The news: Forty-nine percent of American consumers feel stereotyped by targeted, identity-based advertising, per GumGum survey data cited by Adweek.

• 31% felt the ads were “clueless rather than malicious,” while 18% said the ads “completely missed the mark.”
• 62% of participants disapproved of ads that targeted sensitive topics, such as health and finance, with 21% feeling “violated” by these ads.

This comes in light of the Equal Rights Center suing Meta over claims that it uses racially discriminatory marketing practices based on data collected unethically from third-party sources and Meta platforms.

• For example, the ERC alleged Meta uses the sensitive data it collects to market for-profit colleges to Black users and public colleges to white users.

Why it matters: Issues with identity-based marketing are natural consequences of how consumer data is categorized, making these types of ads difficult to avoid entirely. Many advertisers view identity as an important marketing tool that, while having some downsides, is key to overall success.

Despite over half of US states introducing or passing consumer privacy laws, identity-based targeting remains an issue, a finding reinforced by the ERC lawsuit against Meta.

Our take: Overuse of identity-based ads, which rely heavily on personal data, can fracture consumer trust, especially in a period of increased concerns over data privacy. The frustration consumers feel over these ads creates a poor user experience with the potential for long-term brand consequences.

• Over half of US consumers don’t know how platforms use their sensitive information/data when they consent to cookies, which might cause some brands to view this as a less important issue.
• Still, GumGum’s findings indicate that a better approach is required if brands want to be inclusive to diverse identities. Other forms of advertising often provide a better option to connect with audiences without causing discomfort, per GumGum CMO Kerel Cooper.

To maintain consumer trust, brands should carefully consider how heavily they rely on identity-based advertising to reach target audiences. Brands might start moving beyond reliance on third-party cookies and focus on opportunities like contextual advertising to regain consumer loyalty in a world where people are increasingly hesitant about how their data is being used.