Advertising and Mass Customization

That’s the “holy grail” isn’t it? A brand advertising campaign so targeted that it speaks to a niche market segment or even an individual. This NY Times story, “It’s an Ad, Ad, Ad, Ad, World,” talks about that movement in very general terms:

The plan is to build a global digital ad network that uses offshore labor to create thousands of versions of ads. Then, using data about consumers and computer algorithms, the network will decide which advertising message to show at which moment to every person who turns on a computer, cellphone or — eventually — a television.

While online ad targeting is quickly growing more sophisticated, the fantasy of “one-to-one marketing” or ads that are so heavily customized will likely never come to pass. Certainly versions of ads aimed at different demographic groups and geographic areas will come (that already exists) and when behavioral targeting is layered on top of that you’ll have higher response rates. But I’m skeptical of the ultimate vision that the article implies.

Yahoo! has recently announced SmartAds (currently only in Travel), which uses a patent-pending “creative assembly platform” to hypothetically combine different creative elements into more targeted display ads “on the fly.” Yahoo! has characterized this as the future of graphical advertising on the site. It remains to be seen exactly how it plays out. One might imagine a few creative components that could be changed dynamically depending on the audience or behavior.

On the search side, I’ve argued in the past that better location targeting eventually turns into demographic targeting at the residential level. I would expect to see lots of public/census data eventually make its way into the ad interfaces of the major search engines (or at least the back end). That way when targeting a zip code (or neighborhood eventually) marketers will be able to see income, ethnicity, etc. It’s only a matter of time.

But there’s also way in which all the passive targeting of consumers creates discomfort when people understand it’s going on. While behavioral targeting typically occurs in an anonymous fashion, there are still privacy issues that are implicated by the advanced targeting described in the NY Times piece.

Certainly in mobile, the long-hyped and much anticipated “local-based services” will never materialize as originally fantasized: walking by the pizza restaurant they beam me a coupon. The irony of that is that it wouldn’t be very effective anyway. How does the restaurant (or its ad serving proxy) know I want a pizza unless I’ve indicated that in some way? Instead, people will search for those coupons when they want to eat pizza and they’re out or be provided offers that are geographically or contextually related to what they’re doing (e.g., buying movie tickets in a certain area).

The notion of better targeting for display advertising, which is growing faster than anything else as an online ad category, is seeking to overcome a profound cultural shift where consumers can largely shut out ads that they deem “irrelevant.” And while ads are more ubiquitous than ever, they’re less effective than ever – unless they’re particularly funny/engaging or directional.

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