Think Targeted Advertising Is Over? Think Again

targeted advertising future

By Alex Song, CEO and Founder, Proxima

Yes, it’s true — targeted advertising has taken some big hits over the past several months. With the volatile economy and new privacy restrictions, it’s gotten harder for advertisers to target consumers on social media platforms the way they’d like to. Some pundits have even predicted that these barriers could spell the end of targeted advertising as we know it.

But all is not lost. Targeted advertising can still bring measurable returns if brands can find new, more effective vehicles for reaching their tribe and adjust their advertising strategy accordingly. In pandemic terms, it’s time to pivot. If executed thoughtfully, pivoting in response to the current moment could be a great opportunity for innovation and growth.

The Problem With Broad Targeting

iOS privacy rule changes have essentially “cut the signal” between consumers and advertisers, leaving advertisers scrambling to reach their target consumers, while upholding new and evolving privacy standards. This, combined with the volatility of media tech stocks, the rise of new channels like TikTok and Elon Musk’s potential Twitter takeover, have left advertisers’ heads spinning in recent months.

To answer this challenge, platforms like Meta lowered CPMs and encouraged brands to broaden their targeting. To adapt, advertisers had to refine their approach with frequent creative asset iteration in order to learn more about the market. This kind of poor targeting can degrade brand equity. Brands risk alienating audiences with the wrong messages and limiting the learnings that come from interacting with your real audience. (For example, no one benefits when a 15-year-old receives ads for diapers.)

The Appeal of Tech-Enabled Data Sets

In the absence of quality first-party data, advertisers are seeking new ways to target consumers. One solution is to leverage AI-enabled datasets. Taking advantage of independent pools of aggregate third-party data can help advertisers build high-performing audiences for ad platforms that now have a limited ability to track consumers. This approach not only allows brands to build on their profiles of existing prospects and customers – it can give insightful perspective on new, untapped segments.

Using anonymized third-party databases creates a wall between the advertiser and the data, which protects consumer privacy while still providing brands with the information they need to acquire the right customers. Decentralizing underlying customer data benefits advertisers by:

  • Giving them access to more data, which can help identify new audiences
  • Providing the ability to refine a paid marketing strategy
  • Increasing prospecting performance and (ROAS) and
  • Reducing acquisition costs

This approach has the potential to revitalize targeted marketing in a way that benefits both consumers and advertisers and it gives us a perspective on the future of advertising.

Seize the Moment

Although it may seem like the world of targeted marketing is in crisis, the reality is that the field is in constant upheaval. And that’s a good thing because innovation is often born of crisis. Inflection points like these are opportunities to make inroads with consumers and maximize advertising spend — especially for leaders who can adapt quickly to change and remain flexible. Ask yourself these questions to seize the opportunities of the moment:

1. Where can we be first?

With pressure to perform, be on the lookout for new options that ad platforms may offer, and seriously consider being the first out of the gate. A classic example of this is Warby Parker’s Direct to Consumer (DTC) online marketing strategy, which started as far back as 2010.

2. How much risk can we take on?

New media platforms and business models are emerging all the time and it’s worth using part of your marketing budget to test them. But think carefully about how much risk you’re willing to take on and be sure to allocate the majority of your budget toward proven channels, even if it means accepting slightly diminishing returns.

 3. Are we diversified enough?

Within that testing budget, try to diversify aggressively in as many productive channels as possible, since few of us can predict when the next wave of change might shake up the system.

4. How can we leverage the data that’s already out there?

Better technology and the introduction of anonymized third-party data will unlock value in the future ecosystem of targeted marketing. Consider all your potential data sources, including first-, second- and third-party data, which could be the key to more efficient ad performance.

According to Darwin’s Origin of Species, “it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.” If advertisers can look beyond the chaos of the current moment to see the opportunity that it presents, they will find new spaces to innovate, grow and thrive even in the challenging conditions that lie ahead.