Targeted Advertisements Technologies
This article will provide insights into the targeted advertisements in the modern online world, with an overview of some of the essential technologies involved. Further, it’ll briefly describe the evolving web and the new targeted advertisement methods. We investigate the recent increase in litigation cases by NPE plaintiffs and how these patent litigations involve more and more e-commerce and software platforms on the grounds of patents related to targeted advertisement technologies.
Targeted advertisements have become ubiquitous in our lives online, with companies leveraging advanced technologies to collect, track, and trade user data to deliver highly personalized and effective advertisements. This results in a more relevant and appealing advertising experience for individual users. But have you ever stopped and thought about the implications of this technology on your privacy and decision-making? They are changing the way we live, think, and make decisions. From the products we purchase to our political beliefs, these highly personalized advertisements influence every aspect of our lives.
Despite all the privacy concerns in place, we can confidently say that the presence of targeted advertisements will only continue to grow. Advertisers will surely find new and innovative ways to reach their audience in this ever-evolving digital landscape. With the advent of virtual reality and the metaverse, advertisements may take on new forms, becoming fully immersive and seamlessly integrating into our virtual lives. Imagine entering a virtual world surrounded by advertisements tailored to your interests, habits, and behaviors.
Genesis Of Targeted Advertisements And Aiding Technologies
Web search significantly contributes to overall web traffic, as it is a common starting point for many users when they navigate the internet. And the platform that largely dominates the search space is Google Search. This directly leads to tech giant Google capturing a major part of the user data and thus using this data to understand their behaviors and preferences. This then contributes to the development of another service, i.e., Google Ads, which is a major source of revenue contributing up to ~ 80% of the total revenue of Alphabet Inc. So, the solution seems to be easy, that more the user data being capture better will be the targeted advertisement services. But how is this data converted into meaningful insights into user behavior? For this, one must understand that different technologies contribute to this, from monitoring, collecting, analyzing, inferring, and predicting user behavior.
The technologies and platforms used in targeted advertising include Data management platforms (DMPs), Customer Relationship Management (CRM) systems, programmatic advertising, AI/machine learning, behavioral tracking, social media, and geo-fencing/location-tracking.
User data is at the base of all targeted advertisements; over the years, as the internet has penetrated the global population, entities like data brokers have come into existence. Data brokers gather and sell personal info to businesses, including advertisers, via various sources like public records, online tracking, etc. Some of the well-known and prominent data brokers include Experian, TransUnion, Acxiom, Epsilon, etc.
Advertisers use the information collected by data brokers to gain insights into consumer behavior and target their advertising efforts to specific audiences. While data brokers can provide valuable insights for advertisers, they can also raise privacy concerns. The data broker industry collects, analyzes, and sells personal info, raising concerns over privacy and calling for regulation and transparency. Lack of transparency in using consumer data for ads sparks ethical debates.
Tools And Services For Targeted Advertisements
Popular tools for the publisher to list their advertisements include Google Ads, Facebook Ads, Amazon advertising, DoubleClick, Taboola, AdRoll, etc. We can observe that most of these tools are from platforms that provide services like web search, social media, and e-commerce. Google Ads is a pay-per-click advertising platform that allows businesses to create and display ads on Google's search engine results pages, YouTube, and other websites. It offers features like keyword targeting, audience targeting, ad placement, ad formats, real-time reporting, conversion tracking, ad scheduling, A/B testing, automated bidding, custom audiences, remarketing, and a creative library to help businesses reach their target audiences and achieve their advertising goals. Publishing advertisements on these platforms is as easy as a few clicks, and your advertisements will be published on the web.
With the advancement of artificial intelligence and machine learning, there will be greater opportunities for advertisement services to be more effective. The recent developments in the tech industry and the introduction of large language models (like ChatGPT) for natural language processing tasks, such as text generation, conversation, and information retrieval, could lead to changes in the web search industry. This could result in some users switching from Google to Bing for their search needs, reducing Google's market share in the online advertising industry.
However, it's difficult to predict exactly how the integration of ChatGPT with Bing search will impact Google's advertising revenue. Integration of ChatGPT with Bing could increase competition in the search engine market and potentially impact Google's advertising revenue, depending on factors like user adoption and the effectiveness of each platform. Ultimately, the integration of ChatGPT with Bing search is likely to bring new advancements and capabilities to the search engine market. It will be important for both Google and Microsoft to innovate and develop IP portfolios to remain competitive continuously.
