The Benefits of Targeted Advertising
An Introduction to Targeted Advertising
Every year, companies collect more and more data about the consumers that buy their products. Lately, companies have been using this information to create targeted advertisements that select specific consumers, or groups of consumers, to advertise to from which they will get the most revenue. The job of analyzing data has become a much sought after position at many large corporations, including Target, Amazon, and Facebook. This new “data mining” is slowly becoming a requirement in every corporation. Companies do this by studying shopping habits and analyzing consumer traits, but this begs the question: at what point is consumer privacy breached?
Many studies have been done in the last few years concerning the idea of data mining, and even more about the level of consumer comfort that has come with these innovations. In this essay, I seek to explore not only how the public feels about these subjects, but also the general idea of whether or not these advertisements are beneficial to the world. With the decrease in privacy that comes with targeted ads, to what extent are these ads beneficial to both consumers and corporations?
Exploring Scholarly Opinions of Targeted Advertising
In his 2005 article “Benefits and harms of direct to consumer advertising: a systematic review,” Simon Gilbody of the Department of Health Sciences at the University of York examines two sides of the argument around targeted ads by looking at their effects on the healthcare industry. Looking at the “opponents” of targeted advertising, he argues that if patients start demanding drugs that have been advertised to them, even if these drugs do not work, “doctors may feel under pressure to prescribe inappropriate and costly drugs even when they feel this is not appropriate to both the patient and the healthcare system as a whole.” The “opponents” of targeted advertising in Gilbody’s paper would argue that targeted advertising is manipulative of the consumer and does not give them a fair chance to explore other options. However, where this argument falls short is the idea that consumers don’t do any of their own research and only buy what is advertised to them. Even though a product may work for a consumer, they are likely to explore similar products that have the same effects to see which one works best for them before buying. Discussing the “proponents” of targeted ads, Gilbody argues, “the benefits of advertisements targeted directly at patients and the public include increased health awareness; improved patient-doctor communication; improved concordance and, ultimately, improved health outcomes.” In short, the proponents in Gilbody’s paper believe targeted ads give consumers more information than they would have had otherwise by showing them the products that are best for them.
Siding with the “proponents” of targeted advertising, Professor of Law at Georgetown University, Julie Cohen, argues the want society has for privacy is “detrimental to the progress of knowledge” in her 2012 essay “What Privacy Is For.” “In literature and in the popular press, the idea of a surveillance society is habitually linked with totalitarian political systems,” she says. “‘[T]he surveillance society is better thought of as the outcome of modern organizational practices, businesses, government and the military than as a covert conspiracy. Surveillance may be viewed as progress towards efficient administration, in Max Weber’s view, a benefit for the development of Western capitalism and the modern nation-state.” While polls say most Americans see a lack of privacy as being detrimental, Cohen views this as a positive, exploring the possibilities of a society in which all data is available. If we had access to all of the data we sent out between “social media, mobile platforms, cloud computing and artificial intelligence driven data-mining,” we would discover all kinds of patterns that we never would have seen any other way.
An “opponent” of targeted advertising, futurist Alvin Toffler would argue the opposition to these new advertisements is only the product of a society faced by too much change in his 1970 book Future Shock. “By blindly stepping up the rate of change, the level of novelty, and the extent of choice, we are thoughtlessly tampering with these environmental preconditions of rationality,” he argues (188). Because of the rapid advancement of technology we have faced that has led us to be able to do such in depth research about individual customers, Toffler would see how society could be uncomfortable with the idea of companies using data about each customer to advertise to them. While Toffler may say our discomfort with privacy is actually just a reaction to the new advances in technology we have seen, I would say this is just a side effect of a paranoid society where we are trained that it’s “every man for himself” from a young age. In a society where people were brought up thinking every person was supposed to help everyone else, people would not be fearful of companies delving into the private lives of their consumers or changing their advertisements to better suit their consumers’ needs. If people learned to put more trust in corporations, maybe their concern about privacy would dissipate.
