The New Madgicx Guide to Targeted Advertising

Ever feel like your ads are wandering aimlessly in the digital wilderness, hoping to bump into the right audience by sheer luck?

In a world cluttered with ads clamoring for attention, targeted advertising cuts through the noise like a laser.

Today, we'll unravel the mysteries of targeted advertising and help you transform your marketing strategies into precision-guided masterpieces. Buckle up as we journey into a world where hitting your target audience isn't just a hope—it's a guarantee.

What is targeted advertising?

Targeted advertising is a strategy where businesses tailor their advertising to specific groups of consumers based on characteristics like demographics, interests, behavior, or location.

Instead of casting a wide net, targeted ads aim to reach specific people who are the most likely to engage with the product or service.

Suppose you’re promoting an eco-friendly knitwear brand. You’d want your ads to reach eco-conscious shoppers and sustainable fashion enthusiasts rather than, say, someone browsing for golf clubs.

Think of it as matchmaking—except instead of finding "the one," you're finding your perfect customer.

How does targeted advertising work?

Targeted advertising harnesses user data to identify and reach specific groups of consumers. On platforms like Meta and Google, for example, these data points are supplied for you—all you need to do is select which audience qualities you'd like to use when setting up your campaign.

When a user fits the criteria of your targeted ad, the ad platform delivers your ad to them in real time.

The benefits of targeted advertising

You might wonder why you'd want to go to great lengths to personalize your advertising, especially when data and privacy laws are making it increasingly harder for businesses to do so.

The proof, as always, is in the results.

According to some studies, targeted ads are up to 5.3 times more effective in increasing CTR, and around 37% of social media users buy a product they have been targeted with.

On top of that, according to McKinsey, 71% of consumers expect personalization, 76% are frustrated when they don't get it, and 78% are more likely to make repeat purchases from companies that do.

Consumers (and your results) demand targeted and personalized advertising in 2024, and given this momentum, these needs will only increase as more actionable data collection strategies and tech emerge.

Types of targeted advertising

While there are hundreds of ways to personalize and target your campaigns, they typically fall into a few strategic buckets. Let's cover some of these (as well as examples of each) so you can get some inspiration for your campaigns.

Contextual

Contextual advertising refers to a targeting strategy where ads are placed on relevant pages. For example, I was reading a review site about the best cars of 2024, and surrounding the list were ads for purchasing a new car.

Since this page is about consumer car reviews, it's a great place for any automotive advertisers to spend their money as they can guarantee this content is something the readers would be interested in.

Behavioral

Behavioral targeting refers to the strategy of using data about your audience's actions to personalize their experience.

While contextual targeting simply needs a relevant theme, behavioral targeting dives into the psyche of your audience and requires a bit more nuance. Take this great example from Netflix:

In this email, they used the viewer's behavioral data (a recent binge of The Queen's Gambit) as a segue into a conversation about finding a new program to watch. They then used their algorithm to strategically recommend other shows similar to The Queen's Gambit across a variety of categories to entice the user to log in and watch another program.

Geotargeting

As the name implies, geotargeting is based on the intended audience's location. When searching for a Chevrolet dealer, the first result I see is from a local dealer using location-based targeting with their Google Ads:

This feature is incredibly useful for brick-and-mortar businesses, as well as companies that only service specific areas.

Social media targeting

Social media targeting is the practice of targeting users on social media platforms with ads. This can refer to any of the social networks, but the most popular social media advertising platforms are Facebook, Instagram, LinkedIn, YouTube, X (formerly Twitter), Snapchat, Pinterest, and TikTok.

These ads can appear in various formats, such as images, videos, or carousels, and are designed to engage potential customers and drive specific actions like website visits, purchases, or sign-ups.

The advantage of social media targeting is its plethora of data and advanced targeting features, as well as the sheer volume of users on the platforms. This allows advertisers to reach specific audiences without having to gather (or purchase) this data themselves.

Platform and device targeting

Next up are platform and device targeting. Platform targeting simply refers to targeting on a specific platform—this could be a social media platform or another channel like email, etc.