Advertisements In Web 3.0 And Metaverse
Advertising in Web 3.0, also known as the decentralized web, is expected to be more privacy-focused, transparent, and user-centric. In this ecosystem, users would have greater control over their data and be able to monetize it if they choose to. Advertisers in Web 3.0 will have to find new ways to reach consumers more respectful of privacy and data security. This could include decentralized advertising networks, which use blockchain technology to create more transparent and secure advertising environments. Advertisers could also utilize token-based incentives and rewards to encourage users to interact with their advertisements. Additionally, Web 3.0 may also see the rise of new advertising formats, such as virtual and augmented reality ads, that provide users with a more immersive and interactive experience. Advertising in the Metaverse, a virtual world where users can interact with each other and virtual objects, will likely play a critical role in its growth and development. As the Metaverse becomes increasingly populated, advertisers will see it as a new and exciting opportunity to reach a massive, engaged audience.
Nike has started using Metaverse, Web 3.0, and NFTs for its advertisement campaigns. The company is looking to leverage virtual environments' immersive and interactive capabilities to create unique and engaging advertisements. By incorporating NFTs, Nike can create one-of-a-kind virtual experiences that offer a sense of scarcity and exclusivity, further enhancing the value of its advertisements to consumers. The figure below shows a banner of Nike’s Nikeland on Roblox promotion.
Nikeland on Roblox promotion (Source)
Privacy Issues And The Recent Government Action
Governments worldwide are imposing regulations on social media and search platforms over targeted advertising practices to protect citizens' privacy rights. New laws require transparency in data collection, usage, and security and limit the amount of data collected and shared by advertisers. These regulations also have restrictions on targeted advertising and personal data use. However, despite these efforts, online advertisers continue to push the boundaries of privacy, leading to ongoing debates and legal challenges as the need to protect individual privacy rights is balanced against the benefits of online advertising.
European Union's General Data Protection Regulation (GDPR): A regulation in the European Union that gives EU citizens greater control over their personal data and imposes strict requirements on companies that collect and process this data. It affects targeted advertising practices by limiting the use of data for advertising purposes.
California Consumer Privacy Act (CCPA): This law gives California residents the right to know and control their personal data, including the right to request deletion and opt-out of its sale for advertising. It has significantly impacted targeted advertising in California and could serve as a model for other states and countries.
Antitrust investigations: Governments are investigating tech giants, such as Google, Facebook, and Amazon, for potential antitrust violations in their domination of the digital ad market and effects on competition and consumer privacy.
Content moderation: Increased pressure on social media and search platforms to remove harmful content has led to scrutiny of their targeted ad practices, as ads can spread harmful or misleading information.
These actions are part of a growing trend toward greater regulation and oversight of the digital advertising industry as governments seek to protect consumer privacy and promote competition in the digital marketplace.
IP Landscape Of Targeted Advertisement Technology
Many patented inventions address different aspects of these technologies, and it is no wonder that Google owns the highest number of patented inventions in this domain. In the fourth quarter of 2022, the top market sector for Non-Practicing Entity (NPE) litigation was E-Commerce and Software (144 new defendants). The sector was targeted by well-known players such as Fortress Investment Group LLC, various monetization firms, Consolidated Transaction Processing LLC, and Quest Patent Research Corporation, as well as inventor-controlled NPEs such as HyperX Networks, DataNet, and AlmondNet. Additionally, some inventor-controlled entities that have granted a security interest to the same litigation funder also asserted patents in the E-Commerce and Software sector. The sector also saw activity from various campaigns, including device tracking, location-tracking, mapping, user review features, cybersecurity, mobile advertising, cloud storage platforms, and targeted advertising.
Top market sector for Non-Practicing Entity (NPE) Litigation in Q4 2022 (Defendants Added) (Source)
The figure below shows the number of granted patents for individual assignees, and we can observe that most of these are owned by Google, Meta Platforms, Microsoft Technology Licensing, IBM, etc. It is also evident that most of these assignees have a service or platform for data collection and provide these for free. And significant part of their revenue is driven by advertisements. Also, there has been a steady increase in the granted patent in the first half of the last decade but a decline towards the end of the decade, refer to figure 4. The US and China are the major jurisdictions where these patents are granted, followed by Korea, Japan, and Europe.
Granted Patents Over the Years for Targeted Advertisement Technologies (Source: Lumenci)
Geographic Distribution Granted Patent by Protection Country (Source: Lumenci)
*EP filings represent filings directly in EPO office, DE & GB represent filing in their respective offices.
Conclusion
Targeted ads follow users across devices and can't be fully eliminated. As patent lawsuits increase against social media and e-commerce platforms, companies must comply with global regulations and norms while building their intellectual property portfolios. Increasing government scrutiny and penalties make compliance important. AI development will lead to a different online advertising landscape. The metaverse offers a unique opportunity for advertisers to create immersive, interactive, and personalized advertisements that can engage users in a way impossible in the physical world. With the Web 3.0 revolution, there will also be a need for improvements in Targeted advertisement technologies.
Editorial Team at Lumenci
Through Lumenci blogs and reports, we share important highlights from the latest technological advancements and provide an in-depth understanding of their Intellectual Property (IP). Our goal is to showcase the significance of IP in the ever-evolving world of technology.