Online advertising has been growing in popularity for years. But how does it work? How do companies target ads to consumers? And what does the future hold for online ads?
As the world increasingly moves online, companies are looking for ways to reach consumers where they are spending more and more of their time. Enter online advertising.
Online advertising allows companies to target ads to consumers based on their online behavior. That means that if you’re looking for a new pair of shoes, you might start seeing ads for shoe retailers on the websites you visit and in the apps you use.
Advertisers use a variety of methods to target ads, including cookies, web beacons, pixel tags, and mobile device IDs. They may also track your online activity across devices, using what’s known as cross-device tracking.
Cross-device tracking allows advertisers to follow you from your desktop computer to your mobile phone and show you ads on both devices. For example, if you look at a pair of shoes on your desktop computer and don’t buy them, you might see an ad for those same shoes on your mobile phone later.
Advertisers may also use data from third-party data providers to target ads. This data may include information about your demographics, interests, and online behavior.
The data collected by advertisers is used to create marketing profiles of consumers. These profiles are then used to target ads that are relevant to the consumer.
The practice of targeted advertising is not new. What is new is the ability to target ads so precisely using the vast amount of data that is now available about consumers’ online behavior.
Targeted advertising has come under fire in recent years amid concerns about privacy and the use of personal data. In 2018, Google was fined $5 billion by the European Union for violating EU antitrust laws related to its online advertising business. The EU said that Google had used its market dominance to stifle competition and give itself an unfair advantage in the online ad market. Google has since changed some of its practices relating to online advertising but continues to face antitrust scrutiny in Europe and other jurisdictions. US antitrust regulators are also investigating Google’s online advertising business as part of a broader probe into the company’s business practices.
In addition to antitrust concerns, there are also privacy concerns about targeted advertising and the use of personal data. In 2019, Google was fined $170 million by the US Federal Trade Commission (FTC) for violating children’s privacy laws related to its targeted advertising business. The FTC said that Google had collected children’s personal information without their parent’s consent and used it to target ads at them without their knowledge or consent. Google has since changed its practices relating to targeted advertising but continues to face scrutiny from privacy advocates and regulators around the world.
Despite these concerns, targeted advertising continues to grow in popularity as a way for companies to reach consumers with relevant ads. And as more and more data becomes available about consumers’ online behavior, we can expect targeted advertising to become even more sophisticated and widespread in the years ahead
