CATEGORY LEVEL TARGETING

What is Categorical Targeting?

Categorical targeting refers to the process of segmenting and targeting audiences based on specific categories, interests, or topics. It enables advertisers to display ads to users who are likely to be interested in those categories. This approach relies on grouping content or websites into predefined categories, often defined by an ad exchange or platform. These categories can range from broad topics like sports or entertainment to more niche ones like cooking or DIY.

Categorical targeting is useful across different types of digital media, including display ads, video ads, connected TV (CTV), over-the-top (OTT) content, audio, and digital out-of-home (DOOH). It allows advertisers to refine their audience targeting, ensuring their ads are seen by the most relevant users based on their interests and content consumption.

Categorical Targeting Across Different Channels

1. Display Ads

Example: A clothing retailer might want to target people browsing fashion-related content. By targeting a "Fashion" category, ads for the retailer will appear on websites like fashion blogs or online retail stores.

How it Works: Display ad targeting often involves placing banner ads, rich media, or interactive ads on websites categorized under certain topics or interests. Ad exchanges categorize sites into categories like fashion, sports, or technology, so advertisers can bid to place ads on sites falling under those categories.

2. Video Ads

Example: A company selling fitness products could use categorical targeting to place video ads on YouTube or other video platforms in the "Health & Fitness" category.

How it Works: Video targeting can be done by selecting categories like "fitness," "sports," or "technology." When targeting video content, ads appear before or during relevant content on platforms like YouTube, Hulu, or other OTT services.

3. Connected TV (CTV)/Over-The-Top (OTT)

Example: A car manufacturer might target ads to users watching "Sports" or "Technology" content on platforms like Roku, Apple TV, or Amazon Fire TV.

How it Works: On CTV/OTT, ads are shown to viewers while watching programs on streaming platforms. By categorizing content into categories such as "sports," "movies," or "lifestyle," advertisers can ensure their car ad is shown to users watching sports or car-related content.

4. Audio Ads

Example: A podcast about true crime might be used by advertisers to target an audience with an interest in "Crime & Investigation" content, promoting related books, shows, or events.

How it Works: Audio platforms (e.g., Spotify, Pandora, or podcast networks) allow advertisers to target listeners based on their content preferences. Categories could include "comedy," "history," "business," etc. This targeting helps place relevant ads in front of listeners based on their interests.

5. Digital Out of Home (DOOH)

Example: A digital billboard in a sports stadium might display ads for an energy drink during a live sports event, targeting fans of the event and the sports category.

How it Works: DOOH utilizes digital displays to show ads in public spaces like billboards or transit stations. Ads are typically targeted to specific categories like sports, fashion, or entertainment based on the location or event. The content being displayed is categorized for efficient targeting.

Categorization by Ad Exchanges: Top Level and Second Level

Ad exchanges are platforms where advertisers buy ad inventory from publishers, and publishers sell space to advertisers. Websites and publishers are categorized by these ad exchanges into top-level and second-level categories, helping advertisers target specific content effectively.

Top-Level Categories: These are broad, high-level categories that encompass a wide range of topics. They serve as the first point of classification for a website or publisher. Examples of top-level categories might include:
- Sports
- Entertainment
- News
- Technology
Second-Level Categories: These are more specific subcategories under the top-level categories. A second-level category helps narrow down the focus further. For example:
- Sports could have subcategories like "Football," "Basketball," or "Tennis."
- Entertainment could be broken down into "Movies," "TV Shows," or "Celebrity News."

Example: Barstool Sports

Top-Level Categories: Sports, News, Entertainment
Second-Level Categories: Sports (Football, Baseball), Entertainment (Comedy), News (Pop Culture)

By categorizing publishers in this way, ad exchanges make it easier for advertisers to decide which types of content they want their ads to appear next to.

Popular Ad Exchanges

Google Exchange (Google Ad Manager): One of the most widely used ad exchanges, it allows publishers to sell ad space, and advertisers to bid for that space based on various targeting criteria, including categories.
OpenX: Another ad exchange that provides real-time bidding for ad inventory across various content categories.
AppNexus (now part of Xandr): A major player in digital advertising that facilitates categorical targeting for display, video, and other formats.

Strategies: Broad vs. Narrow Targeting

A good strategy is to start by targeting broad categories to reach a large and relevant audience, then narrow down by creating a white list of specific publishers or websites where you want your ads to appear. This strategy balances the advantages of reaching a wide audience while refining your targeting to ensure your ads are being shown in the most relevant contexts.

White Listing vs. Black Listing

White Listing: This refers to the process of creating a list of specific websites, publishers, or platforms that you want your ads to appear on. It’s a more controlled and safe approach because you’re selecting specific content that you know aligns with your brand values and audience.
- Example: If you sell sports equipment, you might white list popular sports websites like ESPN, Bleacher Report, or Barstool Sports.
Black Listing: This is the opposite, where you exclude specific websites or categories from your ad placements. This is used to avoid appearing on sites that might not align with your brand or could be seen as inappropriate or controversial.
- Example: If you sell family-friendly products, you might black list adult content websites or sites related to violence or hate speech.

Categorical targeting is an effective way to ensure that ads are placed in front of relevant audiences across various digital media. By using top-level and second-level categories, ad exchanges help define the types of content where ads will appear. Advertisers can use broad category targeting and refine it by creating white lists (to control ad placements) or black lists (to avoid undesirable sites).