Device targeting, on the other hand, is a strategy where businesses target ads based on the type of device they're using, like:

• Device type (smartphones, tablets, computers)
• Operating systems (iOS, Android, Windows)

If you're advertising your iOS-only mobile app, you'd likely target users with that operating system to ensure your ads are being delivered to an audience who can actually use your product.

Retargeting

Last (but certainly not least) is retargeting. Retargeting is an advertising strategy that targets people who have previously interacted with your brand but didn’t take a desired action (like making a purchase or signing up). It works by tracking visitors through things like cookies and tracking pixels and showing them ads as they browse other websites or social media platforms.

If a customer visits an online store and looks at a pair of shoes but doesn't buy them, retargeting ads can display those same shoes later when they browse other websites or on social media, nudging them to complete the purchase. Tools like Facebook's custom audiences make it easy to capture this data and retarget users, even if you don't have their contact information in your database.

Studies show that people are 3x more likely to click when shown a retargeting ad, making this strategy a go-to in 2024.

Best practices for targeted advertising

1. Clearly define your audience

Before you ever hit publish, you need to step back and clearly define your audience. Typically, this is done by creating an ICP (ideal customer profile) or buyer persona.

An ICP defines the perfect customer for a business's offerings in terms of firmographics or other organizational characteristics, while a buyer persona represents a detailed profile of an individual buyer based on demographics, behavior patterns, motivations, and goals.

Ideally, any advertising campaigns you create should be aimed towards one of these two segments. If you're not sure where to start, tools such as Meta Business Suite Insights (formerly Facebook Audience Insights) can provide valuable data that helps shape your targeting strategy. (HubSpot also has an incredible Buyer Persona Template you can use to formally document them for your organization).

You could also reach out to your sales team to ask what qualities make a perfect customer or compile a list of the top demographics from your best customers using data in your CRM.

2. Choose the right platforms

Next, it's crucial to choose the right platforms for your ads. After all, if you're advertising senior care centers on TikTok, you might not be reaching the right demographic, regardless of how well-designed your ads are.

Each platform caters to different audience types and behaviors, so advertising where your audience is most active is always the smart choice.

Many marketers choose to start with social media advertising (like Facebook ads) due to its straightforward setup, the large number of users on each platform, and the vast amount of built-in audience data within tools like the Facebook Ads Manager.

If you're unsure of which one to use, ask yourself the following questions:

• Who is my target audience, and where do they spend their time online?
• What are my advertising goals? Different platforms can be more effective for different goals, such as brand awareness, lead generation, or direct sales.
• What is my budget? Each platform has some minimum spend requirements, cost per click or impression, and an overall ROI. These are things you should take into consideration before you launch a campaign. (P.S. You can use tools like our Facebook ad cost calculator to find out how much you should be spending on each platform to reach your goals).
• What types of ads do I want to use? Each digital advertising platform offers different ad formats. Decide which formats will best convey your message and which platforms support those formats.
• How sophisticated are the targeting options? Look into how detailed you can get with the platform’s targeting capabilities. Platforms that offer advanced targeting options, such as behavioral, demographic, geographic, or psychographic segmentation, typically provide a better return on investment by reaching more specific audiences.

You can also read our guide on how to make a Facebook ad if you want to dive right in after reading this article! (Side note: Creating ads on Facebook requires you to have a Facebook Business Page first).

3. Create eye-catching (and relevant) ads

The effectiveness of your ads depends not only on the relevance of your ad but also on the quality of the ad itself and how you use the format to convey that message.

Luckily for us, most platforms offer various types of ads and sizes that allow our ideas to truly come to life. That being said, the creative portion is still up to us.

Start by using high-quality visuals that stand out and resonate with your target audience. Using contrasting colors and concise copy are some great ways to make your ad more visually appealing (and understandable). Take this example from monday.com:

Even if you weren't aware of this company before and didn't read the ad copy, you immediately understand that it's a project management app for teams. This is the sort of understanding you should be aiming for.

If you need more ideas, you can use tools like the Facebook Ad Library to browse through thousands of examples from other advertisers (and even your competitors).

4. Improve your marketing efficiency with targeted advertising tools

If you needed to dig a large hole, you could use a large spoon to get the job done. But why would you when shovels exist?

Similarly, there are dozens (if not hundreds) of manual tasks that come with running targeting advertisements. And while you could do them all manually, there are marketing tools and automation solutions designed to streamline these processes, like micromanaging your budget optimization or turning underperforming ads off.

