How Does Ad Targeting Work? 

how does ad targeting work

Introduction To Targeted Advertising

Consumers have access to an abundance of e-commerce brands and their products. How can companies make their products stand out and grow sales? Targeted advertising helps advertisers reach their audience in personalized, appealing ways. 

But how does ad targeting work? How can it benefit brands, and how can you make the most of your campaigns? As a business owner, you want to make sure you get the help you need to take full advantage of this unique marketing strategy.

At Bear North Digital, we’re prepared to provide you with assistance. We’ve created a guide going over the most important aspects of ad targeting to help you get started. Use tips from our Shopify marketing agency and get ready to see your online sales grow thanks to targeted advertising. 

What Is Ad Targeting?

Targeted advertising, also called ad targeting, is a personalized form of marketing. It’s a way for e-commerce sites to hook their audience with customized ads that cater to each visitor’s demographics and interests. Brands use data analytics to compile information about their prospective customers and create digital ads that aim to convert the next site visit into a sale.

How does ad targeting work in real life? Let’s say you’re a clothing retailer that operates an e-commerce site. You use business intelligence tools to uncover information about consumer behavior, such as someone’s time spent looking at activewear. 

If a consumer leaves your site without purchasing anything, but their time on the page indicates their interest, you can create a targeted ad to bring them back to the page. The advertisement should showcase the activewear products rather than your other clothing products since the consumer has the most interest in activewear. A targeted ad can help boost your click-through rate and lead to increased sales. 

Benefits of Targeted Advertising

The concept of ad targeting has some negative perceptions. People don’t like advertisers collecting their data since they feel it invades their privacy. However, targeted ads are not malicious, and brands can enjoy several benefits when they implement these ads into their marketing strategy. 

Below are some of the biggest advantages of creating targeted ads for your e-commerce site. 

Increased Personalization

If you’re a clothing retailer offering men’s and women’s clothing for different occasions, you’ll have more success when you cater your ads to each consumer’s specific needs and demographic. Put yourself in your customer’s shoes in this scenario. If you’re in need of business-appropriate attire for men, are you going to click on an ad that showcases casual clothes or dressier suits and shirts?

Customers react favorably to advertisements that feel personal to them. Using data for targeted advertising helps you connect with different members of your marketing audience and encourages them to see what you have to offer. Personalized ads pave the way for increased sales and customer retention rates.  

Heightened Brand Awareness

How does ad targeting work to improve your brand? Consumers want to purchase products or services that speak to their desires and interests. If you display generic ads that don’t put the spotlight on the specific item that a customer has an interest in, you won’t grab their attention. 

Going back to our clothing site example, your company will have minimal impact on buyers if you market yourself as a men’s and women’s clothing retailer. Get specific with targeted ads that cater to buyers based on their lifestyle, shopping behavior, and more. Personalized ads help you establish yourself as a trusted retailer for a niche product. 

Greater Return on Investment

Your marketing spend doesn’t always lead to profit. Some companies fare well with social media marketing campaigns, while others get more leads from email marketing or pay-per-click advertising. As you fine-tune different strategies, you can rely on targeted advertising to appeal to your customer base. 

Personalized ads using consumer data means you won’t have to spend as much on customer acquisition tactics. Data shows that targeted ads lead to better click-through rates, making it a worthwhile marketing strategy to deploy.

How Does Ad Targeting Work? 

Ad targeting requires websites to collect data on visiting Internet users. Brands then use this data to create personalized advertisements that will appear as banners on various websites or social media platforms. The main purpose of the banner ad is to draw the consumer’s attention since it will feature content that caters specifically to them. 

How does ad targeting work in terms of using the data a site collects? Marketers use the following tactics to appeal to their audience.

Contextual Data

Consumers can find information on nearly any topic across search engines. Your company can strategically place ads on sites that fit the context of what someone is looking for. These ads are relevant to a buyer’s interest since they match the topic on the current webpage a person is looking at. 

An example of this would be seeing an ad for kitchen items and appliances on a recipe page or blog all about cooking. If the recipe calls for the use of a blender and the consumer doesn’t have one or wants an upgrade, the ad featuring a blender could encourage them to buy the product. 

