Behavioral Targeting

Imagine you receive an email newsletter from a bicycle shop you once visited, advertising that they have some new cycling shoes. You click the link and browse briefly on their website but don’t end up making a purchase. The next day, you’re watching a YouTube video and see an advertisement from the same bicycle shop for a particular pair of cycling shoes you had been eyeing the day before. Must be a sign from the universe, right? You click on the ad, which takes you straight to the website, and this time around, you purchase the shoes.

In this scenario, the bicycle shop used behavioral targeting to attract you as a customer. Behavioral targeting involves analyzing consumer activities to personalize marketing efforts—such as tracking that you opened the newsletter, which links you clicked, and how long you spent viewing different items on the website. By targeting the specific product you were interested in, the store was able to motivate you to make a purchase.

In the age of digital marketing, an effective business has to use highly personalized and timely marketing to attract customers over its competitors. Most businesses will leverage information about their customers’ demographics and interests, but behavioral targeting also uses information on how customers interact with their business to deliver targeted advertisements in real-time. These targeted advertisements can include text messages to let you know you still have items in your cart, pop-up promotions, or ad placements on other websites you frequent. 

Behavioral targeting can lead to higher user engagement, enhanced customer experience, higher conversion rates, and, overall, a more successful business.¹

Audience Segmentation: The process of grouping customers based on common characteristics—such as demographics, geographic location, and past engagement—in order to develop personalized marketing strategies.³ In the case of behavioral targeting, segmentation is, not surprisingly, by behavior.

Customer Behavior Analysis: The study of how individuals engage with a brand or product, including purchasing patterns, preferences, and interactions. 

Purchase Behavior: An analysis of customer activity before they invest in a product or service to understand when or how a customer might make a purchase.⁴

Cookies: Small blocks of data created by a web server and placed on a user’s device to track browsing history and activity data which can then be leveraged for personalized marketing.⁵

Campaign Engagement: Tracking the way a customer interacts with your marketing campaign. This could include tracking who opens newsletters, who likes social media posts, or who scans QR codes on out-of-home ads. 

Personalization: Customizing content and advertisements based on a customer’s activities to create more specific and valued messaging that will attract customers.⁶

After World War I,  the Roaring Twenties marked the rapid rise of consumer culture in the U.S., leading to new patterns of consumption. Before this period, people generally spent their money on necessary purchases and rarely indulged in luxuries.⁷ The prominent economic theory at the time was dominated by the belief that humans are rational decision-makers (called homo economicus) that will maximize desired outcomes and minimize cost. In other words, people would buy what they needed, so creative marketing tactics were not considered useful. 

Just as consumerism began to rise, the Great Depression forced people to be more careful with their money. Businesses now needed to market their goods and services to convince frugal customers to purchase them, often relying on mass-marketing tactics to appeal to a large consumer base. 

After World War II, Americans’ spending power increased once more, leading to increased material desires.⁸  With the boom in manufacturing and production came increased competition. To be successful, businesses would have to understand and address their customers’ needs. Businesses started to get smarter about their marketing tactics, implementing market research and segmenting their audiences into smaller groups. 

With the advent of the World Wide Web, businesses unlocked a new dimension: e-commerce. With it came new ways to market and reach their customers. In 1994, cookies were invented, changing the digital landscape.⁹ Websites were now able to track browsing patterns, providing new insights into consumer behavior. Businesses could track online activity to better understand not only who their consumers are but gather precise information on how they behave. This breakthrough marked the birth of behavioral targeting, revolutionizing how businesses connect with their audience.
Rather than promoting a good or service through a highway billboard or broadcasting a TV commercial, brands could now tailor ads based on the unique behavior of their customers. As the digital age advanced and technology improved, businesses were able to access and analyze huge volumes of diverse consumer data at a rapid pace, improving analysis and helping them to refine their behavioral targeting tactics. 

