Our online experience is supported by advertising. In fact, 86% of all time spent online in the US is spent on advertising supported websites. And many of these ads are tailored to specific audiences using data. In this video we'll have a closer look at what data-based advertising is. Before then learning more about data collection, data formats, and data storage later. Let's dive right in. Advertising is at the heart of our content experience online, and in an indirect way it is what funds our experience. And this model isn't new, think about newspapers, cable TV, and magazines. While you do pay for access, advertising is still what pays for most of the content. And maybe you would like an experience without advertising. But it would also mean that we couldn't consume as much content for free. And the ads we see online differ on how annoying or useful they are to us. Often, the more useful ads are the ones that are customized to our specific needs. But for some people, those ads also feel a bit intrusive. Ads that are customized to our needs use data to understand what may appeal to us. And that data is collected by various parties based on our online behavior and our privacy settings. And data-based advertising uses data to optimize an ads' audience, its message, and creative, so that it's maximally appealing to the people who see it. Data also helps advertisers gain a better understanding of the audience, reach that audience online, and adapt or customize the ads shown to that audience. Data-based advertising is widely used online. It was introduced in the early 2000s by companies like Yahoo and MSN, and it shifted the advertising paradigm from contextual advertising, which was the common model until then. In contextual advertising, advertisers look for content that is topically related to their ads. For instance, an advertiser would try to advertise running shoes next to content about running or other sports. And this is the most common advertising model in the magazine industry. And in the early days of the Internet, that was the advertising model adopted by most websites. Data-driven advertising is different. Ads are matched with the audience who sees them, regardless of where the ad appears. So an ad for running shoes would appear to a person interested in running, independent of whether that person is looking at running related content or not, at the time when they see the ad. Data-driven advertising typically results in more relevant advertising experiences. When ads are targeted to people who may have an interest in the product being advertised, they will be more useful to them. And this is typically a more pleasant experience than when people see ads online for products that are not relevant to them. For instance, if you're not a dog owner, ads for dog food are not relevant to you. But if you are a dog owner, those ads may actually have interest to you, and they may give you information you may want to act on. Data-based advertising, chances are the advertisers knows your interest, and can match the ads better to the things that appeal to you. From an advertiser's point of view, being able to show ads to people more likely to be interested in them is important. Data-based advertising enables advertisers to deliver ads to people based on their demographics, location, interests, or previous behaviors. And research has demonstrated that data-based advertising is over 500% more effective than advertising without data. Now that you understand what data-based advertising is, let's find out where the data used to optimize ads actually comes from, and we'll do that in the next video. See you there.