Behavioral Data

Similar to contextual data, a user’s behavioral data focuses on their browsing and social media activity. If they spend a lot of time looking at certain products or websites, your brand can publish ads that cater to that activity. For example, a person who spends a lot of time on travel blogs or social media pages could start seeing banner ads for luggage, hotels, and other items that have to do with traveling. 

Geographic Data

A user’s location is important for advertisers looking to promote their services in the area. This use of data collection is most prevalent for advertising local services or region-dependent products. If you live in California but travel to Florida for vacation, you’re more likely to find banner ads for local restaurants, entertainment venues, and more, according to your browsing activity. 

Ad Retargeting

Once your brand determines a user’s niche interests, you can retarget an ad to them to persuade them to buy a product or service. Ad retargeting is helpful for generating sales after someone spends time engaging with your site or other ads.

Say someone is browsing your products online, but they don’t purchase anything. You can develop ads that retarget that user and showcase the specific products that they were looking at. 

How To Create Effective Ad Campaigns

Understanding the basics of targeted advertising can help your business drive sales. If you want to gain an edge against the competition, you must craft personalized ads that appeal to a subset of consumers and make an impression. How does ad targeting work most effectively? 

The following tips can help your brand generate sales through targeted advertising. 

Determine Your Audience

As the name implies, ad targeting involves catering marketing content to a certain part of your audience. Make sure you fully understand your key demographic and create messages that users relate to based on the following:

  • Age
  • Gender
  • Socioeconomic class
  • Occupation or lifestyle
  • Wants and needs

A successful ad pinpoints the exact demographic you want.

Strike a Balance Between General and Specific Ad Content

Users want to feel seen and enjoy ads that are personalized to their interests. This does not mean that the ad they see caters to only them and no one else. As a brand, you want to find a good balance between broad and specific content. 

How does ad targeting work while checking off both of these boxes? Say you’re a shoe retailer hoping to advertise men’s sneakers. Using the components above, you may narrow down your audience to men between the ages of 21 and 35 with an active lifestyle of working out.

These characteristics let you reach a certain subset of your audience without being overly specific. In this example, you can advertise men’s running shoes, basketball shoes, tennis shoes, and more. You don’t want to limit your audience too much by targeting marathon runners only versus people who enjoy a variety of sports or exercise. 

Consider Similar Markets

The ultimate goal of ad targeting is to pique a consumer’s interest in your business and push them to buy your products or services. How does ad targeting work if your brand is in a competitive market? In this case, you need to expand your horizons and think about advertising in similar markets. 

Let’s say you operate a travel agency. Creating ads that only show up when users type “travel agent” into search engines can limit your reach. Consumers thinking about booking a trip may not immediately search for a travel agent but instead go on sites for hotels, airlines, amusement parks, or tourist attractions. 

If you target your ads to users looking up adjacent products or services, you can grab their attention and lead them to the next step in the buyer’s journey. 

Test Your Efforts

Run A/B tests so you can see which ads yield the best results. You can continue to run the more successful ad and tweak the other before launching it again. Testing your ads helps you learn which method suits your brand and audience. 

Measure Your Success

Once you start to roll out targeted ads, monitor the performance of each one. It’s best to look at the whole picture and key performance indicators like:

  • Page views
  • Click-through rates
  • Advertising spends
  • Sales revenue
  • Time spent on page

All of these data points will tell you something different about your marketing efforts and if you need to adjust them. If you notice your page views are higher but your sales revenue doesn’t increase, something is preventing consumers from making a purchase after landing on your site. You may need to explore the reasons why visitors don’t buy anything from you. 

Pay attention to all of these metrics and analyze how each one impacts your marketing campaign. Test new methods to improve your figures across the board. 

Enhance Your Targeted Advertising With Bear North Digital

After reading this informative guide, you no longer have to wonder, “How does ad targeting work?” Your online business can reap the benefits of this marketing strategy when you team up with Bear North Digital. Our experts specialize in everything from targeted advertising to PPC social media campaigns

Discover how we can help your business grow with personalized marketing techniques. Contact us today online or by calling (218) 216-8692 to schedule a free consultation.