We spend an increasing amount of time online, whether on our phones, computers, or tablets. Today, digital advertising is the best way for businesses to reach us. Businesses now utilize third-party cookies, giving them the ability to track activity not only on their own website but on other websites as well. Behavioral targeting tactics are becoming more nuanced and personalized, speaking to our unique behaviors, demographics, and values. 

George H.  John

An expert in marketing and pioneer of behavioral targeting who has built a successful career by helping businesses learn how to effectively leverage data to target messages and advertisements. John was the senior director for behavioral targeting and personalization at Yahoo!, making the company the first search engine to shift from generic ad placements to targeted ads based on browsing history. Today, John is the co-founder and CEO of RocketFuel, a digital advertising technology that helps improve campaign performance.¹⁰

Sergey Brin & Larry Page

Founders of Google and later President and CEO of Google’s parent company, Alphabet, who met at Stanford while completing their graduate degrees.¹¹ As co-founders of Google, Brin, and Page were innovative leaders crucial in developing algorithms to analyze user behavior, helping lead Google to its current success of US $60 billion in annual revenue.¹² Google has leveraged behavioral targeting since its inception, analyzing a user’s searches to understand their interests and needs to inform personalized advertisements. Over the years, Google’s behavioral targeting has become more sophisticated, using data from across multiple platforms like Google Maps, YouTube, and Google Analytics to understand users’ behaviors and create targeted advertisements. 

Jeff Bezos

American entrepreneur best known as the founder and executive chair of e-commerce company Amazon. Thanks to Bezos’ innovation and data-driven decision-making, Amazon has become an enormously profitable tech giant.¹³ Amazon is a first-in-class example of how behavioral targeting supports success through their product recommendation tool that delivers personalized suggestions to users based on their browsing history.¹⁴ Bezos is also the owner of The Washington Post and founder of Blue Origin, a space exploration company. 

Behavioral targeting begins with businesses using data to better understand who their consumers are. This not only leads to greater conversion rates for companies but can also improve user experience by demonstrating that a company understands its customers’ unique needs and behaviors, helping guide them to make decisions. 

On a macro scale, behavioral targeting can be used by policymakers to promote socially beneficial behaviors or educate people on topics that are relevant to them. 

Optimized Marketing Campaigns

By analyzing a user’s preferences, interests, and purchase behavior, a company can better understand their clientele and design their marketing campaigns accordingly. Technological advancements have made it possible for companies to analyze vast amounts of data at a quick pace and deliver targeted messages in real-time as a user browses from one site to another. 

By analyzing browsing history and purchasing behavior, companies can deduce psychological characteristics about their audience and match their marketing campaigns to their assumed personalities. Researchers have shown that customizing advertisements to match personality traits leads to more clicks and purchases. Behavioral targeting helps companies build rapport with their consumers, ultimately leading to higher conversion rates and greater success.¹⁵

Enhanced User Experience

In the digital world, where we are constantly bombarded with vast amounts of information, and hundreds of companies are regularly vying for our attention and money, behavioral targeting can help consumers find the products they need more quickly. Behavioral targeting aims to show consumers product or service recommendations that are more relevant to their interests, potentially improving the user experience. In an information overload era, behavioral targeting can prevent consumers from feeling overwhelmed. 

While behavioral targeting allows businesses to better connect with their users and enjoy higher conversion rates, it relies on vast amounts of personal data. People rarely take the time to read through disclaimers or pay attention to who has access to their information. If private consumer data ends up in the wrong hands, identification theft and fraud are real possibilities.

Consumer Privacy

Like many marketing techniques that rely on vast amounts of data about consumers, behavioral targeting can feel like a breach of privacy. As Adam Cohen, a digital marketing technologist, writes in an op-ed for the New York Times, “Serving up ads based on behavioral targeting can itself be an invasion of privacy, especially when the information used is personal.”¹⁶

Behavioral targeting relies on the analysis of browsing history (including what pages you visited, for how long, how you transition from content to content, etc.) and purchase history (frequency, price, time, date, etc.). While this information provides valuable insight for designing personalized ads, there are also important ethical considerations. 

