Prior to the digital age and the rise of the internet, advertisers took any opportunity they could to publicize their ads, whether that meant via billboards, the newspaper, or television time. However, over the years with a steep increase in the collection of user data, generating business has become much more methodical and marketing research is a key component in helping companies target their advertising more accurately. In order to determine the best platforms to reach their target audience, companies across the country spend surplus amounts of money to access user data. According to Forrester Research, U.S. companies spend $2 billion dollars a year to gain access to user data. But how exactly is this personal information being collected?
The first way, and arguably the most familiar, is through the collection of cookies. Most web pages present online users with a prompt to either “accept or reject cookies”, however, few users know what this actually means. By accepting cookies from a web page, you are allowing websites to install cookie scripts on your device. While all websites are built using first-party scripts—owned by the same owner as the domain—it is also important to consider that third-party scripts may also be in place via banner ads or social sharing buttons. The data from these cookie scripts is then labeled with an ID unique to you and your device. This further empowers websites to identify and remember you as a specific individual using their platform. Companies then use this information to improve and personalize your browsing experience. For example, they can tag your most recent place on a page, save your login information for future access, and even generate personalized suggestions based on your previous activity. However, this data works beyond simply improving the user experience. Instead, when accompanied by personally identifiable information (PII), such as your name or address, cookies can be used as a powerful tool in the world of business, advertising, and marketing. In fact, this information is so helpful to businesses that a whole market has been dedicated to collecting and selling consumer data. Companies that specialize in this exchange are known as data brokers.
Data brokers aggregate information from a variety of sources, process this data, analyze it, and license it to other companies. This information is used by businesses to effectively tailor marketing messages to specific audiences and decide what platforms they want to invest the most advertising in. In other words, your online data is being bought and sold to companies all over the world in order for them to more effectively conduct business and generate revenue.
A particularly profound example of this is billboards. When companies receive PII from data brokers—such as an individual’s race, gender, political affiliation, and household income—they immediately associate this information with the IP address on someone’s device like a phone or laptop. By having access to a user’s IP address, companies are able to track the location and traffic patterns of millions of people as well as associate these patterns with individualized information. Businesses then use this data insight to determine the best location to display their billboard based on the demographic they want to target. For example, if the data reveals that an average of 600 white, middle-class women between the ages of 18 and 26 drive on the I-696 every day, companies with products suited for this demographic are automatically more inclined to invest in ad space on the I-696. The same approach applies for digital advertising, including platforms like social media and websites.
While gathering digital insights is a very involved process that requires taking complex data security measures, it has proven itself to be extremely beneficial for businesses that utilize it to improve their marketing approach. With in-depth user data, companies are able to more efficiently invest their advertising budgets where they see fit. Not only does this make for more intentional spending but also a subsequent increase in the amount of revenue generated from ads. In fact, studies revealed that targeted ads based on a user’s online presence have a 40% higher chance in leading to a financial conversion over non-targeted ads. So while the cost to access the information collected from data brokers is expensive, for the majority of companies, the increase in business makes it a worthwhile investment.
