Advertising Got Micropersonal – And We Don’t Care 1

If you believe the mainstream press, you’ll believe that consumers are being connivingly “micro-targeted” in a bid for mind control by advertisers and political parties. However, researchers at UniSA’s Ehrenberg-Bass Institute for Marketing Science have discovered there is probably no reason to panic.

Personalised advertising may be one thing but getting people to respond to even micro-targeted ads is a whole other ball game. However, analysis of 3.1 million ad exposures shows that such adverts generate low click through rates (CTR). Furthermore, some of the responses to such ads are counterintuitive – with a higher CTR coming from ads mismatched to personalities and lower vs. the overall industry average for Facebook ads*.

Professor of Marketing Science, Byron Sharp, says this could be interpreted that the proof of the value of psychologically tailored advertising, is a bit of a mystery:

“There were some differences in the CRTs in the different creative ad executions, but overall the rates were low and rather inconveniently, the ad with the highest responses or CTR was an ad designed for extraverts but opened by more introverts.”

Sharp highlights that this casts doubt on the ability of new technology to target effectively. Sharp states that often geographical targeting is enough, and that targeting by time, age, gender and interest only offer incremental gains. However, this evidence should act as a warning – not fuel an assumption. We should always test that additional targeting is effective – not assume more is better. Sharp and colleague Dr Nick Danenberg demonstrate this by explaining that while Facebook allows you to target people by interests, often the people that grow a brand (light category buyers) aren’t terribly interested in a brand. Therefore, a targeting strategy based on interest/Facebook likes will cut a brand off from a potentially large audience.

But if micro-targeting is arguably so ineffective, why do some many marketers use it? Sharp and Danenberg highlight several reasons:

  1. Marketers often do things based on theory/logic rather than evidence. The worst myths, the longest lasting, are those that sound plausible.
  2. Micro-targeted campaigns can boast of high ROI, largely because they are so small, reaching people who had a high likelihood of buying anyway. Marketers see the high campaign ROI from micro-targeting but fail to realise that the overall return to the company may well be lower.
  3. It’s fashionable!!!

Going forward, we clearly have a lot to learn in the space of microtargeting. Sharp and Daneberg highlight the learning priorities for marketers as follows:

  • Learn to appreciate the crucial difference between campaign ROI and company return. And how different activities perform regarding these different metrics.
  • Learn the difference between direct response sales activities and those activities that build brands
  • Develop and apply an experimental, test and learn mindset throughout all activities, with regards to targeting – what works, what doesn’t, what works better and under what conditions

For now, Sharp and Daneberg urge businesses to be wary when it is proposed that large amounts of company money should be spent on systems to design micro-segments and deliver mass customised advertising. Right now, there just isn’t the researched evidence to support big claims about micro-personal advertising influencing purchasing or other choices.

And for the future, Sharp and Daneberg implore marketers to abandon the fanciful notion that there is a more powerful way of unlocking a hidden power of manipulating people. Marketers should always concentrate their efforts on finding ways to cost-effectively and profitably reach larger audiences, not smaller audiences. If marketers must limit the scale of their advertising, e.g. because their budgets don’t allow a greater scale, then traditional behavioural targeting, based on delivering true relevance to their audiences will hold them in good stead.

Professor Byron Sharp, Director and Dr Nick Danenberg, Ehrenberg Bass Institute for Marketing Science

*Based on Analysing research from Michael Kosinski and David Stillwell’s (with colleagues) main experiment to test the responding click through rates of people targeted with ads suited to their psychological profile (introvert or extrovert), they found that across all 3.1 million exposures, CTRs were a bit lower overall than the industry average for Facebook ads.