Targeted Web Advertising: A Glossary of Important Concepts & Terms

The digital analytics ecosystem has not only provided marketers with new channels to reach consumers, but it has also made it easier and more efficient to place creative ads in front of the right audiences. Digital ad targeting has become a necessary practice for marketers – even for those in traditionally “offline” positions – since it enables them to be smarter with their media dollars.

Thanks to the increasing amount of time people spend online and advances in conversion tracking, marketers now have a wealth of data about their target audience segments that they can use to better tailor and serve their ads. The benefits of ad targeting with digital ad terms include hyper-personalized messaging for consumers and improved ROI for brands. Digital advertising’s challenges center on increasing restrictions from tech companies and consumers becoming more concerned with their data privacy.

In this perspective, we’ll take a high-level look at targeted web advertising — what it is, its benefits, recent trends and more — followed by a comprehensive glossary that defines every key term you’ll need to know.

What Is Targeted Web Advertising?

Targeted web advertising is a digital marketing strategy that delivers a more personalized advertising experience by serving custom ads to specific audiences based on their location, demographics, interests and/or browsing history.

Traditional advertising strategies delivered generic messages to broad audiences and hoped for the best. But a one-size-fits-all advertising strategy doesn’t work anymore — consumers see so many ads every day that, unless it’s relevant to them, they tune it out. That’s why targeted web advertising is a critical strategy for engaging today’s consumers. By personalizing ads through data-driven decisions, with the core promise of “right message, right person, right time,” the audience feels like you’re being helpful in anticipating their need and providing a useful answer, rather than an intrusion into their day that’s begging for their attention. Consider examples of targeted advertising: when a brand shows a sponsored ad for jewelry on Instagram to a lead who has searched the Internet for what a good Valentine’s Day present is; or serves a cookbook ad to someone who watches a lot of cooking videos.

To get started with a targeted ad campaign, brands begin by collecting data about their audience’s online behavior, demographics and interests and segmenting them into groups with common characteristics. Then, they create personalized ads for each segment that align with who they are and what they want — delivering them across multiple channels where those audiences spend time. And by measuring, optimizing and repeating, advertisers can continue to refine their process and deliver more personalized ads that convert traffic into bottom-line impact. Our glossary below explains the specific channels, targeting types and tools that make this possible.

What makes a targeted ad different from a traditional ad is that it’s driven by data, rather than assumptions, and it delivers ROI that traditional advertising can’t. Targeted web advertising harnesses personalization at scale and enables real-time optimization through cross-channel coordination. It also opens a two-way positive feedback loop — with ad performance data informing advertising strategy, which in turn enables improved ad performance, which unlocks more useful information to better optimize strategy, and so on.

Why Targeted Web Advertising Matters: Key Benefits

Targeted advertising offers compelling advantages for businesses and consumers alike. When it’s implemented thoughtfully, it creates more efficient marketing and more relevant experiences.

For Businesses

1. Higher ROI and lower wasted spend. Targeted advertisements allow brands to reach audiences who are actually interested in their offerings. It makes every dollar work harder because it reduces the amount of ad spend on fielding irrelevant ads to the wrong audiences.

2. Improved conversion rates. Personalization resonates more than generic messaging and creates a shorter path for the potential customers from awareness to purchase. The right message delivered to the right person will always create a better response.

3. Precise audience control. By layering targeting dimensions (e.g., audience demographics with user behavior and interests), targeted advertisements allow brands to choose exactly who sees their ads based on multiple criteria. This also allows advertisers to adapt their social media targeting in real-time based on performance and exclude audiences that don’t fit or that aren’t responding.

4. Measurable results and optimization. Being able to track every impression, click and conversion on a targeted advertisement and A/B test messaging and targeting strategies allows brands to continuously improve their campaigns based on real-time data. This helps deliver the holy grail of digital marketing advertising: clear attribution of marketing investment to bottom-line impact.

5. Build recognition with the right people. In today’s digital marketing world, it’s not about reaching millions of people — it’s about reaching your specific audience. Digital targeted ads allow for retargeting that keeps you top-of-mind with interested prospects and efficiently builds brand awareness and loyalty.

For Consumers

1. Discovery of relevant products. With the expansive volume of information and options available to consumers today, digital targeted advertisements save consumers time by introducing solutions to actual problems and needs.

2. Personalized offers. By allowing their data to collected and used, consumers can get more targeted offerings — as well as discounts if they hesitate and timely reminders if they left an item in their cart — and have a faster and easier experience.

