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Will Online Advertising Ever Be Accurate?

by Colin Strong , 23.07.2013

We are used to the idea that online advertising is increasingly personalized and amended in real time to target those individuals with a profile most likely to purchase the product. But what if the information that is held on consumers is, shall we say, a little shaky? A recent report by Enliken found that as much as 50% of data used by companies for targeting advertising is in fact incorrect.

The study asked consumers to rate the data held on them by online companies who sell this for targeting purposes. Yahoo had both the lowest accuracy score at 40% and Google led the pack at 68%. A rather vivid example of the level of inaccuracy of personal data was that overall, gender was found to be accurate only 69% of the time.

So what are the implications of this for brands? Well in the defence of companies that use predictive analytics, it does not take much of an increase in hit rates to significantly reduce costs. So being accurate 50% of the time is a whole lot better than 5% or even none of the time. And the math works on the basis that accuracy will be good enough for the total population being targeted, but picking any individual will inevitably be less precise.

But is there a wider point that consumers may start to tire of inappropriately targeted advertising? And when are brands going to be at a point where they know enough about us that we consistently find advertising helpful and timely as opposed to pushy and ill considered?

recent study by Cambridge University suggests that brands may soon have more accurate targeting in their grasp. The research found a strong link between Facebook Likes and a variety of personal attributes including religion, politics, race and sexual orientation. So, as we inadvertently bleed information about ourselves online, advertisers will get more adept at picking up information about our inner selves. So it's likely that the study of online behaviors (such as browsing styles) will become a major weapon in the marketers' armoury to predict our product and brand preferences, thus potentially providing huge improvements to advertising tools such as Facebook's 'Custom Audiences'.

But will the targeted advertising model ever really be good enough on its own? Much of online advertising has less than a 1% click through rate; can brands really learn enough about consumers to significantly improve this? We may start to see the rise of consumers who want better engagement with brands begin taking matters into their own hands in the shape of the 'Intention Economy'. This is where consumers collect and organise their own personal data and then set out their preferences, making available an RFP to brands to compete for their business. So instead of being passive recipients of advertising, consumers will state the products they are looking for along with sufficient information about themselves so that brands can tailor their offer to meet the consumer's needs. Doc Searls, the father of this movement, gives an example: "A car rental customer should be able to say to the car rental market, 'I'll be skiing in Park City from March 20-25. I want to rent a 4-wheel drive SUV. I belong to Avis Wizard, Budget FastBreak and Hertz 1 Club. I don't want to pay up front for gas or get any insurance. What can any of you companies do for me?' -- and have the sellers compete for the buyer's business."

However, given there are not a great number of successful Intention Economy brands, one may wonder what will become of the model. The saviour of the Intention Economy may be starting to appear in the shape of personal data lockers, with the likes of Mydex in the UK and Personal in the US. These companies specialise in helping consumers to 'curate' their personal data to better manage their relationships with brands, government agencies and the like. And there has been significant success with some early focused versions of these stores. Money Supermarket.com, for example, is a UK website that gives advice to consumers on how to get the best deals and save money. Their scheme, Cheap Energy Club, requires you to input details of your current energy tariffs and state the amount of saving for which you would be willing to switch. Available tariffs are then reviewed each month and you are alerted when switching would trigger your target saving.

In fact it is likely that the personal data market will go both ways - ever smarter more intimate targeting by advertisers combined with consumers having more power to set their own agenda. But one thing is for sure, the understanding and management of the personal data market is now one of the biggest opportunities for brands.