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This weekend, AdAge published two articles discussing the lengths to which advertisers are collecting and using data to target consumers for ads. One article details some of the techniques, and the other discusses the potential negative implications.

In short, marketers are increasingly taking data from offline sources and finding ways to apply this data to ad targeting across channels, including the internet.

Needless to say, these marketers are playing with fire. Privacy advocates are incensed that marketers could use data points like credit rating and historical purchasing records, and 'privacy' and 'consumer protection' are three words politicians around the world can count on when they need an excuse to push new regulations that appear consumer-friendly.

But in my opinion, the debate over the use of more advanced data mining by marketers is, in most cases, a red herring. That's because behind the knee-jerk reactions to the fact that marketers are using personal data to target ads, there is an inconvenient truth: the effectiveness of this is often questionable. As we've seen online with behavioral targeting, for instance, doesn't always produce results. One eMarketer study found that less than 13% of respondents found that more than 25% of the behaviorally-targeted ads they received were relevant. Which begs the question: despite all of the targeting techniques in use online today, how many of the last 10 ads that were served to you stood out as being relevant? Exactly.

Therein lies the rub. Marketers might know everything about you, from your age to your income to what you ate for dinner last night. But it's not necessarily going to help them develop a cogent, compelling message. It's not necessarily going to help them hit you with that message at the right time and place.

Don't get me wrong: data mining can be a very valuable tool for marketers. But data mining, like everything else, needs to be done thoughtfully and with purpose. It's about looking at the right data points, and applying them in the right places. In many cases, a lot of the data companies collect and analyze has far more relevance outside of the marketing realm than it does in it.

None of this, of course, means that marketers will think twice about whether or not aggressive data mining serves any practical purpose, or whether or not the analysis of all this data can actually be effectively turned into actionable insight. Marketers will continue to be on the lookout for bigger and better, even if bigger and better isn't better.

But smart marketers aren't interested in using all the tools that are at their disposal just because some are new and shiny. Smart marketers are interested in using the right tools to get the job done most efficiently and effectively, maximizing ROI in the process. Marketers who think that trying to figure out everything about consumers is the holy grail will be searching a long time for that ROI.

Patricio Robles

Published 22 March, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2381 more posts from this author

Comments (4)

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Vincent Roman

As a consumer of adverts I think it would be in my interest to be presented with targetted ads based on eithe rmy interests or other data.  Yes there is a fine line to be drawn between privacy and targetting, but at the same time well targeted ads can be of use. 

Nothing annoys me more than the junk I have to look at on Facebook or nowadays on Last.fm but back int he day when I first started using Last.fm, and they had only music adverts I used to click ont hem all the time. 

If anything there is a LACK of stock for well targetted ads, so whether they use attention data or not is irrelevant.  The price of online advertising needs to plumet and more companies need to partake with interesting ad offerings so that I can be better targetted!

over 6 years ago

Andrew Lloyd Gordon

Andrew Lloyd Gordon, Digital Marketing Expert, Speaker and Trainer at New Terrain Limited

I understand why people are concerned about data privacy. Indeed, if people realised how much information they already reveal about themselves - both on and offline - there'd be a real backlash!

Marketers have always sought to use information about their customers. What's different now is the scale and speed of this data gathering and analysis. This means that we have an even greater responsibility to get it right.

As Vincent points out, when its explained to people how and why their information is used, they quickly 'get it'. 

Unfortunately, digital data mining is still in its infancy. Despite the hype, the technology is often clumsy and the results disappointing. Of course, the technology will improve over time and sharpen the targeting of users.

However, what we'll always run into is the subtle and not-so subtle differences between people. My own experience reminds me of this.

I have two brothers.

We are, obviously, from the same background, close in age and with matching lifestyles. From a data mining perspective, we would look very similar. Yet our tastes and interests vary enormously. And so would our response, therefore, to so called 'targeted' advertising!

over 6 years ago

Rob Mclaughlin

Rob Mclaughlin, VP, Digital Analytics at Barclays

Let some marketers spend large on these tools/data sources...I have every confidence that it will be dropping ROI that leads them to quit rather than privacy policy.

over 6 years ago

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Conrad Taggart

Defining relevant would be interesting. Relevant as you have an interest in an area or you are in the market for a particular good or service. For instance in Financial Services the typical propensity to buy a financial product is 5-6% per year. Even with a two month consideration period you would be going some to have a high relevance score based on likelihood to buy a product or for the customer to be actively interested in it (the measures that matter most to companies) Targeted marketing may still largely be irrelevant given the diverse interests of people and their low propensity to purchase any particular product or service, but it will certainly be many times greater than non targeted ads. It is this relative measure that matters for companies not the fact that 90%+ of people still regard the messages as irrelevant. If you get a response rate of 10% for targeted ads (hence a rejection rate of 90%) and 2% from non targeted ads then you have made a huge improvement by deploying targeted ads, even though the absolute response rate is low. In short, the relevance of targeted/behavioural ads may be low, but so are people’s propensity to purchase any particular good or service and that’s even before you get into brand preferences or actual purchase windows (which reduce things further). Given this, expecting targeted ads to have high absolute relevance might be going to far. However, higher relative relevance should easily be achievable. Moreover, many marketers think their marketing is already more relevant than it actually is or they over estimate the underlying demand for their product or service, hence they are disappointed when they see various stats on the performance of targeted ads.

over 6 years ago

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