Question # 1: Is ‘targeted’ advertising ‘smart’ advertising?

Answer: Indeed, incredibly smart. Apart from the fact that it is ‘targeted’ as it generates relevant advertisements triggered by the user’s queries here are a few more reasons.

• Aware of the user’s geographic location through the IP address and can micro-target an audience pretty much to a radius of a few kilometers.
• Based on the demographics – Gender, Age, Status etc.,
• Recognize the device from which the query is being fired and return ads accordingly,
• Using the data from services like personal search or clicks and predict the behavior of an individual and serve ads accordingly
• Using data from your social graph for example, if you ‘liked’ a product on facebook or the type of places you’ve checked in on ‘foursquare’ etc.,

Question # 2: Can ‘targeted’ advertising grow even smarter?

Answer: Again, indeed. Consider the following scenarios.

I’ve been observing a deluge of Chrome ads these days …both as video embedded text ads and single block text ads on ‘Youtube’. I like chrome and it is my favorite browser but is Google smart enough not to push these ads onto somebody already using chrome? No, at least not yet. With a growing population of people online using chrome this practice, if not corrected, will only prove increasingly fruitless. This stems a new question. Why can’t Google detect the browser information and trigger ads accordingly? I can imagine a world of opportunities if this happens.  Different browsers have different capabilities and can run applications or services that are aligned to those capabilities etc.,

I’ve also been observing another set of ads that Google has been presenting. The query site:[DOMAIN NAME.COM] triggers an ad for  ‘Google Webmaster Tools’.  But the ad gets triggered only for some domain names.  Quick research seems to reveal that these ads don’t appear for the supposedly chosen few ‘white hat’ or well know websites (though I could be quickly rebuked on that), which is fine. For the rest, the problem is that Google doesn’t seem to be checking whether the domain name used in the query already is using the advertised application or not, in this case Google Webmaster Tools.  Again, this is targeted advertising but definitely not smart enough. Why waste so many impressions when you can save on them by putting a check in place to confirm whether the user is already using Google Webmaster Tools, especially if the user is making the queries logged in ?

Now, I do understand that often these changes are not as easy as I’m proposing them and that there could either be a ton of technical constraints that are acting as bottlenecks or simply the effort v/s outcome tradeoff is not worth it, at least not yet.  But I see incredible potential here especially as the idea of OpenSocial and OAuth become more popular and with so many companies opening up their hoods through the APIs, advertising for these very applications can make use of this development and gain an understanding of what applications a user has already been using and present ads in a more smarter way.

Click Forensics, a leading solutions provider for improving traffic quality for online ad campaigns, reported that though there is an overall dip in click fraud rate in Q2 2009 over Q1, click fraud traffic from sophisticated sources and scripted programs rose again in Q2 2009. This is evident from the rise of Publisher Collusion Fraud where publishers are employing sophisticated IP rotation methods or botnets  in oder to inflate their commissions.

There is a huge incentive for the Ad Networks and Search Engines to look at this as a serious concern because any hint of discomfort advertiser will lead the advertiser and/or publisher to defect from the system which will eventually lead to revenue losses.  Infact, Click Forensics President, Tom Cuthbert states that the increased diligence from the Ad Networks and Search Engines is the main reason for the click fraud rates to steadily decrease over the past few quarters. Google for example has set up a resource center to raise awareness about this issue. All the docs, presos and videos at this link are excellent reads on the topic.

So, from a technology standpoint, Search Engines and Ad Networks are doing their bit by developing tools and techniques in order to mitigate the effects of click fraud. What is lacking though are studies that look at user, publisher and advertiser behavior towards click fraud. Do they know what click fraud is? How do they validate erratic behavior on their campaigns? Is there a certain level of awareness to help them make informed decisions ?etc., There is enough proof to tell you that often advertisers complain that a seemingly erratic behavior in their campaigns is click fraud while the real reasons for such a behavior might be something completely different. Conducting research hence is important for the Search Engine  and Ad Networks to develop a strategy around increasing awareness around this issue that actually is effective.