The Future of Targeting in Performance Marketing

10 years ago, when I started my first digital advertising campaign, I was fascinated with how easy it is to target users based on their interests, demographics, or location. Back then, the digital adverting game was a pure math game.

but now targeting and digital advertising are no longer a pure math game

Data Sampling and its Impact on Digital Advertising:

Data sampling is the process of using a smaller subset of data to represent a larger population to draw inferences and make predictions.

In Facebook Ads, data sampling is used to estimate metrics such as reach and frequency and test different targeting strategies and creatives. In Google Ads, data sampling is used to estimate metrics such as click-through rate (CTR) and conversion rate, as well as to optimize campaigns and improve targeting.

While ad platforms always mention the use of data sampling can help achieve better performance, it is also worth mentioning other impact data sampling can have, such as

1. Reduced accuracy: Data sampling can lead to estimation errors and reduce targeting accuracy. The smaller sample may need to accurately represent the larger population, leading to incorrect inferences and suboptimal targeting.
2. Increased costs: Data sampling can increase the cost of targeting as advertisers may need to use more data or run more experiments to obtain a representative sample.
3. Inefficient targeting: Data sampling can result in inefficient targeting as the sample may not reflect the actual target audience, leading to suboptimal results.
4. Lack of transparency: Data sampling can also lack transparency as it can be difficult to understand the methodology used to obtain the sample and to determine the accuracy of the results.
5. Bias: Data sampling can also introduce bias if the sample is not randomly selected or if the sample is not representative of the target audience.

Targeting Challenges:

• iOS 14: With the release of iOS 14, Apple introduced new privacy features that limit the ability of app developers to track user data. This has resulted in a significant decrease in the accuracy of targeted advertising on iPhones and iPads. The new privacy features restrict access to the Identifier for Advertisers (IDFA), which is a unique identifier used by advertisers to track user data. As a result, marketers now have limited information about the users they are targeting, making it more challenging to deliver relevant advertisements.
• Ad blockers: Ad blockers are software programs that prevent advertisements from being displayed on websites and mobile apps. The increasing use of ad blockers has made it more challenging for marketers to reach their target audience. Ad blockers not only block display ads but also limit the use of tracking technologies, making it harder for marketers to deliver targeted advertisements. Advertisers are now forced to look for alternative methods to reach their target audiences, such as native advertising or influencer marketing.
• Cookies limitation: Cookies are small text files that are stored on users' devices to track their behavior on websites and mobile apps. However, the widespread use of cookies has raised privacy concerns, and several countries have introduced regulations that limit their use. For example, the European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) both restrict the use of cookies. As a result, marketers are limited in their ability to track user data, making it harder to deliver targeted advertisements.

Future of Targeting:

As privacy and data protection laws continue to tighten, we will see more limitations when it comes to targeting a narrow audience. This means that advertisers will have to find new ways to reach their desired audience without relying solely on personal data. In the future, targeting will have to be done in a more privacy-sensitive manner, and advertisers will have to find new ways to reach their audience.

Recently, Facebook announced an update to its policies regarding fair use and advertising. The company has stated that it will no longer allow advertisers to target ads based on ethnicity in the United States. This change is a response to growing concerns about fairness and discrimination in advertising.

Advertising platforms are trying to move away from targeting so they can reduce the risk of getting sued and also so they can increase their ad placement sales and profitability. By moving away from targeting, advertising platforms can offer more ad placements to a wider range of advertisers, thereby increasing their revenue. This change will also allow advertising platforms to focus on improving the quality of their ad placements and providing a better user experience for their users.

What can you do know to improve your targeting?

1. Exclude non-target audience: Instead of focusing on your target audience, consider excluding the audience that you know is not part of your target audience. This will help you reach your desired audience more effectively and save money.
2. Narrow targeting: Be aware that the more narrow your target audience is, the more expensive it will be to target them. Platforms charge more to reach smaller audiences and increase frequency, so consider this when setting your targeting parameters.
3. Use standout creatives: The most efficient way of reaching your target audience is by using creatives that can stand out and capture their interest. Make sure your ad creatives are eye-catching, relevant, and engaging to your target audience.

Creative Art, not math is the most underrated competitive advantage you can have in the impact equation in performance marketing; the algorithm will always reward ads that give people what they want.

1. Build first-party data: Building your own first-party data is crucial in improving your targeting accuracy. Invest in collecting customer data through a Customer Data Platform (CDP) or a data warehouse, and feed the hashed customer data to the ad platform through API connections.

In conclusion, the future of targeting and performance marketing is rapidly changing as the platforms continue to update and improve their advertising system. Advertisers must stay informed about these changes and adapt their targeting strategies accordingly in order to remain effective and competitive in the ever-evolving digital advertising landscape.