Paying for promotion: How do targeted ads work?

It`s almost scary: You research the internet to see what vacuum cleaner to buy, and the next day all the advertisements you see are about different kinds of vacuum cleaners. If you make use of any of the big social media networks you come across targeted advertisement every day, but how does this work?

Gathering information

The most common method used to gather information on a person is by using cookies. You have probably come across a popup asking for permission to use cookies hundreds of times. If you click to allow all cookies, a file called a cookie is created on your computer. This file stores information on your behavior on the website. When you encounter a space for advertisements later on, the algorithm uses the information stored in the cookies to match the advertisement to the person using the computer[1].

Figure 1: An cookie popup by Juan Martin Garcia


Not all targeted ads are spot on

In theory, targeted advertisements are a great solution to let a internet user only see advertisements for things he is interested in buying. Unfortunately, targeted ads are not yet always accurate. The main problem is that cookies are not good at tracking if you have actually bought something. Take for instance the example of the vacuum cleaner in the beginning of this blog. Say you bought the vacuum cleaner after one hour of searching for different vacuum cleaners on the internet. You now get a few days worth of advertisements for vacuum cleaners, when the last thing you need is a new vacuum cleaner.

Another problem is that you are not looking to buy every single thing you search for on the internet. Say you have to write an essay on the island of New Zealand, so you are looking for information on the internet. You will probably get a lot of advertisements for plane tickets to New Zealand while you (most likely) have no interest in actually going there.

How about my privacy?

A lot of people see targeted advertising as a danger to privacy. The advertisements can even follow you across different devices by analyzing your behavior and matching that to their database of your person.

I personally think that the real danger to privacy is the tracking of internet behavior behind the scenes, the targeted advertisements merely make this danger visible. This does not mean that targeted advertisement is not to blame. If targeted advertisement did not exist, there would be a lot less need for storing our digital information from a commercial perspective.

Targeted advertising is set to become only bigger more effective in the years to come. While it can bring a lot of value to companies and society, we need to be careful about the issues surrounding privacy.  Governments are bringing more regulations about the use of big data in place, and in the meantime it would not hurt us to spend some more time out of the digital world.