Can relevant digital ads be too relevant?

Discussion
Photo: @criene via Twenty20
Oct 14, 2020
Tom Ryan

Surveys regularly show that consumers want more relevant digital ads. Yet a new study concludes that being relevant to specific consumer needs is often limiting and may lead to missing out on new customers.

The research from Performics, Northwestern University and Microsoft Advertising examined the likelihood of consumers to select a search ad result based on their mindset (“Goal-Driven” or “Item-Driven”) and the type of ad experience (“Limited” vs. “Expanded”).

The study basically concluded that hyper-relevant ads work for online searchers with an “Item-Driven” mindset, or those looking for a specific product or service. However, they don’t work for searchers with a “Goal-Driven” mindset — those with a goal in mind (e.g. build muscle) which can require a variety of products and services (e.g., protein powders, yoga mats, healthy recipes, gym memberships) to attain.

The study further found:

  • Currently, no matter the mindset, most brands show “Limited” ad results targeted to specific queries. Yet more than half of consumers are in a “Goal-Driven” mindset and 54 percent of “Goal-Driven” searchers continued to search, because they didn’t find what they were looking for;
  • While repeat purchasers search with an item in mind (e.g., buying the same protein powder every month), new consumers to a category or brand are more likely to be in a “Goal-Driven” mindset. Brands have a 26.7 percent higher chance of finding a new customer when targeting a “Goal-Driven” vs. the “Item-Driven” mindset;
  • When presented with an “Expanded” set of ad results with associated products related to their goal in the ad mix (vs. “Limited”), consumer perception of usefulness of ads increased 10 percent.

Ashlee Humphreys, associate professor at Northwestern Medill, recommended to brands, “For consumers in an Item-Driven mindset, give them what they want, but also highlight associated products within your search, social and native site experiences. For Goal-Driven consumers, predict all the ways you can help them achieve that goal by testing a variety of experiences, showcasing associated products and bundles of products. Most importantly, don’t overlook the value of Goal-Driven search queries, which is where you will find new users to the category, one of the most powerful sources of growth.”

DISCUSSION QUESTIONS: What lessons can marketers draw from this study? Do you agree that hyper-relevant digital ads are often not optimal for new consumers to a category or those with a goal-driven mindset?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The entire digital ad channel is in its infancy and there is much to learn; the challenge is to be willing to listen, learn, and adapt."
"When consumers are in the research phase on their path to purchase a specific item it’s much more effective to serve up options, rather than a singular focus."
"Ultimately, customers, not retailers, will decide what level of targeted ads is acceptable."

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11 Comments on "Can relevant digital ads be too relevant?"


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David Naumann
BrainTrust

Serving “item driven” ads is much easier than predicting or inferring complementary products or services by trying to understand consumers’ underlying goals. That said, it makes sense, as suggesting products and services that help consumers achieve their goals (that are inferred based on baskets and browsing sessions) would be more valuable to consumers than promoting the same product they just browsed. If retailers can do this effectively, it would garner more goodwill and loyalty from customers.

Suresh Chaganti
BrainTrust

This is interesting research and intuitive to understand. Do brands need to show only the product related to their search or related ones that expand their horizons? There are two aspects to this. First is establishing whether a customer has an item-driven mindset or a goal-driven mindset. The second is matching the recommendations with the intent. Brands should experiment with all four combinations of intent and types of ads served. It becomes much easier to recommend for existing customers with much richer purchase and browsing history.

Rodger Buyvoets
BrainTrust

Being relevant doesn’t always mean hyper-personalization. Instead, this is highly dependent on the intent of the user – which not only accounts for ads but in communications across the whole customer journey (from acquisition to retention strategies). So yes, I definitely agree. I also think that if retailers were to research more deeply into this, they’d find that there are more aspects of shopper goals and intent that will require different ways of showing ads and/or messages across the entire funnel.

Jeff Weidauer
BrainTrust

Digital marketing is full of both promise and pitfalls. The entire digital ad channel is in its infancy and there is much to learn; the challenge is to be willing to listen, learn, and adapt.

Patricia Vekich Waldron
Staff

When consumers are in the research phase on their path to purchase a specific item it’s much more effective to serve up options, rather than a singular focus.

Ralph Jacobson
BrainTrust

Cross-selling and up-selling are some keys to driving new growth for both existing and new customers here. There is so much more personalization to capture with online selling. I believe we will see even more dramatic relevancy gains as technologies home in even further.

Bindu Gupta
BrainTrust

A single consumer could be item-driven or goal-driven at different points of time or consumer journey phases. Marketers have to test and learn based on where a consumer is in their journey to be more effective.

Craig Sundstrom
Guest

“Half of my advertising is wasted, I just don’t know which half.” Jon Wanamaker c. 1900 … it sounds like not much has changed.

I didn’t read the (whole) study, so I’ll refrain from being … uhm, “hyper”-critical, but this sounds like one of those studies of the obvious: highly targeted ads work when the search criteria are clearly defined, but wither when they become vague. Who’d’ve thought? I suspect the limitation in advertising right now (and always, really) is money. Casting a wide net by trying to tie a product such as, say, detergent, to searches like “get clean” or “make girlfriend happy” may produce results, but will prove too abstract to departments with limited budgets.

Casey Craig
BrainTrust

Targeted ads are a great way for retailers to reach new customers. Though we are still learning how to best use this technology, it is helpful for customers to see products that they are looking for, rather than be inundated with vague websites, services, and product offers. Ultimately, customers, not retailers, will decide what level of targeted ads is acceptable. If customers feel the use of this technology oversteps their privacy, it will show in the bottom line.

Carlos Arambula
BrainTrust

It’s an issue of pitching to the converted — who is likely to have a brand or product preference in place already — vs pitching to the potential market.

In emerging categories, or when targeting a category with a very low consumer penetration, it is always better and sometimes easier to grow the business targeting new entries to the category, instead of a small number of consumers already loyal to a competing brand.

Katie Hotze
Guest

Busy shoppers don’t have time to think; they need solutions. Any engine that thinks for them will have a tremendous advantage in earning the sale. This is why the goal-driven searcher doesn’t convert, they’re left to think about the application of the promotion to their goal and ultimately click-out.

wpDiscuz
Braintrust
"The entire digital ad channel is in its infancy and there is much to learn; the challenge is to be willing to listen, learn, and adapt."
"When consumers are in the research phase on their path to purchase a specific item it’s much more effective to serve up options, rather than a singular focus."
"Ultimately, customers, not retailers, will decide what level of targeted ads is acceptable."

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