While I'm certain that you now are salivating at the prospect of reading yet another industry player's predictions for the coming year, I'm sorry to have to disappoint you. Although I'm excited about 2007, which will no doubt be an even better year than 2006 -- and the behavioral industry's best year ever -- I prefer to reflect on the lessons learned in 2006.
This past year, newspapers, blogs and websites were filled with articles and posts about the expanding gap between Google and the rest of the industry. Billion-dollar investments did not help the leading players close the gap. They still continued to lose market share.
Although I promised I wouldn't prognosticate, I do predict that search and behavioral will be, without a doubt, the hottest areas of interactive advertising in 2007, because combined, they will create a better, more efficient advertising ecosystem and help close that gap.
How can I so confidently make this prediction? In the American Advertising Federation's poll of 168 industry executives, 52 percent said behavioral targeting -- giving users ads based on past search behavior and surfing activity -- is the most effective way to target ads. Interestingly, the same survey indicated that 71 percent of respondents believed search was either very effective or the most effective form of online advertising.
While the AAF study supports my prediction for 2007, I would not be so brash as to come to such a definitive conclusion based on secondary data. In fact, my own company, AlmondNet -- which pioneered behavioral targeting (we have patents to prove it) many years ago and implemented Post-Search behavioral as early as three years ago -- conducted its own survey of post-search behavioral ads delivered by some of our clients in different sectors. We found that behaviorally targeted ads delivered over the course of a three-year period generated five to 10 times the conversion rate of non-targeted ads with the same clickthrough rate.
Basically, ads delivered via behavioral targeting are 500 to 1,000 percent more likely to result in a purchase than their non-targeted counterparts. This is particularly compelling because it represents a huge uptick in conversions although the same number of consumers is clicking through the ad. It illustrates that behavioral targeting's true value isn't in delivering more ads, but instead delivering the ads to the correct audience that has demonstrated an intent to purchase-- an intent that may only be recognized via the aggregation of accurate consumer search data.
As major brands shift more of their ad budgets to online marketing during 2007, a year when online advertising budgets are expected to climb 42 percent over 2006, the rising tide will not necessarily lift all boats. Advertisers and marketers will seek innovative media owners and ad networks that have access to the behavioral data that allows them to identify the right audience that will convert and deliver customers. If a content owner, ad network or search engine can't deliver this post-search audience, the ad dollars will go to competitors who can. This is a lesson that should be heeded by companies wishing to participate in the rising post-search tide.
Roy Shkedi is CEO and founder of AlmondNet, a behavioral targeting media and advertising company in New York. .