Revenue Science's CEO says that consumers are consistently more receptive to behaviorally targeted ads than to contextual advertising.
A recent study from Jupiter Research indicates that consumers are more receptive to behavioral targeting than contextual ads. The findings really emphasize the growth and maturity of behavioral targeting. And now that we're entering the political season, I can't help but notice some parallels between the election cycle and the rise of behavioral targeting.
Who's going to run?
Before the candidates take the field, there is much speculation on who will run for office, resulting in the media, wonks and various other groups igniting the conversation on what the outcome will be.
Behavioral targeting actually started in this same exact manner.
There were numerous opinions about this new technology. We heard that it could be great, but we also heard that it was too difficult to coordinate. Reports from trade media were energetic about the idea of behavioral targeting but wouldn't go as far as saying that the technology worked. But, as speculation and voices grew louder about the possibilities of behavioral targeting, behavioral targeting -- much like the election cycle -- entered the next phase.
The first evidence
The first stage of the general election after the field has been announced is the "straw poll." Straw polls gauge the electorate's opinion of a particular candidate; however, these polls are not always accurate and usually have little influence, although they may sway delegates to choose a candidate in a caucus. Behavioral targeting, when first introduced about four years ago, had its own "straw polls" in the form of research.
Research conducted by all types of firms, agencies, advertisers and publishers tried to gauge the power behavioral targeting held. However, many advertisers and publishers were not sold on the benefits that behavioral targeting could provide. That is, until research started to pop up discussing behavioral targeting's advantage over run-of-site.
For example, a study in early 2005 on ads delivered to an unqualified audience that received run-of-site placements and a highly targeted audience that received behaviorally targeted ads found that behavioral targeting showed about a 200 percent increase in awareness compared to run-of-site. In a similar study in April 2005, it was shown that behaviorally targeted ads reduced customer acquisition costs by 61 percent compared to run-of-site.
So the first "straw polls" of behavioral targeting allowed the industry to get an initial glimpse of what the technology could do. But this new online ad form had a long way to go to prove that it was the right choice for every online advertising campaign.
Belief into action
The primary election decides which candidate will compete for the presidency. In the online advertising world, behavioral targeting entered the primary season about one to two years ago, when advertisers -- and to a certain extent publishers -- started to believe the promises of behavioral targeting.
If studies in the "straw poll" era by behavioral targeting companies reached deaf ears, studies on those who plan to use behavioral targeting were heard loud and clear.
For example, a 2006 report found that 74 percent of marketers were using or planning to use behavioral targeting in the next 12 months, compared to only 69 percent of marketers using or planning to use contextual ads.
Following a June 2007 report, we've started to see a major power shift in how advertisers spend their online dollars. This report highlighted the fact that right now, behavioral targeting is a $575 million industry and that in 2011 -- less than four years from now -- behavioral targeting will be a $3 billion industry.
These studies pushed the philosophy to the next logical conclusion: behavioral targeting is in fact better than the current mode of run-of-site advertising. In many ways, behavioral targeting grew more sure of itself and expectations were raised.
The primary results are in. There remains one last thing in the way: the general election.
The winner
We all remember the most recent general elections, and we remember them because of all the vitriolic reactions from both sides of the aisle. With online advertising, the results of the general election are in, and it has been proven that the most logical and sophisticated method of reaching the right audience is based on -- you guessed it -- the audience itself, and not the sites they go to.
A September 2007 research report -- sponsored by Revenue Science -- found that for online shoppers, behaviorally targeted ads outperformed contextual ads, in some cases by up to 22 percent.
In other words, consumers are consistently more receptive to behaviorally targeted ads than to contextual advertising. Behavioral targeting has proven its worth to advertisers, publishers and as this study indicates, consumers.
But we still must remember that the next term is right over the horizon.
Just because we understand this truth to be self-evident, we must not forget that behavioral targeting still needs to govern in a populist manner. Advertisers need to work with agencies and publishers to create the correct way of utilizing behavioral targeting. This is not a one-way street. Advertisers also need to devote time to learn the technology, which will then enable them to understand the electorate and deliver the right ads.
If we continue to play our cards right, behavioral targeting will have many more long years ahead as an online advertising leader.
Bill Gossman is the president and CEO of Revenue Science. Read full bio.
