Targeted Advertising: A Glossary

Targeted Advertising: A Glossary

Have you ever been browsing the web and felt like you were being watched? Maybe you were scrolling through Facebook or looking something up on Google, when suddenly you realize there’s an advertisement on the page for those sweet shoes you were thinking about buying earlier in the day. How did the ad get there? How did they follow you? And how are they now 20% off?

Using sophisticated data-collecting techniques, digital marketers can serve custom-built, highly-specified advertisements to you based on your online activity. These targeted ads are displayed to different demographic groups based on where the marketer thinks they’ll be the most relevant.

But what a lot of people don’t understand is how companies can collect and compile data from the time you spend online, and how they use that data to create a better browsing (and advertising) experience for you.


How do data companies collect your digital information?

There are a myriad of techniques that different tracking companies use to document small amounts of digital information, from your URL to your IP address. Here are a few of the big ways that your data is collected.

Clickstream Data — Clickstream data monitors the path you take through a website. For example: You click an image to expand it, then a search bar or a link that takes you to a new page. The sequence of your clicks on the page are logged and used to develop information about the best way to lay out a site.

Cookies — Cookies are text files saved on your machine from a webpage. Typically, cookies are arbitrary sequences of numbers that work as an ID for information saved on a web server. Your information, whether it’s social media login credentials, passwords, or browser viewing preferences, is then saved to a web database.

Whenever you visit the site, the website can access the cookie saved on your machine for your cookie, which it then uses to access information in its database and customize your viewing experience based on your preferences. This might sound intimidating, but don’t worry. Cookies are generally harmless, and the average machine has hundreds of them.

Interested in seeing what cookies are stored on your machine? Click here:

IP Address – Every device that connects to the internet is assigned an IP (Internet Protocol) Address, which is a unique sequence of numbers assigned to your machine, that allows companies to differentiate your computer from all the other computers connected to the network. This is important when sending emails, shopping online, or performing any online request where you send out information that you want to be returned to you personally.

Although your internet service provider (ISP) keeps track of your IP address and personal information, it’s difficult for an advertiser to associate an IP address with a name, address, or age of the user — contrary to popular belief. There are privacy laws in place that bar marketing companies from purchasing IP addresses that are linked to this information. However, data companies can use an IP address to triangulate the region, city, or occasionally even the zip code of the computer accessing the Internet and can use that information to assume certain demographic information about you.

Interested in seeing your IP address, and what information marketers can collect from it? Click here:

Profile Data — When you create a profile online, social networks filter all your demographic info that you voluntarily put in your profile. Based on this demographic information, marketers that advertise on these social platforms can deliver ads that target anything from your age, interests, and location, to the field you work in, your relationship status, and what you typically post about.

Purchase Data This is how websites can recommend things you’ve viewed in the past. Amazon is one of the biggest players in the data-gathering industry. Amazon analyzes items you’ve purchased, put into your shopping cart, or viewed and rated, and then analyzes this information to recommend other products you might be interested in purchasing.

It does this by comparing items you’ve shown interest in with other customers who’ve shown interest in the same items, and then looking at other things they bought. According to Investopedia’s most recent estimates, Amazon has used this technique to increase revenue by up to 30% annually.

Search Data — Search engine giants like Google use information in your search history to show you ads you might be likely to respond to. It also affects the way Google compiles your search results, listing entries that it thinks you might be more likely to click on higher on the page.

Interested in managing the information that Google collects about you and seeing how they use that data? Click here:

URL Tracking – Tracking links work by attaching digital tracking codes to the end of a URL. For instance, a typical URL might look like, but a URL with a tracking link might look like Here, “123456” is the tracking link. Web pages can monitor the number of times a URL tracker is accessed, and use this information to gauge the effectiveness of digital marketing tactics and monitor web traffic.


Why is targeted advertising important?

Targeted advertising has fundamentally changed the way marketers deliver advertisements to the consumer. Before, ads were displayed to reach broad demographic groups within an audience. For instance, on a website for toys, you might see ads for diapers, because a large percentage of those shoppers are likely to be parents. Now, digital marketers can deliver custom advertisements to consumers for products and services that they’ve already expressed a direct interest in.

More importantly, targeted advertising creates a foundation that allows us to enjoy free content on the Internet. By tracking your information across web domains and social media platforms, data companies have created a way to monetize your online movements by selling this information to advertising companies. Online services like Google, Twitter, Facebook, and rely on money generated by targeted advertising to fund their sites. Without targeted advertising, we most likely wouldn’t be able to utilize these services for free.

What are your thoughts? Are targeted advertising and data collection beneficial or harmful? Let us know your thoughts in the comments below!

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