December 18, 2015
In a previous post, we discussed the rising importance of Cyber Monday for holiday season retailers. Last year, the National Retail Federation released a report claiming that only 55% of holiday shoppers spent money on Black Friday and Thanksgiving weekend. This is a far cry from the door buster sales of years past. Even more telling, 42% of those shoppers spent their money online as opposed to in the store. Clearly, ecommerce sites have gained a firm foothold in the shopping experience and behavioral advertising.
The real question is why. Sure, the convenience element cannot be ignored. Tapping the screen on a tablet will always be easier than driving a car across town, fighting traffic, stopping at five stores, waiting in long holiday shopper lines, then driving home, and fighting the traffic all over again. However, it’s easy to discount the role of user data and savvy marketing techniques.
Digital marketing strategies have grown to become sophisticated and intelligent. By gathering information about a user’s behavior on the web, they can hone their advertising message to display relevant information and drive sales.
Advertising on the Internet
Behavioral Advertising and Cookies
Beyond simple usability improvements, cookies can be used to track a web user’s travel throughout the internet and record the advertisements or webpages that they interact with. This is called behavioral advertisements, and it is an extremely common form of digital marketing.
It all begins with a cookie, otherwise known as HTTP cookies. When visiting a website, the web browser will receive and store a small packet of information about your visit to the site. The next time the user returns to the website it will check to see if there is a relevant cookie in the browser and then use that information where appropriate.
One of the most common uses for a cookie is to prefill form fields with information the user has inputted in a prior visit, but there are many more possibilities. Using this information, other websites can display advertisements catered to your interests.
Try it yourself. Clear the cookie cache in the browser tools and then start surfing the web. Before long, major websites you have visited or related content will begin appearing in adspace on other websites.
Social media advertising is another animal entirely. Unlike traditional web advertisements, users voluntarily post their own interests, location, affiliations, family composition, and more right on their Facebook, Twitter, and other social media pages. Not surprisingly, all of this data is then used by advertisers to target promotional content. When an advertiser wishes to create a Facebook ad, they can segment their list of subscribers and the wider collection of users in their target area based on this information.
For example, if Mindsight wanted to create targeted Facebook ads for this blog, we might segment users by city, age, and interests. Say a reader follows Bill Gates and lists energy sciences as one of their interests. We could create an ad to promote our recent blog posts on the subject, “A Response to Bill Gate’s Atlantic Interview and the Acceleration of Innovation”
It’s simple but effective and accounts for a majority of revenue generated by Facebook. In the third quarter of 2014 alone, Facebook reported $2.96 billion in revenue generated from advertising.
A third manner of digital advertising used today is probably the most straight forward. Google offers ad space on search engine result pages (SERPs) with pricing based on the popularity of certain keywords. When searching on Google, the specific words inputted into the search bar will pull ads from companies who have paid to be represented when those search terms are used. Once again, this is not a terribly complicated system, but it is source of virtually all of Google’s revenue.
In the first quarter of 2015, Google generated $15.5 billion in advertising sales using Google Adwords.
The Morality of Data Tracking
It is easy to assume the worst when discussing something like behavioral advertisement, but it’s not as nefarious as it may sound. The data gathered and generated by interactions with a website are primarily used to cater targeted email communications or digital ads in the margins of the website.
Behavioral advertising can be thought of as another manner of customer service. If someone has demonstrated interest in new barbecue grills, an ad later in the day featuring that same grill model at a lower price or a competitor’s brand would be useful or even welcomed information to receive. Traditional forms of advertisements work much like a shotgun. Spray them everywhere and hope something hits, but an argument can be made that behavioral advertisement makes sure they are only experiencing the content and ads that they want to see.
In the end, the primary reason that Cyber Monday is becoming more popular by the year is a simple one. Digital marketing works.
They say if you want to find who’s responsible for something, follow the money. When Facebook rakes in nearly $3 billion and Google almost $16 billion in a quarter selling ad space, it is clear that companies across the globe are investing in digital advertising to drive users to their website. The result is the rise of Cyber Monday.
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