How to Use Personalized Ads Properly?

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Chloe Xu
Director, Australia

How to Use Personalized Ads Properly?

Data-driven marketing such as done by using Google ads and Facebook ads is the new norm for tech-savvy marketers who try to influence customer buying decisions in every possible click. Supporters of cookies and other surveillance tools believe that highly-tailored ads based on a customer's browse history allow for an improved online experience and sales performance. Meanwhile, customers are increasingly concerned about the privacy issue when knowing their information is collected, shared, and utilised by businesses. In such a situation, any tailored ads can only trigger opposition and compromise a range of sales metrics, performance and reputation included.

Research mentioned by Kim and Barasz revealed that among various factors, two largely determine if customers will be comfortable with the use of their personal information:
- The nature of the information. People are more reluctant to share their intimate information, such as data on sex, health, and finances.
- How the customer's personal information is transferred. People prefer disclosing their information directly by themselves than without their knowledge. A study shows that when people realise their information is shared in a way that they don't like, their appreciation for ad personalisation and interests of purchase declines.

The research also identifies 3 factors that can offset the downside of personalised ads, which are:
  • TRUST. Customers want to know how and where marketers get information from them.
  • CONTROL. Customers will feel easier if they have control over how much information they would like to disclose, who will see it, and how it will be used.
  • JUSTIFICATION. Customers need a clear answer to why their information is collected and shared.
Based on the above findings, suggestions for savvy marketers include:
  • Stay away from sensitive information. If the product offering is sensitive, marketers would better to advertise on websites that their potential customers will visit.
  • At least, provide customers with information on data practices when asked.
  • Use data in a way that can delight and bring true value to your customers.
  • Tell customers why you collect information from them and how you will use it to generate meaningful messages between customers and your offerings.
  • Don't forget the traditional data collection. Methods like online survey still work well and don't trigger any privacy issues.
No matter how technology changes, market strategies should be customer-centric, in the service of creating value for customers.

Source: John, L., Kim, T., & Barasz, K. 2018. Ads that Don't Overstep. Harvard Business Review, 96(1): 62-69.

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