Utilizing these tools can significantly reduce the time and effort required to segment audiences, schedule ads, and analyze performance data, allowing you to focus more on strategy and creative development (aka the "human stuff").

By leveraging the right tools, you can more effectively target your desired audiences, personalize your messaging, and scale your advertising efforts to meet (and exceed) business objectives.

For those specifically looking to optimize their targeted advertising on Meta platforms (Facebook and Instagram), Madgicx offers a suite of tools tailored specifically for this purpose:

• Audience Launcher comes packed with over X pre-made targeted audience segments that you can implement with just a few clicks, streamlining your advertising campaign setup process.
• Audience Studio offers advanced interest targeting and detailed performance analytics, giving you deep insights into specific audience segments.
• The 360 Meta Audit provides insights into your ad performance across different demographics, locations, time of day, and audience types, enabling you to optimize your campaigns with maximum precision.
• AI Marketer acts like an always-on media buyer, making optimization recommendations based on data drawn directly from your account. Developed by experienced Facebook ad specialists with more than ten years of experience managing billions in ad spend, it's like having a built-in expert advising you every step of the way.

But don't just take our word for it—you can try Madgicx for free TODAY by signing up for a 7-day trial.

FAQ

What is an example of a targeted advertisement?

Here are a few examples of some targeted advertising you can run based on the above categories:

Geotargeting - A coffee shop chain wants to promote a new seasonal drink. They use location-based targeting to show ads to people within a 5-mile radius of their store locations.

Behavioral targeting - An online clothing retailer wants to target users who have browsed the "summer dresses" category but haven’t made a purchase. Using behavioral retargeting, they show personalized ads featuring the dresses these users previously viewed.

Contextual targeting - A fitness brand wants to promote its new line of protein powders. Using contextual targeting, they place ads on websites and blogs that feature health and fitness content, such as workout guides, nutrition tips, or articles about building muscle.

What are the pros and cons of targeted advertising?

When done correctly, targeted advertising can skyrocket performance, but it can cost your business a lot of money if you don't pay attention to the legalese involved in handling sensitive data. Consider the following pros and cons before creating targeted marketing campaigns:

Pros:

• Increases relevance and performance: With these strategies, ads are shown to people more likely to be interested in your product or service, making the campaign more effective. This leads to a better return on investment (or ROI), as you're paying for impressions and clicks, which are more likely to result in sales.
• Produces valuable data-driven insights: Platforms that have advanced targeting options typically feature advanced reporting on those audience segments, giving you more insights into what works and what doesn’t. This data helps refine your strategy, improve future campaigns, and better understand your audience.

Cons

• Comes with a slew of privacy concerns: Using cookies, data collection, and tracking to create targeted ads can raise privacy issues for many businesses. On top of this, recent privacy regulations (like GDPR) and changes in tracking policies (like Apple's iOS 14 updates) have made it more difficult for companies to track users and personalize ads. A growing number of users also find hyper-personalized targeting creepy and won't purchase from advertisers using some of the tactics above.
• Increased costs: While targeted advertising can be cost-effective in reaching relevant audiences and improving conversion rates, niche targeting can sometimes lead to higher ad costs per impression or click because you're bidding against competitors for a smaller, more valuable audience.

How effective is targeted advertising?

Studies show that personalized and well-targeted ads significantly improve engagement and conversion rates. Behavioral data combined with contextual data yields a better ROI than broad, untargeted campaigns. According to McKinsey, campaigns using these strategies generate around 40% more revenue than their counterparts.

To summarize it in a word: very.

Conclusion: Targeted advertising in the post-cookie era

As we undoubtedly learned today, targeted advertising offers unprecedented precision and efficiency in reaching specific audiences. By leveraging advanced ad targeting, as well as automated marketing tools, marketers can craft campaigns that not only resonate deeply with their intended demographic but also drive meaningful engagement and conversions.

As technology evolves and consumer behaviors shift, the ability to fine-tune advertising strategies to individual preferences and behaviors will become increasingly crucial. Businesses that embrace these capabilities will find themselves well-positioned to maximize their advertising ROI and stay ahead of the game.