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In a world of information overload, targeted advertising can work in your favour.

As brands adopt more sophisticated technology, the advertising you see becomes more targeted. If you’re a sports fan, you are now more likely to see ads from sporting brands pop up when you’re watching YouTube. If you’ve been researching a product to buy online, it’ll be no coincidence that you will see an ad for that product waiting for you when you next open Facebook.

Whether this new world of hyper-targeted advertising makes you worried, or glad to be finally seeing ads that are relevant to you, will depend on how you think about privacy, say Dr Alvin Lee, Director for the Master of Marketing and Dr Michael Valos, Director for Industry Engagement at Deakin University.

‘This depends on the person’s perceptions of privacy and if they find the practice of being stalked or followed “scary or annoying”. Some consumers will just see it as a fact of life, while others who are very concerned with privacy and civil liberties might boycott those brands and create a negative word-of-mouth amongst peers,’ Dr Lee and Dr Valos say.

Before you install an ad blocker and delete your social media accounts, it helps to have some understanding of how digital advertising works. And in a world of information overload, how more targeted advertising can work in your favour.

What are the benefits of more targeted advertising?

These days, it’s increasingly common for companies to ask you to sign up and provide some of your personal details so they can add you to their database – whether it’s part of a loyalty scheme, a competition or when you buy something. ‘It is a fact of life that people will monitor and contact you,’ Dr Lee and Dr Valos say.

Alexander Crowden, Social Media Coordinator at Deakin University, explains the pros and cons: ‘The main con is that people feel that they are being followed because they see ads in their personal social feeds based on what they’ve liked, said, or websites visited. However, it results in ads and content that are more likely to interest them if the companies who booked the ads and created the content implemented good targeting.’

The plus-side to providing your details is that you’re more likely to get relevant offers that don’t seem like ‘junk’ to you. Dr Lee and Dr Valos explain: ‘this should mean less annoyance with the amount of advertising you receive’.

‘Possibly the company’s database might indicate the type of advertising the consumer wants in terms of emotional or factual and modify the messages based on an individual’s characteristics. The idea is that customers “pull” digital information towards them. The old “push” idea does not work anymore on digital. People will choose to ignore, block or not to interact with messages that they find useless.’

How does social media advertising work?

When companies purchase Facebook ads they can target them to potential customers based on a wide range of factors, Crowden explains. ‘The ads shown to you depend on which pages you like, whether you engage with Facebook posts and click on them, and your age, location and interests.’

Facebook ascertains your interests based on your online behaviour, then serves you ads accordingly. ‘When companies buy Facebook ads, one of the targeting options available is to target the people who like your page. You can also exclude people who already like your page to contact new people. And if you like Rebel Sport’s and the AFL’s Facebook pages, advertisers can target you as someone interested in football,’ Crowden explains.

Facebook also shares ads based on their quality, he adds. ‘Whether an ad gets clicked on, engaged with just after first posted affects how many people it will be shown to. If it’s engaged with a lot immediately it will be shown to more people as Facebook grades this as “good content”. Poor performance after posted will result in less people seeing the ad.’

The other type of ad you might see when you’re browsing Facebook is known as retargeting. This is when advertisers target you based on the URLs you’ve visited. It explains why those exact shoes you were eyeing off yesterday have suddenly popped up in your Facebook feed today. Curious coincidence? Not at all.

What’s next for social media advertising?

According to Facebook’s 2016 annual report, the company generates ‘substantially all’ of its revenue from advertising. But Facebook announced late last year that it expects to see a slowdown in advertising growth this year, because it’s reaching a limit on how many ads users will tolerate in their feeds. ‘Based on user feedback, it’s unlikely newsfeeds will see more ads in them,’ Crowden says. ‘There certainly is a saturation point and we’re getting close to that.’

Instagram ads are also increasing – and nearly at their limit too, in Crowden’s view. Instagram Stories became available for advertising in March, and Instagram’s main feed has contained ads since 2014. ‘When booking an ad through Facebook’s Power Editor, you can add Instagram as a place where ads are shown as well as Facebook or can target Instagram alone,’ Crowden explains.

Facebook is working hard to expand its technical infrastructure and deliver ‘new products and services’ throughout 2017 – possibly to help balance out its reliance on advertising.

In the meantime, you can expect to see advertisers becoming more creative. Rather than increasing the quantity of ads, it will be all about cutting through the clutter with innovative types of content. ‘Instead I think it will be up to advertisers to trial different types of ads such as carouselsCanvas, video ads and whatever is next,’ Crowden predicts.

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