Behavioral Targeting (BT) is an increasingly popular topic among online marketers, and for good reason.
The benefits of increased relevance to consumers, increased ROI to marketers and increased revenue to publishers have been repeatedly proven. However, now that significant dollars are flowing to BT, it suddenly seems that every marketing services company touts itself as a leading provider of the technique, which leads to considerable confusion for marketers.
Perhaps the most common customer request we hear is, "Everyone out there says the same thing. Please help me understand the difference between all of these behavioral marketing companies!"
The many minor differentiators between providers makes it difficult to delve into them all in this article, but I will offer a high-level distinction that will hopefully help distinguish the most important nuances of BT.
Passive vs. active behavioral targeting
BT can take many things into account, but it always intends to act upon exhibited consumer behavior. For this article, the main differentiator is what type of exhibited behavior is being tracked, which broadly falls into two categories, which we term "Passive" and "Active."
Passive BT -- also sometimes called Targeted Segments and other names -- is generally done either through applications that reside on a user's computer, such as downloaded software, or through tracking tags that reside on publishers' websites. In either case, these technologies anonymously record consumer web browsing activity. The consumer is unaware that such tracking is occurring, as it doesn't affect their surfing activity in any noticeable way.
The tracking information is collected and analyzed, and the cornerstone of this approach is the subsequent attempt to make increasingly educated guesses about a consumer's interests based on the data in order to deliver timely and relevant marketing communications.
Examples of providers of this approach include Tacoda, Revenue Science and Claria.
Active BT on the other hand -- also called User Retargeting -- consists of anonymously registering consumers' proactive, direct interaction with a company's marketing efforts. For example, display or email advertisements or material on the client's website and then implementing follow-up marketing programs that address that explicitly expressed interest in an attempt to deepen the relationship and lead to conversion.
Leading providers of Active BT include major networks such as ValueClick Media, Advertising.com and technology providers such as DoubleClick and ValueClick's Mediaplex.
In short, Passive BT records where a consumer goes in general, and Active BT records what the consumer does while interacting with the brand. An analogy is window shopping vs. actual shopping. You might see someone on the street looking in the window of a couple of stores and draw the conclusion that the person is genuinely interested in the wares, when the reality is that they might just be killing time while waiting for someone.
Conversely, if that same person walks in the store, picks up items, asks questions about them, et cetera. it's a different story -- there is explicit interaction by the consumer. Both instances have meaning, but one is clear-cut and the other requires speculation.
Both are valid for better understanding consumer interest, but the distinction is important when it comes down to budget allocation because knowing the difference can help prioritize your spend.
For instance, if you have a limited marketing budget and/or a high-consideration product, focusing your spend first on Active BT as much as possible would be wise, and if any budget remains, you can then expand into Passive BT to help enhance volume. Indeed, if budget is very tight, you can drill even deeper into the Active BT by first targeting recent buyers for upsell possibilities, followed by cart abandoners, then information requesters, then site visitors, and so on, before ever getting to Passive BT.
The ideal scenario is to combine both techniques as budget allows and as marketing objectives and goals dictate.
Behavioral Targeting is certain to continue to gain ground and become a central component in savvy marketing plans. But in order to ensure that it doesn't become just another technology-of-the-month in the rapidly-developing world of online marketing, marketers must understand the different facets of it and use them to their greatest advantage in order to realize their business objectives.
Sean Quick is senior director of product management for Mediaplex, a leading provider of interactive marketing technologies. .