IP Targeting 101: Smart Display Advertising

For as long as individuals have been selling products, location has been one of the most important components of the marketing mix.  

The "Four Ps" of Marketing

Digital marketing has revolutionized the way that marketers think about "the 4th P" (Place). The market is global now, opening opportunities for businesses to sell across the world, and the technology that facilitates operations within this global market continues to offer marketers ever-increasing levels of precision for targeting their campaigns.

Despite all this progress and digital innovation, delivering unique messaging to individuals has been hard to accomplish, due to Internet privacy and the anonymity that a mouse and keyboard provides.  Today, Internet Protocol (IP) Targeting stands to challenge what was previously possible, adding a whole new level of accuracy and specificity to digital geo-targeting––and also a handful of ethical questions.

What is IP Targeting?

IP Targeting is an advertising practice that delivers personalized content to a website visitor’s mobile or desktop device based on its physical location, which is determined using its Internet Protocol ("IP") address.

Every computer that is connected to the Internet has an IP address that refers to its location, whether a home or a place of business.

Traditionally, IP addresses were composed of four numbers separated by decimal points. This protocol is known as IPv4. A successor, what is now known as IPv6, was born out of the concern that the demand for IP addresses would exceed the available supply. It has a slightly different format, using both numbers and letters separated by colons. 

IP targeting provides a level of specificity and personalization that was never feasible through traditional media or past iterations of digital targeting.  Whereas the tracking was once quite limited, capable of only targeting a region or cluster, developments have made it possible for advertisers to target individual homes/neighborhoods/apartment complexes based on their IP address.  By associating a unique IP address to an individual, more precise information can be gathered and used to create and deliver a personalized ad, just for that individual.  

The same strategy can be applied to businesses as well. Whereas each home has a unique IP address, businesses often share an IP address among all computers in a network. Once you learn a business's IP address, it's possible for marketers to craft custom messaging to reach and engage their B2B prospects. 

The Growth of IP Advertisements

This previously unheard-of level of consumer connection has led to an explosion of IP targeted advertisements.  Millions of homes and businesses have now been opened up to marketers in a way that allows personalized advertisements to be delivered through display advertising and email marketing.

To illustrate how IP targeting works and why it's an attractive marketing option, let's view its benefits through a hypothetical:

You operate a business selling widgets to the manufacturing sector. It's the beginning of your fiscal year and you are trying to decide how to budget your marketing dollars. Traditionally, you've relied on a personal sales team to make cold calls. While you could use your marketing budget on a traditional display advertising campaign, an even more precise way to target would be to discover the corporate IP addresses of businesses that meet your customer profile. With these IP addresses in hand, you could then run a display advertising campaign that speaks directly to your target audience, and only your target audience. Then, when your sales team calls them to discuss doing business, it's no longer a cold call, and you haven't wasted essential marketing dollars speaking to businesses that aren't a good fit.

Adding to this already tremendous level of customization and specificity, IP targeting campaigns can be executed at a fraction of the costs of radio, print, or television advertisements.  This has greatly improved the cost-effectiveness of many marketing programs in recent years.

IP Ethics

Though advertisers have been captivated by the benefits of IP targeting, concerns have been raised regarding the nature of collecting the IP addresses of individuals to sell products.  As our connection to the web has grown and our internet devices have become further integrated into everyday life, defending personal privacy online has become an increasingly important issue to millions of Americans.  

As such, questions regarding the expansion of tracking methods are sure to follow.  Are IP addresses owned by individuals?  Should they be off limits for organizations gathering data?  Does IP targeting start us down a slippery slope of more intrusive business practices?  In time, questions like these must be answered.

Although the system is still far from perfect, the efficiency exhibited by IP targeting is far above what has been available to digital marketers in the past.  With constantly improving technology and affordable options for organizations large and small, the adoption rate amongst advertisers is set to keep rising.  

Internet Protocol targeting is here to stay and looks to keep marketers excited for years to come.