The American public seems to agree with the “opponents” of Targeted advertising, as recent studies and polls have shown. A new study by Pew Research seems to suggest Americans are not as comfortable with the concept of direct advertising as advertisers would have thought. Of the group that responded they had experienced targeted advertising on the Internet, 68% responded they were not comfortable with the idea. This study, along with others such as a 2013 consumer privacy index poll taken by TRUSTe, seem to suggest an overall discomfort with the idea of targeted advertising, even though other studies suggest people want to see advertisements for things they want. According to a Zogby Analytics Poll from 2012, 70% of responders stated they would prefer to see advertising online that “somewhat targets their interests.” Although these studies seem contradictory, unless attitudes about targeted advertising changed in one year, there may be another explanation for the discrepancy between the two studies. While one study asked users about their privacy online, suggesting knowledge of private lives, the other asked only about advertising noting correlations between data sent by the person directly. Second study responders were not put in a position where they had to endorse companies investigating the “private lives” of consumers. If consumers were more informed about the benefits of targeted advertising, they would more likely support it on a large scale.
A third group of scholars not mentioned in Gilbody’s review, the “neutralists,” believe that targeted ads, although a breach of privacy, will not change how advertisements work and are viewed in society. In his book The Singularity is Near, futurist and author Ray Kurzweil sides with the “neutralists” by arguing that, soon, targeted advertising will simply be a part of technology and therefore us, so privacy concerns and whether or not targeted advertising is effective will not be concerns. In his essay, Kurzweil states there is a rapidly approaching singularity, in which humans and technology will be so closely intertwined that there will be virtually no difference between them. In this future, in which “the intelligence of man would be left far behind,” the systems of advertising and commercialism through technology would simply become a part of our thinking and our mind just as we use our brain to think now (22). Heading towards this future, Kurzweil would not be surprised to see more purchases in modern times being done with technology and more advertising directed toward consumers with this same technology. Kurzweil would say privacy doesn’t matter because soon all machine and human life will be merged and there will be no such thing as privacy. Even the most private thing we have, our own minds, will be irrelevant in a future ran by a unified intelligence. Because of his theories on mankind and technology merging, Kurzweil would likely say that targeted ads and depersonalization are just the side effects of the inevitable upcoming singularity.
Target’s Target- A Practical Example of Targeted Advertising
Since 2002, Target Corporation has been targeting specific consumers by sending advertisements directly to their houses using basic information collected in the store. As Target statistician Andrew Pole said in a 2012 interview with the New York Times, “if you use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an e-mail we’ve sent you or visit our Web site, we’ll record it and link it to your Guest ID.” Using this system, Target now knows what advertisements interest each of its’ customers and how to specifically show each of them what he/she wants. And since they started doing this, revenues increased by $20 billion- a beneficial side effect of targeted ads.
The idea of targeted advertising has many benefits to both consumers and companies alike. Beneficial, in this context, is defined as any action that assists in either the profits of a business, the ease with which a consumer can find the products they want, and the comfort a business can provide the consumer while advertising to them. As Target has proven with their revenue, targeted advertising has the possibility to sharply increase profits by pinpointing advertisements to those most likely to buy the products. Targeted advertising also benefits the consumers by providing them with an easier way to find the products they will probably want to buy. After studying the opinions of consumers and how they feel about privacy, companies like Target have figured out ways to make their advertisements personal without consumers feeling like their privacy was invaded- leading consumers to feel comfortable with targeted ads.
Examining Target and how they have changed their advertising based on what consumers want to see is an important study because it deals with so many issues ranging from the psychology of privacy to how advertisers can be more effective in modern times now that so much information exists about consumers. These factors, when mixed together, have the possibility to supply companies a solution that both satisfies the concerns of American consumers and provides a direct route with which companies can provide their products to the market.
An Analysis of the Benefits of Targeted Advertising
With a $20 billion increase in revenue after implementation of targeted advertising, Target has proved that targeted advertising has the potential to benefit many businesses. By providing consumers with direct links, either physically or digitally, to the products they want, consumers are more easily able to give companies their money. Target also saves money in advertising using targeted ads, as they don’t need to print as many ads that will most likely not be as effective as targeted ones. Instead of gearing ads toward a specific market as they had done previously, Target now makes ads for small groups of consumers that are ready to buy the products they are offering- and they know this through the power of statistical reasoning. In every way, targeted advertising has the potential to increase the power of large businesses across the world.