Many tech giants like Apple and Google have begun moving away from behavioral targeting to provide users with greater privacy. While previously, the standard was to have users opt in to cross-site tracking and targeting, Apple made the move to require individual apps to have to ask users if they could track their behavior on other apps, and Google followed suit.

Manipulating Vulnerable Populations

Although behavioral targeting can positively play to your individual characteristics, it can also lead to the exploitation of vulnerabilities. Not everyone has sufficient knowledge about personalized marketing and may be unaware of the persuasion techniques that are convincing them to make purchases and diminishing their ability to make rational decisions. This can be especially true for vulnerable populations such as the elderly and children. One study found that personalized ads led to a significant increase in impulsive consumption, demonstrating that these tactics can push people to make purchases they wouldn’t have otherwise.

Additionally, receiving targeted ads can feel uncomfortable. Instead of driving sales, it could turn a customer off from a brand if they feel that they are being targeted or manipulated. Companies need to strike a delicate balance between making their consumers feel valued and having their unique needs met while not going so far as to creep them out. 

Scammers can also exploit personality traits and psychological biases to target individuals. Research has shown that one’s level of impulsiveness correlates with particular personality traits, and scammers can target users who possess these traits to push them to make impulsive, irrational, and sometimes even irreversible decisions.¹⁵

Personalizing Health Education for Improved Outcomes

You’ve likely Googled your symptoms once or twice—but did you know that 58.5% of the US adult population relies on the internet for health information?¹⁷ As diseases such as obesity and asthma are among the leading causes of preventable deaths in the US, and more people are turning to the internet to guide them in their health, health practitioners can utilize behavioral targeting to better reach their audience. A study by the Baker Institute showed that health education is most effective when it consists of personalized messaging tailored to the audience’s needs and interests, which can be achieved through behavioral targeting.¹⁸

Imagine that you have asthma and are looking up ways to manage it online. As you visit various websites and click on different links, algorithms analyze your online behavior and can infer that you are likely someone living with asthma. In this scenario, health practitioners could potentially use this data to tailor their messaging towards you. For instance, if you spent a while on a page that explains how to use an inhaler, the messaging may target proper inhaler use, whereas if you spent more time on a page about how seasons affect asthma, the messaging might focus on how to reduce symptoms during allergy season.¹⁸ 

Behavioral targeting can help people better manage their conditions by making it easier for them to access the tools and knowledge required for day-to-day management through tailored and targeted messages. This empowers individuals to take their health into their own hands, potentially leading to improved health outcomes and reducing the economic burden of disease.

Behavioral Targeting on TikTok

Historically, advertisements on social media platforms have relied on connections between people and demographic data to target ads effectively. However, TikTok places a greater focus on a user’s behavior on the app to deliver content and advertisements that it believes will resonate with users. 

This is based on the assumption that people are interested in content that may have no relation to them: for example, videos about the dangers of the North Sea were recently trending, although most people are not likely to find themselves having to navigate those scary conditions. 

Instead of segmenting audiences by age, location, or connections, TikTok’s algorithm identifies users with similar behavioral patterns (viewing habits, interaction, engagement patterns) to deliver personalized content on their “For You” page. TikTok’s interest-based targeting has placed the focus on content-first discovery, compelling brands and users to focus on creating interesting content to be successful.¹⁹ 

Ad Retargeting and Psychological Reactance

In this article, our writer, Preeti Kotamarthi, describes a situation we are all familiar with—being bombarded with advertisements for a product after a simple search on your device. However, Preeti explores why ad retargeting may not be the most effective method for businesses, as humans tend not to like being told what to do. 

The New Personalized AI Nutritionist

Gone are the days when you would need to sit down with a costly nutritionist and review your eating patterns and preferences so that they could create a personalized nutrition plan. Now, AI can do it all for free! In this article, our guest contributor, Valerie Guo, explores the benefits and pitfalls of AI in nutrition and health promotion. 

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