What is targeted advertising?

Targeted advertising promotes products and services online by displaying ads to specific user groups. This ad type focuses on individuals who are most likely to be interested in the brand’s products or services. The advertiser defines user characteristics when configuring the ad campaign.

Let’s examine a few examples:

• A downtown café can target people who live or work within a 5 km radius and are interested in cuisine, restaurants, or food delivery.
• A pet shop can run ads targeting men and women aged 25–45 who care for pets and frequently purchase pet supplies.
• A beauty salon can target ads to women aged 18–45 who live in a specific area and are interested in self-care, cosmetics, and wellness procedures.

Targeted ads are often placed on social media platforms. Ads may appear in stories, content feeds, and video formats.

How targeted advertising works

Simply put, here’s how targeted advertising works: The advertiser first sets up the campaign:

• They define the parameters of potential customers: age, gender, location, interests, and the social media groups they engage with.
• The advertiser defines the campaign duration and schedules ad impressions by day and time.
• Develops the ad creative. Typically, an advertising can include text, images, videos, and a call-to-action button.

Once the campaign has been set up, the ad is shown to the target audience. The advertiser can track campaign statistics such as ad impressions and clicks.

What types of data are used in targeting?

Targeted advertising relies on several types of data:

• Demographic data: Gender, age, education, industry, income level. For example, tutoring services may appeal to school students or their parents, while online graphic design courses might attract designers or social media managers.
• Geographic data: User’s place of residence or work, as well as locations they frequently visit. For instance, you can advertise a bakery to residents of a specific neighborhood or district.
• Behavioral data: Information about user activities on a website, such as searches, purchases, or orders. For example, if someone searches for sneaker models, you can show them an ad for a footwear store.
• Technical data: The type and characteristics of the device used for internet browsing. Depending on the device brand, you can advertise iOS or Android apps, phone cases, or earphones for specific models.
• Time data: Specific hours or days when the ad will be displayed. If response time is critical for your users, you can pause ad impressions outside of working hours.
• Psychographic data: User interests, lifestyles, and values. For example, if a user visits art-related websites and views event announcements, you could offer them tickets to concerts or other cultural events in their city.

How much does targeted advertising cost?

The cost of targeted advertising depends on several factors. Here are a few:

• Competition in the target niche. The more companies compete for the same audience’s attention, the higher the cost of advertising. This is why advertising in popular niches tends to be more expensive than in less competitive industries.
• Advertising system. Advertising costs vary depending on the platform and service used to run your campaigns.
• Ad quality refers to how effectively your ad generates clicks and conversions (targeted actions). The higher the click-through rate and conversion rate of your ad, the lower your advertising costs can be.
• Payment model, for example, pay-per-click, pay-per-impression, or pay-per-conversion. The advertiser selects the payment model during campaign setup.

Who can benefit from targeted advertising?

Targeted advertising works best for businesses with a strong online presence looking to manage well-established market demand. A company should have a website or social media profile where customers can explore its product or service range, learn about its business model, and place orders or book services.

However, targeted advertising may not be ideal for companies with a very narrow audience. Let’s consider two possible scenarios:

• Premium segment: For instance, a developer offering properties starting at $2 million in downtown Dubai.
• B2B segment focusing on specific manufacturing categories. For example, a company that produces metal structures for steel mills.

Reaching niche audiences or small groups through advertising systems can be challenging.

What is the difference between contextual and targeted advertising?

Contextual advertising refers to ads displayed in search results and on partner network websites. Ad impressions are influenced by audience characteristics and online context — users see ads when they enter search queries or show interest in related products or services.

For example, if a user searches for a business-class taxi, they might see an ad for such services.

Contextual advertising can also target specific users by identifying them online through their contact details or ClientID. This significantly enhances targeting accuracy and boosts the effectiveness of your ad campaign.

How does targeting work in contextual advertising?

When setting up contextual advertising, you can also define audience parameters. This allows you to accurately target your potential customers.

Geolocation. Select the region where your business operates, or the entire country if you offer online services or delivery.

How to set up geotargeting in contextual advertising

Search queries. These are keywords that your potential customers use to find products and services through search engines. For example, “flower delivery in Dubai”. When a user enters a keyword that the advertiser specified during campaign setup, they may see the advertiser’s ad.

Along with keywords, you can specify negative keywords (for example, “free”) to prevent your ads from appearing in certain search results.

Interests and habits, along with websites, organizations, and apps users frequently interact with. For example, an advertiser selling pet food might select “Animals” as a target interest.

Choose interests related to your business category

Retargeting. Retargeting allows you to display ads to users who have already interacted with your site, such as those who have added items to their carts. With retargeting, you can encourage users to return to your website to complete their purchase or place a repeat order.

Summary:

• Targeting is an advertising strategy that delivers ads to people based on specific characteristics. The advertiser specifies the relevant parameters.
• Targeting is based on demographic, geographic, behavioral, technical, temporal, and psychographic data. This type of advertising excels at defining your target audience with precision, covering factors such as age, gender, interests, lifestyle, and income level.
• Targeted advertising is most effective for businesses with a strong online presence, established demand, and user-friendly landing pages, like websites or active social media profiles. However, businesses with narrow audience segments may find it challenging to attract enough potential customers to engage with their ads.