What are AdChoices and the way do they have an effect on your PPC?
Data is godsend for marketers, and it helps us serve our audiences with better, more relevant ads.
Regardless of what we think, consumers aren't always fans of data-centric advertising. According to the Pew Research Center, four in five Americans say the benefits of data collection are outweighed by the potential risks, while the same proportion admit they are concerned about how brands use their data.
Far from enjoying the prospect of seeing ads tailored to their preferences, they are resigned to having little or no control over how their personal information is used.
In theory, this is where AdChoices comes into play. We'll dive into AdChoices, discuss its relevance to marketers and consumers, and review the pros and cons of the initiative.
What is AdChoices?
AdChoices is nothing new. It's been around since late 2010 and its roots go back even further. In order to fully understand what it does and why it is important, it is worth taking a brief detour into the history of the program.
The U.S. Federal Trade Commission (FTC) was concerned about the impact of advertisers' collection of large amounts of consumer data without review or consideration and opened a practice investigation in 2009.
This research found that consumer privacy should be protected by stricter rules on data collection. Rather than directly enforcing these regulations, the FTC asked the advertising industry to regulate itself.
As a result, some of the biggest names in advertising have come together under the banner of the Digital Advertising Alliance to establish the online behavioral advertising self-regulatory program that oversaw the launch of AdChoices in October 2010. Since then, it has also been introduced in Canada and across Europe.
The idea was that by being able to easily see when online advertising data is being collected or used, consumers would be able to manage their data and have some degree of control over the types of ads they see.
Back in 2007 (three years before AdChoices was born), research firm Yankelovich estimated that the average resident of the city ran 5,000 ads every day, and it's likely that that number has grown significantly since then. Many of the ads you see today are part of AdChoices as members of the program include major advertisers and advertising networks such as:
- AT & T.
- Microsoft
- Procter & Gamble
- Taboola
- Yahoo!
You can identify these behavioral indicators by looking for the AdChoices icon, which is a lowercase "i" inside a triangle. It's usually shown in the top right corner of internet behavioral ads that are served based on your data:
If you click on the icon, you will learn more about why you saw this ad or how the website in question collects data. You also have the option to opt out of behavioral ad targeting.
Why is AdChoices important to marketers?
There are several reasons why AdChoices is so important to marketers and advertisers.
First, it should be clear why self-regulation is better for the advertising industry than being forced to abide by many potentially much more stringent government-enforced measures.
Second, it helps improve the user experience by ensuring that consumers are (at least in theory) only served with ads that they want to see.
Why is AdChoices important to users?
Given the number of internet users affected who have no control over how their data is collected and used online, AdChoices is by and large a good thing.
Simply put, it gives consumers more input to the ads that are shown to them. If you see an ad that you don't like, you can click the AdChoices icon and stop the ad.
You may have a number of reasons why you no longer want to see an ad. Perhaps you don't like the company in question for moral reasons. Maybe you are not interested in the product; You could have been looking for gift ideas for a friend or family member, but you've bought something else and don't need it yourself. You might disagree with the way they are advertised. Either way, you can block it.
Some advertising networks, including Google, can also help you find out why a particular ad was shown to you in the first place.
3 reasons to use AdChoices
I know what you're thinking: “PPC is a massive source of revenue for my company. Why should I give audiences the option to turn off my ads? "
In fact, there are some great reasons to give your prospects more control and choice. Here are three of the biggest:
1. AdChoices helps marketers target users with relevant ads
Of course, you don't want to have all of your behavioral advertising campaigns turned off. However, do you want to continue targeting people who don't like seeing your ads?
If you pay on a CPM basis (that is, you pay per 1,000 impressions), any impressions that reach the wrong people are money down the drain.
Even if you pay per click, having your ads served to people who don't want to see them doesn't help. At best, these people are going to like you even less. Worst-case scenario, they'll click your ads on purpose with no intention of buying them, burning your budget and skewing your numbers.
That also has a downside.
By giving consumers the ability to block ads they don't like, your ads are more likely to be seen by the right people. This, in turn, means your campaigns will get better results.
2. AdChoices helps build trust with consumers
As shown by the Pew Research Center numbers mentioned earlier, consumers don't exactly love online ads.
This is best seen in the seemingly unstoppable growth of ad blocking software. Today, more than a quarter of US Internet users block ads on their connected devices. The increase in adoption has been slow, but also consistent.
Clearly, the universal adoption of ad blockers would be a disaster for brands and marketers alike. Granted, that day may never come, but advertisers shouldn't be complacent.
