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According to a recent study by the Malta Communications Authority (MCA), 58 per cent of Malta’s adults currently shop on the internet, but – considering 89 per cent of those aged 18-24 do – this figure can be only expected to increase.

More people are spending more time and more money online and these trends have helped catalyse the growth of a lucrative new industry in the form of digital marketing.

Vying to capitalise on potential customers, shops and service providers – both physical and online – have launched sophisticated advertising campaigns to capture this custom.

This is a phenomenon that is happening globally. In 2021, Statista estimates that businesses will spend $400 billion (€328 billion) on digital marketing.

In their pursuit of spending efficiency, advertisers need to make sure they only show their adverts to those customers most likely to make a purchase.

This is where targeted advertising comes in.

In the wake of these changing consumer habits in Malta, BusinessNow.mt spoke to two of Malta’s leading marketing specialists; Benji Borg, Co-Founder of ANCHOVY and Chris Knights, Partner at BRND WGN; to discuss their experiences targeting advertising in one of the smallest countries in the world.

First things first, how does targeted advertising work?

Benji Borg/ LinkedIn

“On the most simplified level, every person online, whatever they are doing, every time they click a link, go onto Facebook, carry out a Google search, or land on a page, they are being followed”, Mr Borg explained.

“With the old-school cookie, which is basically a nice way of saying tracker, every time a user lands on a landing page or a website, a beacon is placed on the user. So it knows what you did on the website, and where you go afterwards”.

“That’s how Facebook and Google make all their money. They allow advertisers to target possible clients based on their internet habits”, he said.

These are not necessarily the best options though, according to Mr Borg. The reality is that “if an advertiser uses the basic targeting functionalities of Facebook and Google they risk showing adverts to the wrong people”, he said.

In the case of ANCHOVY, Mr Borg explained, “[the company] has always wanted to build deeper and higher target personas than those typically provided by Google or Facebook targeting services. This lead them to set up another company – Onest Data – which is co-owned by PwC”.

Onest conducts primary and secondary research on a quantitative and qualitative basis then uses the research to create these “higher target personas”, allowing for better-targeted advertisement.

What factors need to be considered when launching targeted advertising in a smaller market like Malta?

Malta, with its unusually small population, presents a number of challenges to those conducting targeted advertising, and local companies are forced to take a different approach.

Mr Borg invites a comparison to the US: “Data points in Malta are obviously not as numerous as they are in America and the basic entry point targeting offerings of Facebook and Google in Malta are far inferior to those provided in America”.

This poses a particular challenge to local advertisers, who could have the “best artwork and the best campaigns”, but risk missing the proverbial boat if they’re targeting the wrong people.

Chris Knights/ LinkedIn

In Mr Knights’ experience, on the other hand, Malta’s size can actually simplify things for advertisers.

“Since our entire audience can be capped at 420,000, most of the time we simply don’t need to segment the market. With a healthy budget, advertisers are able to target all 420,000 people and hence segmentation is unnecessary”, he explained.

Sometimes BRND WGN does carry out more targeted advertising but Mr Knights noted that if campaigns try to segment too much they end up with very few users to target.

In the past, BRND WGN has run campaigns based on the location, interest, gender and job titles of prospective customers, but Mr Knights feels that the data available for segmentation like this is limited in Malta.

“Most of the time we cast a wide net, then if we get a small bite we retarget with remarketing ads”, he explained.

“The challenge is to identify which personas should be targeted for a particular campaign. Most of the time our clients are looking to target everyone — which is fair as our audience is small”.

Will the controversial iOS update change things?

With Apple’s controversial recent update to iOS allowing users to “opt-out” of being tracked, the topic of targeted advertising has inspired increased debate internationally.

On the one hand, proponents of the feature praise that it allows them greater control over their data. On the other, some commentators have argued that it will harm small businesses, by making their advertising less effective.

For the Maltese experts who, by their own admission, are less reliant on the type of data provided by this tracking, the update is a positive development and any compromise is worth it to counter what Mr Borg referred to as a “huge exploitation” of data being freely used.

Businesses should, however, take it as an opportunity to rethink their approach to advertising, he thinks.

iPhone
iOS 14.5 allows users to opt out of cross-app tracking

“The reality is that it’s a bit of a wakeup call to businesses because they’ll have to wake up and acknowledge that it’s time to build their own databases”, he said.

“Compiling a list of customers, their phone numbers, email addresses, the items they purchased, when they last shopped, who their friends are etc. This sort of database is going to be worth its weight in gold”, Mr Borg predicted.

“And it’s the right time because it’s only going to get harder and harder to advertise. There are going to be more regulations, more laws coming out, and new platforms that make it easier for people to browse without being tracked”.

Businesses should establish their own databases, says Mr Borg

Mr Knights agreed that the update would bring mostly benefits. “I feel [the iOS update] is a positive step”, he said.

“Most networks are collecting vast amounts of data that we are simply unaware of”, Mr Knights said.

This data – used wisely – could assist businesses, Mr Knights commented. However, as things stand he doesn’t think that it’s being used to facilitate the advertising of “the right product at the right time”. Rather, it is simply being made available to the highest bidder.

“Long term, I think giving control to the user will be beneficial for both parties. If someone asks to be targeted then ultimately as a digital marketer my life just got easier. Now I know the people I’m targeting want to be targeted”, he said.

“Yes, Facebook will have fewer people to target, will know less about their behaviour and ultimately sell fewer ads or impressions. But I think over time we’ll get comfortable allowing certain advertisers to track us and target us”, he added.

Mr Knights compares it to other, more regulated sectors: “For me it’s a bit like newsletter signups; thanks to GDPR I have ultimate control over who is allowed in my inbox. Why shouldn’t this apply to ads online?”

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