The continued development of e-commerce has changed the way businesses advertise online in important ways. Online sales have increased drastically in recent years; 2012 saw a twelve percent increase in online sales from 2011, and the amount of sales conducted online is projected to continue to increase. Businesses have been acutely aware of the shift from traditional purchases to online sales, and their advertising focus has shifted accordingly.
If you have ever purchased something online or simply visited an online retail website, you have probably noticed an increase of advertisements directed towards what appear to be your personal tastes. This is no accident: Many companies have begun using personally targeted advertising to attract shoppers that have shown a prior propensity to purchase related products in an attempt to focus their advertising on an already interested demographic.
This strategy for personalized advertising can be effective, but not all personalized advertising schemes are created equal. Two researchers from the Sloan Business School at MIT found that personalized advertising is effective only when the consumer is seriously considering purchasing a product or related items. Essentially, the consumer’s behavioral tendencies are just as important as their tastes, if not more important.
This type of behavioral targeting is intuitive and wise for businesses, but is all too often ignored. For example, travel agencies may attempt to attract an individual with online advertisements catered to their personal preferences if that individual has looked at several websites for different travel agencies. But the individual would be unlikely to respond to personalized advertisements for a specific type of travel agency unless they had also looked at websites for plane tickets, hotels, etc.
So how can businesses use this information to maximize the results of their online advertisements? By carefully selecting the targets of advertising campaigns. Only serious consumers should be considered, and valuable web real estate should not be wasted in areas where consumers are unlikely to respond to an advertisement.