3. Better overall experience. When targeted advertising is done right, consumers see fewer completely irrelevant ads and are able to distinguish the signal from the noise. Rather than an unwanted intrusion, consumers can feel like a brand is helping them get what they want and have the kind of experience they are looking for.

The Trade-Off

It is important to acknowledge that these benefits require collecting data, and not everyone is comfortable with being tracked in that way. Privacy concerns are legitimate, and the advertising industry is evolving to address them by implementing best practices in transparency, user control and compliance.

Targeted Internet Advertising Glossary

This comprehensive glossary covers 25 key terms and is organized into sections — channels, targeting types, tools and privacy considerations — and alphabetically to make it as easy for you to understand the lingo necessary to successfully launch your own targeted advertising campaigns.

Key Channels For Digital Targeting

Addressable TV (ATV)

Technology and methods that enable advertisers to show different ads to different households during the same TV program broadcast. This can refer to advertising on cable, satellite or streaming TV services.

Connected TV (CTV)

A television device that connects to the internet, such as a smart TV. A regular TV can become CTV with devices like Apple TV or Roku.

CTVs enable content streaming outside of traditional cable or satellite platforms. CTVs are the devices, while ATV refers to mechanisms for serving ads.

Display Advertising

A type of ad made up of text and images (still or moving) that link to a website where users can buy or learn more about products. These “banners” appear on other websites, apps or social media.

Display ads can operate in the top of the digital funnel, attracting attention and spreading brand awareness to people who may not have been specifically seeking its contents. They can also be “retargeted,” meaning they can resurface products and services that people previously looked at or searched for online.

Mobile Advertising

Ads that appear to mobile device users, including SMS texts, in-app ads, display ads, paid search and ads on social media. The smaller screen size, personal nature of devices and higher likelihood to use location-based data make mobile ads distinct from other digital advertising.

The prevalence of smartphones has led ad tech to evolve – capturing data for retargeting based on consumer profiles, browsing habits, geolocation and more.

Native Advertising

Paid advertising that mimics the organic content around it. It can take the form of a video, article, social media post or almost any other content people view online.

Because native ads look so much like organic content, they capture more attention than banner ads, but some may consider them deceiving. The FTC has introduced regulation to limit deception, such as the requirement that native ads be labeled “sponsored.”

Paid Search/Search Engine Marketing (SEM)

Ads that show at the top of search engine results web pages and are a key part of online advertising. Advertisers target ads based on keywords searches and only pay for ads people click on.

When people search for information, they’re in an optimal frame of mind to consider new brands or products. Brands continually invest in search engine optimization (SEO), the organic partner to paid search, in order to rank higher in search results.

Paid Social

Paid ads on social media platforms, such as Facebook, Instagram, YouTube, LinkedIn and X (formerly known as Twitter).

Ads on social platforms are highly targetable, thanks to user interest data. As people engage with topics and content, social platforms capture data to determine what an individual’s behaviors and affinities may be.

Video Advertising

Ads that appear before, during or after an online video.

Most online consumers watch videos, whether on video streaming sites like YouTube, social media platforms like Facebook or on other sites like ESPN.com. Video ads tend to deliver greater emotional connection than other digital ads, like audio-only or banner ads.

Types Of Digital Targeting

Behavioral Ad Targeting

Targeting based on people’s online actions, such as sites visited, online searches or purchase history.

Digital behavioral data offers unprecedented visibility into people’s lives, letting advertisers make smarter predictions about their needs. For example, if someone looks at flight schedules online, an advertiser could show them an offer for airline tickets or infer that they might also be interested in hotel deals.

Contextual Targeting

Targeting based on a website’s content rather than data about a visitor.

An example of contextual targeting could be displaying ads for men’s apparel on a style blog. It’s similar to promoting topic-related ads in magazines, except it can be automated with technology.

Demographic Targeting

Targeting based on demographic traits, such as age, gender, location, income, life stage and major life events. Data usually comes from a user profile or browsing history. Most demographics are captured at the individual level but are also aggregated for household, neighborhood or local market-level targeting.

Demographic data can help advertisers better anticipate people’s needs as they browse online. For example, visiting ikea.com from the U.S. results in a recommendation to navigate to ikea.us. Additionally, advertisers can focus their strategies on more desirable demographic traits, such as a women’s brand allocating more spend to show ads to women.