AdChoices could be the solution, or at least part of it. By raising awareness of the initiative and explaining how data is collected for ad targeting purposes, the online advertising industry will appear more transparent and trustworthy to consumers.
This reduces the risk of these consumers becoming frustrated with the number of targeted ads they receive and resorting to ad blocking technology.
3. AdChoices helps marketers run more effective campaigns
You got me right: by registering with AdChoices and allowing consumers to block your ads, you can improve campaign performance.
How? Being more open about how and why you're collecting data can potentially make your ads more effective.
A study published in the Journal of Consumer Research analyzed the impact of transparency on campaign performance. From the authors' findings, I found these three points particularly interesting and relevant:
- Consumers don't automatically hate when their data is collected: Instead, they are broadly satisfied with it as long as the data on the website (and not by third parties) has been collected and provided by the user, rather than being derived from the advertiser.
- Transparency does not guarantee success: If you are using third-party data and inferring information about the user, it does not help you to have it. Exposing these "unacceptable flows of information" can affect your ad effectiveness.
- Platform trust is tied to performance: When consumers trust your website and the way you use their data, ad performance increases. They spend more time on your website, clicking more recommended items, and buying more.
3 Possible disadvantages of introducing AdChoices
Data visibility can improve ad performance, and AdChoices offers the visibility consumers crave. In that case, signing up with AdChoices is certainly a breeze.
Unfortunately, like so many things in marketing, it's not that easy. While AdChoices offers many advantages, it also has some significant disadvantages, such as:
1. Lack of awareness of AdChoices
The biggest criticism of AdChoices is that not enough people know what it is. Chances are you're a little blurry yourself or you wouldn't be reading this article.
Given the financial clout behind the program's supporters, it's hard to understand why there is so little awareness of AdChoices. A survey conducted in 2013, three years after it was launched, found that only six percent of consumers were familiar with the AdChoices symbol. By 2018, awareness of the program had reached almost 34 percent.
This number is definitely a step in the right direction. It should be tempered, however, with 28 percent of respondents saying they were not familiar with any of the ad filtering or blocking programs presented to them, while 43 percent admitted they never had them used each of them.
If those numbers don't increase dramatically, it's hard to see how AdChoices can achieve its stated goals of giving consumers better control over their data.
2. Consumers often misunderstand the purpose of AdChoices
Awareness isn't the only problem. Even after hearing about AdChoices, consumers often misunderstand why it exists.
For example, Advertising Standards Canada (ASC) received 283 complaints about the AdChoices platform in 2016, twice as many as in 2015.
That suggests the program worked as intended, doesn't it?
Unfortunately not. Of those complaints, only eight percent were related to behavioral ads, which, if you recall, is the only focus of the AdChoices initiative. In contrast, three-quarters were different types of ads that weren't data-focused.
To make matters worse, most of that tiny fraction of relevant complaints came from people who mistakenly believed that opting out by AdChoices would prevent them from seeing online ads in the future. They contacted the ASC because they were upset that they were still being served ads.
AdChoices is not an ad blocker. It's about seeing more relevant ads. For some reason, this news doesn't seem to be reaching consumers.
3. AdChoices can look inconsistent
There are likely many reasons consumers aren't "getting" AdChoices, but it certainly doesn't help that the program and implementation of the icon are so inconsistent.
What do i mean by that?
See for yourself. Here is an ad with the AdChoices icon in the top right corner, but without the "X" icon next to it:
Next up, here's another ad that has the AdChoices icon in the top left instead:
What's even more confusing is that here you see two separate ads for the same product on the same website within minutes of each other. These ads are more or less the same, but the AdChoices icon is displayed:
The other one not:
This is because different advertising technology vendors and vendors are responsible for serving ad impressions and not all of these companies have joined AdChoices.
How can we expect consumers to understand AdChoices and trust that it will work to their benefit when this type of inconsistency exists?
Conclusion
As you can see, there are some pretty important concerns about the feasibility of AdChoices.
If it is to achieve its goals and improve the world of behavioral ads for consumers, it needs to be adopted by the vast majority of ad platforms and providers. Otherwise, it is hard to imagine that there will be a large increase in awareness of the program or support for the goals it is trying to achieve.
That's not to say that the underlying principles of AdChoices are bad or wrong. Consumers clearly want better control over their data and how advertisers use it.
However, because Apple, Google, and Mozilla are taking steps to discard the third-party cookies that serve behavioral ads, the days of relying on these types of ads could be counting.
Maybe it's time to give consumers what they want and move on to less invasive, more traditional tactics like contextual and keyword-based advertising?
What do you think of AdChoices? How would you deal without behavioral targeting?
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