As targeted advertising has shown, consumers are ready and willing to buy products that they need, especially if the products are presented to them in a timely manner that is easy to access. Mail pamphlets and e-mails sent by Target allow consumers to shop for their products without even leaving the comfort of their own homes. This is beneficial to the consumer because it shortens the amount of time spent in store when they get there, or even removes it all-together if products can be purchased online. This frees up time for consumers to do other things with their time other than go shopping, a luxury that can be afforded thanks to targeted advertising. In all previous times, consumers have had a choice about what products to choose between/buy, but I believe we will reach a point where consumers will no longer even have to choose specific items to buy because there will be systems in place to make sure they get what they want/need without them even having to do anything except confirm a purchase.
As Target found out soon after implementing targeted ads, people didn’t want to be targeted with such specific “personal” items. As indicated by the TRUSTe Consumer Privacy Index, almost half (43%) of American adults do not trust any business with their personal information, while 89% of adults worry about their privacy when shopping online. Already dealing with mistrust by consumers, advertisers like Target had to find a way to communicate their message and target consumers without making them feel intruded upon; and the solution they came up with was to bury what they were trying to show among other products in directed advertising leaflets. After advertisers began using this method, consumers felt more comfortable with the advertising and the advertisements were much more effective. This is beneficial to both the consumer and advertiser because it allows the consumer to feel like they are not being targeted and permits advertisers to get their message across without the consumer being uncomfortable.
Given these benefits of targeted advertising, some consumers still raise concerns that companies are still invading consumer privacy. Though it is true that advertisers collect data about specific consumers to advertise to them, it isn’t necessarily a bad thing. When a consumer purchases a product at a store or clicks to purchase something online, they are willingly giving the company that is selling that product the information that they are buying that thing, as well as their credit cards, addresses, e-mail addresses, and other personal information. Though it would be wrong for companies to sell to consumers who had not willingly given this information, it is not wrong for companies to make good use of the information they are being given by shoppers. As the evidence has shown, the benefits of targeted advertising far outweigh the disadvantages.
A Long Shot – The Future of Targeted Advertising
With more information being uncovered about consumers every day, it’s only a matter of time before all advertisers take advantage of the opportunities at hand- but there is still work to be done. If the general public knew more information about the benefits of targeted advertising, maybe they would feel okay about revealing their personal information to companies like Target. More research could also be done to specify what would be a good medium between what consumers want out of advertisements and what advertisers want consumers to see. In general, through proof of its success, academic support of its ideas, and the rise in advertising efficiency it has created, targeted advertising is not a concept that is going to go away anytime soon. In fact, there is enough evidence to support it will be the future of most advertising in the world.
As more technology becomes readily available that will link our bodies and faces to habits and link our habits to products, the world may change to one where it is impossible to get away from personalized ads. In such a world, privacy would not exist, as everything we do would be tracked and monitored for data correlation, and in a way, this technology would become as much a part of our lives as our smart phones and personal computers already have. With these advances, at what point do we ourselves become the advertisements that are targeting us? And even further, at what point does the technology that we have bought because of advertising become an advertisement for itself? As we slowly become a part of the future our technology is creating, we can begin to realize the true potential of innovations like targeted advertising that will help us get there.
Works Cited
Bachmann, Katy. "Poll: Targeted Advertising Is Not the Bogeyman." Adweek. N.p., 18 Apr. 2013. Web.
Cohen, Julie E. "What Privacy Is For." Social Science Research Network. Georgetown University Law Center, 5 Nov. 2012. Web.
Duhigg, Charles. "How Companies Learn Your Secrets." The New York Times. N.p., 16 Feb. 2013. Web. <http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?pagewanted=1&_r=3&hp&>.
Gilbody, Simon. "Benefits and Harms of Direct to Consumer Advertising: A Systematic Review." BMJ. BMJ Quality & Safety, 18 Apr. 2005. Web.
Harris Interactive. "2013 TRUSTe US Consumer Confidence Index." 2013 TRUSTe US Consumer Confidence Index. TRUSTe, Jan. 2013. Web.
Kurzweil, Ray. [Chapter 1.] The Singularity Is Near: When Humans Transcend Biology. New York: Penguin Books. 2005. Print.
Purcell, Kristen, Joanna Brenner, and Lee Raine. "Search Engine Use 2012." Targeted Advertising: 59% of Internet Users Have Noticed It, but Most Don't like It. Pew Internet, 9 Mar. 2012. Web.
Toffler, Alvin. [Excerpts.] Future Shock. New York: Random House. 1970. Print.