Geotargeting

Targeting based on a consumer’s real-time location. Geotargeting enables search engines to bring up the closest location when you search for “Starbucks,” whether you’re home or visiting a city for the first time.

Psychographic Targeting

Targeting based on people’s attitudes, values and interests.

Advertisers are increasingly tapping into the power of psychographic data to understand what motivates consumers – which can be more powerful than demographic data alone. Platforms like Facebook and Google have cornered the market on data related to people’s activities and interests, and survey data can complete the picture by further revealing their perceptions.

Tools & Methodologies

Cookies

A small data file sent from a website to an individual browser for tracking purposes.

Websites use cookies to track visits and remember preferences, such as which products you looked at, or your login information. Typically, a cookie is associated with the website visited. But third-party cookies typically sent from advertisers are the focus of most privacy concerns.

Cross-channel

The intentional orchestration of customer experiences and data across two or more marketing channels for improved performance.

Cross-channel targeting anticipates how people interact with brands across different touch points to drive a cohesive brand experience. It requires the strategic management of data to recognize customer journey traits, such as who is visiting a website from a customer loyalty program or who is interacting with the brand for the first time.

Pixel

A small piece of code placed on a website that sets the cookie, which enables tracking of online behavior.

Tracking pixels are generally undetectable by the user. Pixels may be installed on a website, email or similar online location.

Programmatic

Using software to automate the buying and selling of online ad placement based on a pre-determined targeting strategy. This automation enables marketers to target people more reliably and efficiently.

Remarketing

Email marketing campaigns to re-engage customers. To launch a remarketing campaign, your brand needs to have some sort of pre-existing relationship in which the customer has already provided an email address.

Retargeting

Online advertising practice that displays an ad based on the user’s previous online behavior, such as visiting a website or searching for a specific keyword.

Retargeting fosters re-engagement with individuals. For example, if someone starts but doesn’t finish the checkout process on a website, that person could be served an ad that reminds them to complete the purchase. Some consumers find retargeted marketing “creepy” because it works by tracking online behavior.

Tracking

The process of collecting data and insights about online ad performance, generally using tools and techniques like tracking URLs, cookies and pixels.

Online ad tracking provides marketers with a wealth of customer data, including interaction and purchase data that can be used to measure and optimize ad performance. The conversation around tracking is getting louder, as online privacy laws go into effect and consumers pay more attention to how their data is being collected and used.

Personal Data Considerations

Brand Safety

The practice of protecting a brand’s reputation in its online marketing strategy, such as avoiding ad placement next to inappropriate content. A children’s ad, for example, shouldn’t run before a video with explicit adult content.

Automated ad buying produces great efficiencies, but online advertising still requires the critical judgement humans provide in determining the right associations for a brand. Best practices include choosing reputable publishers and setting up exclusions in ad targeting to restrict placements.

California Consumer Privacy Act (CCPA)

A data regulation that went into effect on Jan 1, 2020. The law aims to protect an individual’s data privacy and applies to certain for-profit companies that do business in California, whether offline or online.

Regulations like CCPA have huge implications for how companies track and target people in online advertising. CCPA stipulates that consumers have the right to know what information is being collected about them, the right to request the deletion of personal information and the right to control who has access to their information.

General Data Protection Regulation (GDPR)

A data regulation that rolled out across the European Union in 2018. Much like CCPA, the law protects online data privacy and must be followed by businesses that collect data of European users.

GDPR set a precedent that other countries have followed, and smart companies are paying attention. It signals a shift in data regulations to require more transparency in the collection and use of consumer information.

Personally Identifiable Information (PII)

Data that may be used to identify a specific individual. This data may be sensitive (such as a person’s full name and social security number) or non-sensitive (such as the zip code where they live).

PII is the focus of regulations like CCPA and GDPR. Either alone or combined with other data, PII may reveal an individual’s identity and make them susceptible to security breaches.

Privacy

The proper use and governance of personal online data. The rise of ad targeting has brought increased awareness among consumers of how their data is collected and used, and it has provoked strong debates about individual data privacy.

Partner with Material for Smarter Targeted Web Advertising

Targeted web advertising delivers better results and more relevant experiences. Understanding the terminology and tools is essential for success in this ever-evolving space, and this glossary and overview arms you with what you need to be successful.

Material implements targeted advertising strategies across all channels and platforms, and we help businesses navigate the changing privacy landscape. Whether you’re starting with targeted advertising or adapting to new technologies, we can help.

Want to learn more about how Material can help you get the most out of targeted web advertising? Start the conversation.