In many ways, technology has opened up opportunities that simply weren’t available with more traditional advertising methods. For one, these ads are more cost-effective than formats like print and television — especially because you can carefully target who sees your ads based on the sites where they appear as well as audience demographics.

You also receive more feedback from digital ads, in the form of tracking your clicks and conversions from different campaigns and ad variations. Perhaps most notably, digital ads provide the platform for reaching consumers, including your target audience, at a scale that would have been impossible a few years ago. With over 5 billion Google searches every day, that is a huge potential audience for your business. But if you could reach each internet user, on every website, would you really want to?

Why Bigger Isn’t Always Better

To an extent, every person who sees your ad means another opportunity you have to make a sale. In that case, it would make sense to advertise everywhere possible, and as much as possible. Yet for most businesses, every internet user is not a legitimate potential lead. Perhaps an online visitor doesn’t fit your product’s use case, or they aren’t in the purchase point of the buying cycle.

Any advertising dollars spent to show your advertisement to these internet users, whether through the website they visit or ineffective targeting, would be wasted. This is why it is so important to know your audience and precisely target your advertisements to reach that audience.

What if your product or service is something that everyone needs, meaning your audience is truly universal? You may think that putting your advertisements on every website to reach the highest number of users makes the most sense, but a concept known as signaling indicates otherwise.

The Theory and Evidence for Signaling

Signaling as an economic term refers to the way that an insider, someone with more information, influences buying or selling behavior by outsiders based on their actions. For example, the owners of a company that is planning to go public work hard to signal that the company is a good one, by holding onto their ownership and carefully preparing their prospectus.

Advertisements as well provide potential customers signals about your product. If a poorly designed ad looks inexpensive, it signals to viewers that the product or service it advertises is likewise cheap. On the other hand, a high-quality ad crafted by a professional designer shows clear investment — meaning that the advertiser believes the product itself is of quality and worth the expense.

The websites and platforms where your ads are displayed also send a signal to your potential customers. When you advertise on a site, your brand and your product or service are associated with and judged based on the quality and nature of that website.

Studies have shown that consumers do make assumptions about the value of a product based on where they view its advertisement. In fact, research has shown that higher level advertising — specifically placement — can often be a better indicator of a solid product than product ratings. With your potential customers making instant judgments of your ad, it’s critically important that your ad displays on the right websites: websites that reflect the value of your product and the values of your brand.

Key Takeaway

Even if you want to reach your audience at a high scale, widespread advertising across the internet is not the best strategy for your brand. You need to ensure that your ads only appear on the right sites so that your product and brand reputation don’t suffer by connection to bad publishers.