Why You See the Advertising You do

Understanding how targeted advertising works is a critical part of how domain traffic is monetised. In this article I’m going to attempt to unpack online advertising and to help shed some light in what has changed over the years.

Back in about 2002, when I first started investing in domains, I made sure that every one of my domains had an appropriate keyword attached to it. I had an underlying assumption that keywords influenced the advertising results and ultimately user behaviour via the click-through-rate (CTR). This approach seemed quite logical and I spent hours researching each domain and setting an appropriate keyword.

I remember attending a conference and hypothesized with the Google domain team that just because you owned pizza.com doesn’t mean the advertising should be about pizzas. I suggested that with an appropriate amount of research I discovered the advertising should be about raising a loan to start a pizza shop.

This was a hypothetical situation (I didn’t own pizza.com) but it did illustrate the importance of researching domains. What I didn’t realise at the time was that I was actually crossing the boundary between context sensitive advertising (ie. domain content) and psychographic targeting (ie. the user).

My example also illustrated that in the early days of PPC advertising, domain keywording could be easily abused. For instance, it was often economically beneficial to place mortgage related advertising on gaming domains as mortgages paid out $50 per click and games paid out $0.01 per click. A “lucky” click meant that the earnings for the gaming domain because HUGE. In many respects this was essentially systemic fraud as the advertisers were paying top dollar for traffic that typically wasn’t interested in what they were paying for.

Being the dominant advertising network, Google had to make a change so that advertisers were protected from this type of behaviour. That change occurred about 8 years ago when Google migrated from context to psychographic targeting.

This was a dramatic change for the industry, and I would hazard a guess that many of us have experience this advertising behaviour in a form known as “retargeting”. For example, have you ever researched a vacation to only discover that at least some of the advertising on your domains now have hotels for your destination? This is an artefact of retargeting…..it actually goes much further than that as well.

I would like to share a bit of a humorous story. Over the last few years I’ve had a number of clients contact me and complain about adult related advertising on some of their domains. You guessed it, with retargeting my reply was, “they were being targeted due to their behaviour”…..which was a little embarrassing.

The underlying aim of psychographic targeting is for those people interested in ordering a pizza received pizza advertisements while those wanting to raise money to buy a pizza shop were shown finance related advertising. This meant the advertiser and the user were benefiting from psychographically targeted advertising. All seems good….or is it?

If you were a domain investor setting “loans” keywords for all your domains, then you would have noticed a sharp decline in revenue. Those that spend a huge amount of time researching their domains and setting keywords would have discovered that all that work was a complete waste of time…..but not quite.

Google realised that throwing out all of the keywording work wasn’t that smart and over the last few years they relaxed some of the restrictions so keywording can once again become a part of the mix to influence the advertising results.

Why did they do this? This is only a guess, but I would like to surmise that GDPR (ie. protection of privacy) was like a freight train coming down the tracks to potentially obliterate retargeting. The only way that a person can be psychographically targeted is if there was some way (eg. cookies) to tag them. In its most simplistic form this became a bit of a “no, no” with GDPR.

What’s interesting is that if you click on the little “Ad” link in the top right corner of a Google banner advertisement then it sends you to a page about how Google advertising works. There are links on that page that allow you to control how different advertising networks target you. Since it’s “opt-out” and not “opt-in” it may just scrape through some of the new privacy issues…..but may is questionable.

With the European Union’s focus on user privacy I wouldn’t be surprised if in the future we swing back to context sensitive advertising. If this happens then my advice to the domain community is to not be tempted by high paying keywords and to set those that best match the domain itself…..this is called playing the long-term game.