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Updated Oct 20, 2023

Facial Recognition Advertising: The New Way to Target Ads to Consumers

This personalized form of advertising is incredibly innovative – but also concerning.

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Kiely Kuligowski, Business Strategy Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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If the refrigerator door display changes from Pepsi to flavored water before your eyes the next time you walk into a Walgreens, don’t be surprised. Many Walgreens locations now incorporate technology that embeds cameras, sensors and digital screens into the cooler doors, creating smart displays that target ads to individual customers, similar to personalized online ads

These innovative and interactive doors boast several benefits, like real-time stock information and instant campaign feedback, but also bring up questions about the future of targeted marketing and where the line of intrusion exists in this modern marketplace. 

What is facial recognition advertising?

Facial recognition advertising is the use of sensors that recognize a customer’s face and change how an ad appears to them in real time. The goal is to create dynamic ads that adjust to appeal to a person’s interests the moment they notice the ad. [Learn about customer segmentation, which helps make custom advertising possible.]

At Walgreens, the sensors and cameras in the refrigerator doors connect to face-detection technology that can identify a customer’s age and gender. They can also glean external factors, like if it’s hot or raining outside and how long the person has been standing there, and even pick up on the person’s emotional response to what they’re looking at. This allows the doors to act as a dynamic, responsive marketplace, much like how effective online ads use your information to better cater advertising to your interests. 

The doors for Walgreens were created by Cooler Screens Inc. and thought up by CEO and co-founder Arsen Avakian. When he was the CEO of Argo Tea Inc., Avakian spent hours in cooler aisles trying to figure out how best to advertise his products. This was his creative solution, one people are likely to see more and more.

Did You Know?Did you know
The company most commonly associated with facial recognition advertising is Walgreens. As of fall 2021, 750 Walgreens locations – mostly in the Chicago area – were home to 10,000 cooler doors with facial recognition ads.

How can my business use facial recognition advertising?

As a newer technology, facial recognition advertising isn’t yet available to most small businesses. Currently, megacorporations are its primary users, as they have enough money and locations to roll out the technology at scale cost-effectively. 

For now, the best way to engage with facial recognition advertising as a small business owner is to keep reading news about it and stay informed about the technology’s evolution. That will help ensure your company is ready and knowledgeable when such tools are available for smaller firms to take advantage of.

What are the benefits of facial recognition advertising?

Using Cooler Screens as an example, here are some potential benefits of facial recognition advertising.

  • Simultaneous real-world and digital value: These intuitive doors combine the best of digital power with the traditional lure of in-store shopping. They show off the products in their best light and provide real-time CRM analytics, telling advertisers which items customers picked up or looked at and alerting retailers when certain items are low in inventory.
  • Uniquely dynamic ads: Using proximity sensors in conjunction with facial recognition technology to determine when a customer is approaching, the doors shift what products are in view based on what they think the customer will want to see – ice cream on a hot day, for example, or water for someone who looks like they came from a workout.
  • Customization (depending on the advertiser): The doors can also be programmed to show specific advertisements and promotions, and Cooler Screens has partnered with advertisers to display animated ads. This feature reveals the real purpose of these doors: They’re a vehicle for advertisements. The doors track which items a customer picks up and may show an ad based on that choice – for example, a promo for a frozen pizza if it sees the person grabbing a six-pack of beer, which they may also have chosen based on the doors’ display.
  • Greater sales for previously ignored products: The odds are slim that a potential customer enters a store knowing every item available for purchase. Cooler Screens offers an opportunity to more effectively market lesser-known products and increase sales by capturing attention as customers browse.
Regardless of the technology you use, make sure you understand the differences between advertising and marketing for the most effective campaigns.

What are the concerns with facial recognition advertising?

As with most facial recognition technology, many consumers are worried about privacy and data protection. Here are some concerns to consider when it comes to facial recognition advertising in particular.

  • Lack of anonymity: Cooler Screens maintains that it does not store any data and that the data it does collect is anonymized, which means it can’t track repeated purchases or habits by any particular customer. However, some experts, like those at Duke’s Fuqua School of Business, argue that full anonymization is not possible. This is almost certainly the case in densely populated cities like New York and Chicago – two cities where the Cooler Screens have been placed.
  • Lack of human touch and critical thinking: There is also the perennial issue of artificial intelligence’s, well, intelligence – whether it is able to truly and accurately read a human’s emotions and desires without person-to-person interaction. This ad technology often relies on data to determine which products it displays, which does not always match what a customer is looking for when they come into a store. In contrast, a salesperson can engage with a consumer and direct them to a product based on that interaction.
  • Assumptions and bias: If a young woman walks up to the refrigerator screens, she will probably be shown low-calorie frozen meals or diet protein ice cream when she may actually be looking for Ben & Jerry’s or a Red Bull. Reliance on gender stereotypes could lead to inefficient or even inadvertently offensive advertising.
  • Potential for overstimulation: Marketing consultant Nicole Meyerson sees a potential issue in overstimulation. “We’re already approaching the risk of being bombarded by too much visually interesting stimuli in public,” she said. “From tech-enhanced billboards to cars with built-in touchscreens, we’re already very distracted.”
  • Advertising blinders: What’s more, because advertisements have become so ubiquitous, many consumers are developing banner blindness, the phenomenon of being so inundated with ads that we simply stop seeing or absorbing them. 
  • Possible legal repercussions: For small business owners, there are laws on the types of data you can collect on customers. However, most data that platforms collect every day lacks any sort of regulation, which could work in some companies’ favor – or prompt litigation.
Did You Know?Did you know
No single law covers all data collection concerns for small businesses; the rules you must follow come from several laws. Some of these laws pertain to certain situations only. For example, HIPAA may be pertinent only if you want to open a private medical practice.

What is the future of targeted advertising?

Despite the above concerns, many believe the use of facial recognition is the logical next step in targeted advertising. After all, internet browsers and social media are full of ads designed for and targeted to specific users. Most of the time, it is subtle enough that we just don’t notice, write it off as a coincidence or have already clicked “accept” on too many cookie agreements to care. Advertising based on facial recognition is merely the in-person version of targeted online ad campaigns.

“I think this is exactly where marketing is heading, if it’s not already there,” said Jonathan Mendoza, former content marketing specialist at Fueled. “Millennials and Gen Z-ers are the top two demographics, [and] they want to feel seen and heard, so marketers have begun to target these demographics and their specific interests. I think it was only a matter of time before marketing became this personalized.” [Related article: How to Be a Good Manager]

Ultimately, the ability to advertise and target products to shoppers in real time will be increasingly common in modern marketing, a tool used not just by big corporations, but also by small entities. Consumers want to feel seen and be given exactly what they’re looking for almost instantaneously, and facial technology is a strong step in that direction, irrespective of the drawbacks.

Max Freedman contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article. 

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Kiely Kuligowski, Business Strategy Insider and Senior Writer
Kiely Kuligowski is an expert in project management and business software. Her project management experience includes establishing project scopes and timelines and monitoring progress and delivery quality on behalf of various clients. Kuligowski also has experience in product marketing and contributing to business fundraising efforts. On the business software side, Kuligowski has evaluated a range of products and developed in-depth guides for making the most of various tools, such as email marketing services, text message marketing solutions and business phone systems. In recent years, she has focused on sustainability software and project management for IBM.
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