What are targeted ads?
You may have heard people talk about targeted ads, ad targeting, targeted advertising, and targeted social media ads. All of those terms refer to the same idea: using facts known about a group of people, such as demographics (primarily age and gender), location(s), interests, and other traits to help ensure that they see the advertiser’s message.
After all, if someone is going to see ads, it’s generally preferable that they see ones that are relevant to their interests, and probably their current needs and wants too. Online targeted advertising is particularly useful for small businesses that can’t afford to spend money on traditional ads like print, radio, and TV. It’s also very handy for any business with niche offerings, such as an e-commerce store that caters to fans of certain kinds of movies and TV shows.
Information used for ad targeting can be gathered in several ways, including:
- Search engine activity, which is typically used by search engine companies to sell ads tied to specific keywords
- Customer-provided info, including contact data provided during a purchase; platforms like Snapchat allow businesses to upload customer info lists and create Customer List Audiences from them in a privacy-safe way
There are 3 aspects of targeted ads businesses can pay attention to when running ads anywhere online:
- Contextual advertising: This involves placing ads on relevant websites, similar to the idea of placing ads in magazines that cater to niche audiences.
- Behavioral targeting: This includes a wide variety of ways to reach people based on their behaviors, such as website events measured with a Pixel or creating an audience of people who have engaged with their ads.
- Geographic targeting: This is an option found on many online advertising platforms. It allows you to restrict your targeting to one or more cities or towns, postal codes, states or provinces, nations, or predefined geographic areas.
How does targeted advertising work?
Many online ad platforms, including Snapchat, enable you to either create a targeted audience while building an ad or use an Audience tool to create it before entering ad setup. The benefit of using an Audience tool is that you can create and save audiences for later use, rather than assembling them while building an ad.
Many online ad platforms offer a variety of different kinds of audiences. These are the ones Snapchat offers, and other ad platforms offer audiences that have the same or similar names.
- Core Audience: You may also see this one referred to as a Saved Audience. It’s an audience you create by defining characteristics, such as gender, age range, location(s), interest(s), and other criteria. In Snapchat Ads Manager, you can use the Audience Insights tool to create a Saved Audience; beyond basic characteristics, you can also include and exclude Custom and Predefined Audiences.
- Customer List Audience: You create this one by uploading a list of customer contact info, typically email addresses, phone numbers, or mobile device IDs. (Snap only lets you upload one type of contact info per list.) The ad platform will try to match the information in the list with its users and then delete the upload afterward.
- Website Events Audience: This audience is used in conjunction with a pixel to find people that a business wants to perform one or more actions on their website, including viewing a web page, adding a product to a cart, making a purchase, or one of many other events.
- Mobile App Custom Audience: Similar to a Website Events Audience, this type of audience targets people that a business wants to perform one or more actions in their app, such as making a purchase.
- Ad Engagement Audience: This audience allows a business to target people who have engaged with their ads in any way, even if they didn’t perform the primary action for that ad. For example, they may have clicked to see the advertiser’s social media profile but not clicked through to the business’s website, which was what the business wanted.
- Profile Engagement Audience: Similar to the previous audience type, this allows a business to target people who have viewed their social media profile or acted on it in some way, such as clicking a link. A Profile Engagement Audience and an Ad Engagement Audience both allow businesses to target people who have shown interest in their products and services.
- Lookalike Audience: Other audiences, typically various kinds of Custom Audiences like a Customer List Audience or a Website Events Audience, can be used as the source for this audience, which looks for people who are similar to the ones in the original audience. Lookalike Audiences usually have controls that allow a business to decide if they want the Lookalike Audience to be more or less similar compared to the source, which will result in a Lookalike Audience that’s smaller or larger, respectively.
- Predefined Audiences: These are audiences created by an ad platform from their data as well as third party information, such as household income or people with specific kinds of interests.
For example, Hi Cola, a unique beverage business whose customers are active young people, can target new and existing customers on Snapchat in various ways, such as:
- They can install the Snap Pixel on their website and use a Website Events Audience in their ads. The ad delivery system will look for people in their audience who are most likely to take a specific action, such as make a purchase.
- They can use different customer lists to create separate Customer List Audiences, such as regular customers and people who haven’t made a purchase from them in a while.
- They can create Lookalike Audiences based on their Website Events and Customer List Audiences and run ads looking for new customers.
It’s important to also consider ad creative (text and images and/or videos) when creating an ad. It should speak to that kind of customer in a specific way. For example, Hi Cola could use their main slogan in an ad targeting new customers when using Lookalike Audiences.
What are the benefits of targeted ads?
The biggest benefit is that a targeted ad can result in a much cheaper cost per action than one that is presented to a wide audience. You can be much more specific with your ad messaging when you have refined targeting, as opposed to a “one size fits all” approach, such as a local newspaper ad.
In fact, ads that are personalized for a target audience result in about 91% of consumers being more likely to make a purchase, according to Accenture research cited by Forbes.1
You can also quickly see the results of your efforts. For example, Hi Cola can easily see how many people are taking the action they want on their website and understand the ROAS (return on ad spend) that they’re experiencing compared to their budget.
Finally, you can target people across the sales funnel, which is often described as awareness (getting the word out about your business), consideration (getting people to keep your business in mind), and conversion (prompting people to make a purchase or perform another action, such as filling out a sales lead form). For example, Hi Cola could:
- Run an awareness ad with broad targeting and get people to click through to their website, where they can read about their latest beverage flavors. The business has a Pixel installed on their website.
- Retarget people who have clicked on the ad and let them know that those new flavors are about to be released and can be pre-ordered now.
- Run a conversion ad that’s focused on website purchase activity and prompts people to buy the new flavors that are in stock now.
What are some tactics you can use with targeted ads?
There are different ways you can use your audiences with ads that are geared toward certain kinds of customers:
Finding new customers
- You can use any type of audience except a Customer List Audience created from current customer info when looking for new customers. (A Customer List Audience created from sales leads, or people who have created an account but not bought anything, is still a good way to find new customers.) It’s a good idea to exclude your Customer List Audience(s) from your targeting, so you can try to avoid wasting money by showing your ad to existing customers.
Reaching existing customers
- Customer List, Website Events, and Mobile App Events Audiences are the best audiences to use here, because they’re people who know your business and have engaged with it in some way.
- You can use different Customer List Audiences to retarget people who haven’t made a recent purchase, customers who have stopped using a service or let their subscription lapse, or based on other criteria.
- You can use a Website Events Audience to target people who add products to their cart but don’t check out, or who click through to your web page but don’t fill out a lead form.
- You can use a Mobile App Events Audience in similar ways as a Website Events Audience, but you can also use other tactics with it, such as targeting people who have reached a certain level in a video game.
Should consumers be concerned about targeted ads?
Many ad platforms, including Snapchat, have a variety of privacy safeguards in place. For example:
- When a business creates an audience for ad targeting, they can’t view the people in that audience, nor can they download the audience to see who’s in it. They also can’t get any personal information from an audience, such as names, locations, email addresses, and so forth.
- When someone makes a purchase from an e-commerce website that has a Pixel installed, the business doesn’t know the identity of that person. They can only see aggregated data, such as the number of website visitors, the number of purchases, and so forth.
- When a business uploads a customer list to match that information to users on a social media network, they don’t know which of their customers matched with users on the network, and the list that’s been uploaded is deleted after the matching happens.