" to it will contribute to CTR data, and every time they go through with or convert on the advertisement the user adds "action-through" data. Results from the study show that advertisers looking for traffic on their advertisements should focus on behavioral targeting in context. Likewise, if they are looking for conversions on the advertisements, behavioral targeting out of context is the most effective process. The data was helpful in determining an "across-the-board rule of thumb"; however, results fluctuated widely by content categories. Overall results from the researchers indicate that the effectiveness of behavioral targeting is dependent on the goals of the advertiser and the primary target market the advertiser is trying to reach.

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