The Claria Corporation (formerly The Gator Corporation) provides behavioral marketing services to large Fortune 1000 advertisers and smaller advertisers and publishers. As the Senior Vice President and Chief Marketing Officer, Scott Eagle manages the Marketing Communications teams, Creative Services and Product Management Teams.
Eagle is actively involved in all facets of behavioral marketing, and every aspect of the products and analytics that touch and benefit his clients. During an interview with iMedia Connection, he spoke passionately about the career he loves, predicting a bright future for behavioral marketing.
iMedia Connection: What are contextual and behavioral marketing and how do they differ?
Scott Eagle: Contextual is a subset of behavioral. But let’s start with demographics. Demographic targeting is targeting the sweet spot probability for your target audience. For example, if you were selling airline tickets, you might say, “My primary audience would be males, 30 to 45, business professionals who tend to travel.” As for your odds of getting someone who is going to buy an expensive ticket for air travel, you’d be better served targeting males 30 to 45 than random people on the street. So that is demographic targeting.
Contextual targeting goes one step further. Can we identify somebody’s desire based on the context of where he or she is or what the person is doing? For example, I might advertise in travel magazines if I am selling airline tickets. Or I might advertise on the Web. I might find a vertical section of a portal or the travel section of a publisher like the New York Times. Because my odds of hitting somebody interested in buying an airline ticket are much greater if I have contextually targeted someone who is viewing travel content on the Web or a travel magazine than the random population.
Contextual targeting has been around for dozens, hundreds of years, right? People would sell the stomach remedies at flea markets to people who ate too much cotton candy back in the 1800s. In the last 30 years, marketers advertise in baby magazines for baby products, or beauty products in glamour magazines. That’s all contextual targeting. And it’s very effective, relative to demographics.
Contextual targeting is an element of behavioral targeting. What takes behavioral targeting to the next level is a greater understanding about the user’s needs, enabling a marketer to deliver even more value to that consumer.
iMedia Connection: Could you give an example of how this concept could be applied to an online campaign?
Eagle: Let’s use the example of airlines. Say someone did a search for domestic cross-country travel. A contextual marketer would say, “Ah ha! I am going to give them all the kinds of information that I think would apply.” Save 40% on domestic, coast-to-coast travel might be one. Cheap travel across country might be another based on context.
But a behavioral marketer would say, “Wait a minute. Maybe this person is buying it on a corporate account and they don’t care about a 30% reduction.” What they care about is on-time connections or they care about double mileage because they get to put it in their pocket. So a behavioral marketer wouldn’t spend the money or waste the impression to tell that consumer, “Save 20%.” They would say instead, “On-time connections with Delta or triple the mileage.”
Or they may know by behavior that this person always rents a car when he gets to the airport and he is always loyal to airline X, so don’t bother wasting your impression telling him about airline Y. He has mileage with airline X, he loves airline X, but you know what? Tell him about the rental car deal that’s available at that airport. So a behavioral marketer takes it to the next step with more relevant information.
A behavioral marketer would say, “Let’s understand who this person is. Let’s understand what his needs are.” And what return would an advertiser get to move this person to shop at their store?
A behavioral marketer potentially has deep insights that enable it to give a more relevant offer, a more targeted offer, a higher value offer to the consumer. And that certainly eliminates a lot of the waste for the advertiser.
Again, someone might type in the word mini-vans or go to the mini-van section, but what she is actually interested in is used mini-vans. Or she many not be sure if she wants a mini-van or an SUV. But a behavioral marketer says, “Ah ha, I can educate that consumer on why she should consider SUVs over mini-vans.” So a behavioral marketer can provide a lot more information.
And the more you can blur the lines between advertising and information, the more you can give consumers something they perceive as information versus an ad, the better it is for the consumer and the advertiser.
iMedia Connection: When does advertising become information?
Eagle: It happens with auto insurance. Geicko calls all the time to my home, it sends dozens of envelopes, direct mail, to me all the time and it is always noise. But you know what? When I come home and I find out my current carrier just sent me the renewal form and there’s a 32% increase, I am annoyed. But you know the whole inertia thing, I am not going to pick up the phone and call around. But if I get a phone call that evening from Geicko, “Do you have 15 minutes?” “Yes I do!” It’s information.
