Know Your Audience: How to Take Full Advantage of Targeted Advertising

Alright, you've got your website up and running, launched your advertising campaigns, and nothing. You're not getting the traffic and leads you were hoping for. What happened?

While there could be many reasons for this, it's good to start with the easiest solutions. Failing to identify your target audience is one of the common mistakes new business owner's make.

Your advertising campaigns seem to be successful but, are you reaching the right customers? For example, if you sell high-end electronic accessories, you'd want young adults 18-35. Not small children under the age of 5.

If you want to learn more about targeted advertising and how to take full advantage, then keep reading.

What Is Targeted Advertising?

Targeted advertising refers to placing ads based on demographics, users' buying history, users' search history or even shopping behavior.

With targeted advertising, both the business and the audience benefit. Businesses ensure they are bringing in those customers most likely to buy from them. Likewise, consumers only see businesses most likely to meet their needs or match their shopping behaviors.

Targeted Advertising Examples

A targeted ad is an ad which targets a specific group of consumers. But, there are two forms of targeted ads worth mentioning a little more in-depth: social media advertising and search engine advertising.

Social Media Advertising

93% of marketers use Facebook advertising regularly. Which makes sense with 1 billion people seeing ads on Facebook each month.

Those stats are due in no small part to targeted advertising. When a business pays for advertising on Facebook, it has the option of choosing who to target the ad for. A marketer can choose from a variety of choices to include age and buying history and behavior.

Upon the ad's launch, those users meeting the criteria set will begin to see it in their newsfeeds. The ad will run for the length of time the marketer designated or until the set budget has run out.

Search Engine Advertising

Search engine advertising ads appear on search engine result pages (SERPs). These results can either by organic (using SEO to rank higher) or pay per click (paid ad space on Google). Targeted advertising here refers mostly to PPC advertising. This is about the only difference between the search engine and social media advertising.

Advertisers have the same abilities as Facebook as they do with Google. They can choose between age and buying history and behavior among others.

The benefit to this is being at the top of the SERP where users will be more likely to see your link and click on it. And with Google averaging around 40,000 searches a second, you'll need every advantage.

Benefits of Targeted Ads

As you've guessed there are many benefits to targeted advertising, one of which you're sure to have guessed is higher ranking on Google. However, things like click-through rate, conversion rate, and ROI are also affected by targeted advertising.

Click-Through Rate

Click-through rate refers to the number of times your ad is clicked on by a consumer. Targeted ads help to increase this by making sure those who are most likely to click your ad will see it. 

While you might be impressed with the numbers you've seen on non-targeted ads, but if your revenue is still low you check to see if you're looking at impression instead of clicks. An impression is when a user sees your ad but does not click on it. 

The formula for click-through rate looks like this:

(total clicks on Ad) / (total impressions) = click-through rate

The key to targeted ads is not to get people to see the ad but to get them to click on it. Click on the ad is the first step, and most important, to increase your conversion rate.

Conversion Rate

Conversion refers to a consumer taking any action you desire them to take. For example, filling out and submitting a contact form, clicking on a link on a landing page, etc.

The conversion rate is then factored by dividing the number of visitors by the number of conversions.

(Total visitors) / (Total conversions) = conversion rate

Similar to the click-through rate, getting people to see your ad is meaningless unless they click on it and spend money. Conversion rate helps you measure the success of an ad by knowing how many visitors are actually completing the actions intended of them.

Return on Investment (ROI)

Ranking on Google, exposure on Facebook, click-through rate, and conversion rate, all lead to ROI. Why? Because the ultimate goal of any investment is to see a return. And when you purchase ad space or run a PPC or Facebook campaign, you are investing in your company's advertising. So naturally, you want to see a return.

In this case, your return will be seen by looking at total revenue generated by your advertisements and the total amount spent on those advertisements. If the revenue generated is greater than the money spent you're in good shape.

Click-through rate and conversion rate are all measurements to help you pinpoint where you might be losing out on your ROI or where you could increase your ROI. 

ROI is not profit. Profit refers to the total revenue from all sales and the total money spent over a period of time. ROI refers to only the revenue generated by the investment and money spent on the investment.  

Targeted Ads and Your Business

The benefits of targeted advertising on a multi-level scale. Saying the benefits are numerous doesn't quite explain convey the true cumulative nature of the practice.

By achieving a high ranking on SERPs and social media the impressions are increased, those impressions are controlled by exposing the ad to those most likely to click on them. This increases the chances for clicks, increasing click-through and conversion rates. All to achieve the ultimate goal, increasing ROI.

Targeted ads could help to expand and grow your business by increasing revenue and driving traffic. If you have questions about your marketing strategy and targeted advertising contact us today!