How to do personalized advertising effectively and ethically

People like to feel unique. We appreciate when others recognize and validate our identities, backgrounds, and interests. This same principle also applies to online advertising — albeit with some reservations.

Today’s digital world is saturated with marketing campaigns. To save time and avoid information overload, people prefer to encounter messaging that matches their specific needs and wants. As technology evolves and data expands, executives and advertisers can personalize ads to reach potential customers better, targeting relevant audiences and improving conversion rates.

While online advertising has become an accepted part of everyday life, consumers are increasingly concerned about privacy and data misuse. Although personalization is an easy way to get your ads in front of potential customers, marketers need to be mindful and transparent about how they use data.

This article will explore:

• The definition of ad personalization
• Effectiveness of personalized advertising
• How customer data is gathered
• Privacy concerns involved with consumer data
• How to use ad personalization
• How to get started

What is ad personalization?

Ad personalization is a strategy that aims to predict how relevant an ad will be to a specific user, allowing marketers to tailor the ad to a user’s preferences and potential customer journey stage. To gain insights about users, marketers gather information about their behavior and characteristics.

You can use many data points for ad personalization. Some examples include location, demographic details, purchase history, and general interests.

Ads can be broad or specific depending on how much you know about a user. The landing page platform company Instapage divides ad personalization into six areas:

• Level 0, which targets based on a user’s need or want and broad geographic location (country or state).
• Level 1, which targets based on a user’s need or want and more specific geographic location (city).
• Level 2, which targets based on a user’s need or want, micro-geographic location (zip code), and demographic detail (such as age or income).
• Level 3, which targets based on a user’s need or want, micro-geographic location, demographic details, and general individual interest (like music or sports).
• Level 4, which targets based on a user’s need or want, micro-geographic location, specific demographic details (like political party or favorite brands), niche interest (job titles or company size), and buying intent (based on the search term).
• Level 5, which targets based on a user’s need or want, exact geographic location, advanced demographic details, specific niche interest, buying intent, and historical behavioral patterns (including search history, order history, or browser history).

These details eventually form user profiles, which you can categorize and automate to create relevant experiences and campaigns.

Effectiveness of personalized advertising

Personalizing ads empowers businesses to place ads in front of the right users at the right time. This intentionality can improve conversion and click-through rates by targeting audiences that are more likely to be interested in your offer. In turn, this strategy strengthens your return on investment related to advertising.

Ad personalization also benefits consumers, helping them access what they need more quickly with less research. When personalization is done well, it can increase customer satisfaction and loyalty. According to a report by Accenture, 91% of consumers are more likely to purchase from brands that provide personalized recommendations and offers.

When it comes to personalization, providing value is the key to keeping customers and potential customers happy. Your goal should be to improve their experiences, demonstrating through advertising how your brand can solve a specific pain point or make their lives easier.

How customer data is gathered

Ad personalization depends on substantial data. Without user information, there would be no way to tailor ads to specific audiences or anticipate a user’s needs or wants accurately.

Consumers’ online behavior is tracked through identifiers called cookies. These tiny text files record how users engage with your site — from which product pages they visit to which items they add to their cart.

You can also work with other data-tracking platforms to publish personalized ads. For example, Google documents users’ search history and available information via apps, such as location data through Google Maps or videos watched on YouTube. Social media platforms like Meta store information from profiles, engagement, and messages to personalize which content viewers encounter in their feeds.

Cookies can provide valuable insights about your customers and potential customers. What’s more, they can improve user experiences, preventing the need for users to reenter information and increasing their chances of seeing relevant information.

While this sounds like a win-win for companies and customers, cookies aren’t without controversy.

Consumers are worried about privacy

Many consumers have concerns about the substantial amount of personal information available to brands. According to a survey by Innovid, only 32% of consumers like personalized ads.

Sometimes personalization can seem too on point, coming across as creepy or invasive to consumers. For example, imagine you had a conversation with your friends about visiting Florida for your next vacation. The next day, you come across an ad promoting a beach resort in Orlando. Although this recommendation may be targeted from other data, it can be easy to wonder whether an Orwellian “Big Brother” has listened in on a private conversation.

While the microphone myth is controversial, privacy concerns like these have led to demands for greater transparency and control over data access. Consumers worry that companies will sell or misuse their data and have become more selective about how they share and grant access to their information.

Companies have shifted strategies to alleviate concerns. For instance, Apple now offers App Tracking Transparency, allowing iPhone users to block apps from gathering information. Similarly, Google allows users to opt out of ad personalization.

To build trust with consumers, you need to be open about the processes and purposes of your business’s data collection. In the Innovid study previously mentioned, 87% of participants reported they would avoid working with a company if they felt uneasy about its security practices.

While it’s important to keep these privacy concerns in mind, they don’t spell out only doom and gloom for ad personalization. As companies have adapted to be more transparent about data use, attitudes have softened over recent years.

Many consumers recognize the potential value of personalization to create more convenience in their lives and access relevant information. This attitude is supported by the Innovid survey results, in which 43% of respondents acknowledged the importance of ad personalization.

How to use ad personalization

There are many ways to begin using ad personalization for your business. Depending on your needs, you may want to focus on one area more than another. The following steps will help give you a firm foundation to find potential customers and filter your ads based on their preferences.

Identify an audience

Get to know your customers and potential customers. To shape the perfect personalized experience, you’ll need to know who you’re aiming to target with your ad. Define which traits and characteristics make up the group you’d like to reach and collect data in areas where you have gaps.

Figure out how you want to personalize

Determine the end goal of your ad personalization. This will allow you to plan the steps you’ll need to take to reach that destination. For example, if your objective is to get people to purchase a new product, your strategy should involve ads promoting it to consumers who have demonstrated a high buying intent.

Deliver retargeted ads

One of the easiest groups to target is consumers who are already familiar with your product or brand. Let’s say a customer added a product to a cart online but didn’t end up buying it. You might leverage this data by sending them a targeted ad with that product. Sometimes this reminder nudges the customer to take action, increasing the likelihood of conversion.

Build unique landing pages

After a consumer clicks on an ad, you’ll want to ensure that the landing page is highly personalized as well. Rather than a “one-size-fits-all” approach, your landing page should be relevant to the ad and meet the user’s needs.

Be mindful

Finally, focus on building trust with your audience through transparency and ethical data practices. If you avoid sharing details about how you use data or go too far with personalization tactics, you can drive away customers. Prioritize adding value to their experiences and strengthening your credibility through clear messaging.

Getting started with ad personalization

Ad personalization paves the way for reaching the right consumers and growing your business. As you craft advertising based on consumers’ traits and stages in the customer journey, you strengthen your advertising and potential for profit.

When you’re ready to begin building your ad personalization strategy, make sure to start by collecting sufficient data and exploring a solution suited to your needs.

Managing data and personalizing ads can be easy with the right tools. Adobe Target can help your company deliver the right experiences to every single customer at scale, thanks to A/B and multivariate testing, unified customer profiles, and precise optimization.

If you’re looking to focus on creating content based on customer journey stages, you’ll want to consider Adobe Campaign. The solution makes it simple to control online and offline journeys, delivering personalized, unified experiences across channels.

Watch these videos to learn more about Adobe Target and Adobe Campaign.