What is personalized advertising? Commentary on examples, benefits, and points to note

I think everyone has experienced something like this at least once. These advertisements are distributed based on the user’s attributes and behavior history, etc., and are called “personalized advertisements”.

The mechanism of personalized advertising is mainly adopted in advertising services provided by Google and Twitter. Therefore, if you want to use Google Ads or Twitter Ads in the future, it is essential to understand personalized advertising.

In this article, we will explain in detail how personalized advertising works, its benefits, and case studies.

Table of Contents

“Personalized” refers to providing optimal products and content based on data such as user attributes and behavior history . Web advertising that utilizes this mechanism is called “personalized advertising,” and based on personal data accumulated by advertising distribution companies, advertisements for products and services that users are interested in are distributed.

By utilizing personalized advertising, users will be able to connect to the recognition of new products and information in areas of high interest, increasing the possibility of efficiently purchasing the products and services they are looking for. As a result, companies can also increase their sales efficiency, which is a win-win for both parties.

How personalized advertising works

The data on which personalized advertising is based includes elements such as user attributes, behavior history, search history, and each person’s tastes and preferences. Then, based on the accumulated data, the mechanism of personalized advertising is to automatically display advertisements that match the needs of each user .

For example, if you want to consider buying a new car, you search for “Toyota new car recommended” and browse car review sites and comparison sites. I ended up closing the browser without purchasing anything.

Then, later, when I was looking at a news site that had nothing to do with cars, I saw an advertisement in the advertisement column that said, “If you want to replace your car, go to Toyota.” This is a personalized ad based on your search history for “Toyota new car recommendations” and your behavioral history of visiting car comparison sites.

Personalized advertising in this way allows us to automatically serve ads that match your needs.

Another marketing term that is often confused with “personalized” is “targeting.” In both cases, there is no difference in the sense that the advertisements to be distributed are matched to the user’s attributes and interests, but targeting is the setting of the target to be distributed by the advertiser himself at the time of advertisement placement. It works differently than advertising.

Differences from non-personalized advertising (NPA)

Non-personalized advertisements (NPA) are advertisements that do not use personal information acquired by the advertisement distribution company for distribution . For advertisers who want to show non-personalized ads to users who have opted out of data collection for advertising purposes.

However, it is possible for the advertiser to use the prospective customer data that the advertiser has obtained and specify the user attributes and hobbies and preferences at the time of advertisement for targeting.

We will explain the benefits of using personalized advertising for both users and advertisers.

Benefits for users

For users, it is an opportunity to learn about new products and new information in the genre they are interested in. As mentioned earlier, if you are interested in purchasing a new car, appropriate advertisements such as “car trade-in simulation” will be displayed according to your needs. As a result, it becomes easier to reach the target product or service efficiently.

In addition to recognizing the information you want to know, it is also useful as an opportunity to learn new information such as “Toyota’s new car purchase campaign”. Being aware of your latent needs can reduce the risk of post-purchase failures and increase satisfaction.

Benefits for advertisers

When users can efficiently access the products and services they seek, the company’s sales efficiency also increases. Displaying ads randomly to a large number of users requires a large amount of money, but with personalized ads, the delivery destination can be limited and advertising costs can be reduced. As a result, you can optimize your return on ad spend (ROAS) .

There is also the advantage of being able to approach latent users, such as those who have shown interest in word-of-mouth and comparison sites, but do not know about the existence of your company.

By understanding not only the advantages but also the disadvantages of personalized advertising, you can calmly determine the marketing method that suits your company and broaden the range of future advertising strategies. I will explain the disadvantages of each of the user side and the company side.

What are the disadvantages for users?

A disadvantage for users is that personalized ads may not respond to changes in their thoughts and needs .

For example, a user searching for information on “Hawaii travel” can learn about services such as “HIS latest tour information” through personalized ads. In addition, it is also an opportunity to learn about Hawaii travel services provided by other companies such as JTB and Hankyu Travel.

However, if your interest later shifts from a trip to Hawaii to a trip to Taiwan, or if you change your thinking to “I should stop traveling and spend money on new cosmetics,” the Hawaii travel ad will no longer meet your needs. I guess. In other words, personalized ads may not be able to respond to changing user thoughts and needs, and may continue to display inappropriate ads.

What are the disadvantages for advertisers?

As mentioned above, it is also a disadvantage for advertisers that it is difficult to respond to the ever-changing needs of users. Nonetheless, one of the great benefits of personalized advertising is the ability to reach out to potential customers, so it would be a good idea for advertisers to flexibly adjust their targeting to respond to changing needs.

Another point to note about personalized advertising is the issue of user privacy. Users may feel uneasy about their personal information being used for advertisement distribution, and may develop a sense of distrust toward companies.

Nearly 75% of users say personalized ads are “creepy,” according to an InMoment survey . A study by Accenture found that 41% of customers opted out of a company’s products and services as a result of being exposed to inaccurate personalized ads.

In order to overcome the issues of privacy and the loss of trust in companies, it is effective to use them in combination with other means of attracting customers. There are methods such as SEO measures, information diffusion on SNS, development of new channels that make full use of video sharing services, and utilization of non-personalized advertisements.

So, what kind of ad distribution services can actually use personalized ads? Here, we will introduce three services.

• Amazon
• Twitter
• Google

The content of personalized advertisements provided by each service is as follows.

Amazon

Sponsored ads provided by Amazon employ a system of personalization.

Amazon personalizes e-commerce site users with “recommended products for you” and “people who bought this product also bought”. Similarly, for advertisements, it is possible to deliver advertisements tailored to each user based on browsing history and checkout system data .

Twitter

Twitter Ads has menus such as Promoted Ads and Follower Acquisition Ads, each of which enables detailed targeting. In order to improve the accuracy of targeting, Twitter utilizes the personal information of users it obtains in order to distribute advertisements. Twitter ads are also a type of personalized ads because they deliver ads based on acquired user attributes and website visit history.

Google (GDN)

Google Display Ads (GDN) provided by Google enables personalized display according to the content to be distributed.

Google obtains data such as user attributes, search history, and website browsing history from account information and Chrome browsers. These data are customized for each user, and display advertisements are designed to deliver appropriate advertisements based on customized information .

If you open the ” Customize Ads ” page while logged in to your Google account , you can view your customized data or set your preferences to stop receiving ads.

While personalized advertising is useful for users and advertisers, it comes with privacy concerns. For users, there are cases where they feel uneasy about when, how, and what kind of data is taken, so careful handling is required.

For example, what is Google’s thinking about privacy when developing personalized ads?

Google is very careful when dealing with information related to personal privacy. It is up to the user to decide “to what extent to disclose their own information to Google”, and personal information will not be collected unless consent is obtained.

In addition, the authorities of each country are accelerating the movement to demand information disclosure from platform operators, and penalties for handling personal information and data leakage are gradually being developed. The environment and systems that allow users to use web services with peace of mind will likely be further strengthened in the future .

By distributing personalized advertisements, users are more likely to efficiently purchase the products and services they are looking for, and companies benefit from improved sales efficiency. However, there are many users who feel uneasy about acquiring personal information, so consideration for privacy is essential.

Multi- channel awareness is key to reaping the benefits of personalized advertising while overcoming privacy concerns . Deploy personalized advertising by making full use of multiple means of attracting customers, such as SEO measures, information dissemination on SNS, and video sharing services.