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This year marks the 30th anniversary since the first digital ad made its debut online – a banner ad from AT&T, which garnered a click-through rate of 44%, likely for its novelty. At the time, not even a third of U.S. households had a home computer.
Fast-forward to today, when digital ads are everywhere and nearly 9-in-10 U.S. adults owns a smartphone. Is ad targeting becoming more or less effective, as consumers are increasingly enmeshed in wi-fi enabled digital ecosystems – whether working, shopping, streaming, gaming, using digital wallets, smart speakers, or smart home appliances?
From the consumer’s perspective, effective ad targeting appears to be increasing. Recent CivicScience data show that in 2023, 44% of U.S. adults reported that the majority of digital ads they saw were at least ‘somewhat’ relevant to their interests. That breaks down to 8% who said digital ads were ‘very’ relevant and 36% who said they were ‘somewhat’ relevant.
Join the Conversation: Do you alter your device settings to not allow tracking or ad targeting when you are online?
Digital Ads Have an Age Problem
It’s no surprise that digital ads reach younger consumers at much higher rates than older consumers. In 2023, nearly 3-in-4 Gen Z adults and 2-in-3 younger Millennials said the ads they see are at least ‘somewhat’ relevant to their interests. More surprising, perhaps, is that those percentages have nearly doubled since 2021.
By the close of 2023, digital ads were more relevant than not for the majority of adult consumers under age 35, whereas the majority of consumers 35 and older reported that most ads were still ‘not at all’ relevant to their interests. Consumers aged 55 and older remain the least likely to be accurately targeted by ads online. However, even adults in older age groups noticed ads becoming more relevant in 2023.
What About Clicks?
More ads doesn’t necessarily equal more clicks, but more relevant ads does. The likelihood to click through on digital ads has also increased since 2021. As of 2023, 59% of U.S. consumers said they were at least ‘somewhat’ likely to click through on a digital advertisement relevant to their interests. As expected, consumers with the greatest likelihood to click through are over four times more likely as others to see ‘very’ relevant ads.
Who else is more likely to see digital ads relevant to them?
- iPhone users: Despite Apple’s optional restrictions on app data tracking, 37% of iPhone users aged 18-34 reported the majority of digital ads they saw were ‘very’ relevant, compared to just 19% of Samsung smartphone users in that age range.
- YouTube users: 54% of YouTube users who visit the site daily to weekly reported the majority of ads they see as at least ‘somewhat’ relevant to their interests, higher than the yearly Gen Pop average (44%).
- Social media users: Among weekly to daily users, 74% of TikTok users and 68% of Instagram users say most digital ads they encounter are at least ‘somewhat’ relevant. However, monthly Facebook users are more likely than more frequent users of the platform to say the same (65% to 52%).
At the end of the day, the debate remains as to whether ad targeting is getting smarter, or if consumers are just seeing more ads through increased digital usage, thereby increasing the likelihood to see more relevant ads. Less debatable, however, is that Google’s coming takedown of cookies is likely to have a major impact on the current status quo of ad relevance and clicks.