That’s information at that time and it’s valuable to me. So a behavioral marketer could create that “Ah ha!” moment of, “Yes, it is value to me.” Contextual marketing is somewhat guessing based on the context - which, by the way, is still better than demographic targeting.
iMedia Connection: Going back to demographics, how would a marketer who defines its audience using demographics use behavioral marketing?
Eagle: Let’s switch gears from airlines to automotives. If you are selling SUVs and you are limited to how you can target and you want to buy scale, you pick a probability and you pick a demographic. And you say, “You know what? Lots of people buy SUVs lots of times during the year, but I sell 80% of my SUVs in these seven months and I sell 70% to people of this demographic.” So they come to us and say, “We take a hiatus in November and we spend heavily in December, January, May and June, and we target males 30 to 45. How many do you have?”
Let me ask you a question, “If my wife is interested in buying an SUV in November, do you not want to talk to her?” “Well of course I do!” So what a behavioral marketer would say is, “Why do you care?” If you have the scale and ability to reach people who are buying your product or interested in your product, regardless of a demographic, wouldn’t you like to talk to that person?
A behavioral marketer like Gator might say, “Last month we saw 120,000 people. We don’t know who they are, they are anonymous to us, but we can approach 120,000 people on your behalf that are interested in a car of your class.” Look at the metrics. That is very powerful because that is really a lot of scale.
Two nights ago I was watching an adult show at about 9:00 at night and saw an ad for a high-end Sedan, either a Lexus or an Acura. And at any given point in time, I think the statistics are 8% of the population is shopping for a car. That means for every 1,000 people who watch this show, which was targeted at males 30 to 45, for every 1,000 impressions they ran, 920 of them fell on deaf ears. Of the 80 of the 1,000 that were interested in buying a car, less than 10% are buying a sports car. That’s eight. That means 992 of their demographically targeted impressions didn’t fall on someone who is buying a sports car.
The cop-out is saying, “Look at all the branding benefit.” No! Over 800 of those 992 are never buying a high-end Sedan, period.
It is way more than 50% of ads that are wasted. In my example with automotive, over 90% of the ads, demographically targeted, are wasted.
Paid search and behavioral marketers are finally delivering on the original promise of the Internet, which is being able to have a more robust insight into a consumer’s needs than a broad demographic.
iMedia Connection: What other insights can a behavioral marketer provide?
Eagle: A behavioral marketer can help an advertiser better understand actual, not reported, behavior. You can survey people about what they said they did two months ago, or what they might do in the future and you get what you get. If you actually see a behavior online and talk to a consumer at that moment -- You just viewed content at car manufacturer X and then you went to car manufacturer Y and you’ve never gone back to car manufacturer X, why? What didn’t you get at car manufacturer X that they need to know about? -- you can immediately react to that behavior. Not only that, a behavioral marketer can tell if someone is early on in the car process or near the end when they are about to make a decision between one or two makes or models.
You can become so much smarter about the targeting, which will improve your offline campaign. Why do you keep showing skiers on your TV commercials -- 80% of people who are interested in your car are very cerebral and like to read, or they are golfers.
iMedia Connection: Why aren’t more companies investing their advertising dollars into online behavioral marketing campaigns?
Eagle: Number One: Why would you target a demographic online when it is not as robust as targeting a demographic offline in terms of commercials or whatever?
Number Two: How do I know when I advertise online, what benefit I am getting offline? And that is hard to figure out.
Let’s say a company is having an online and offline shoe sale, or an online and offline hardware sale. It certainly knows if it is advertising online how many people go and view content at its site and buy online, that’s easy. And it can measure the ROI from an online perspective.
But how does the company know what happened offline? McDonalds plans to run the McChicken sandwich on TV, but why would I advertise the McChicken sandwich online? How do I know how many people I am driving into McDonalds? Well, a behavioral marketer could say, tell me your target audience – just hungry people or health-conscience people -- we can target those people. And we can also target the lunchtime hour, day-part. And, very powerful, a behavioral marketer could test and control for X impressions for X amount of time, for one population.
A week later, I could survey people, and I can ask them, what did you do last weekend? Did you shop? Did you go out for any meals, any fast food? What did you buy? And you can absolutely quantify how you move the needle offline, via your online advertiser.
And a behavioral marketer knows because it can control the frequency, the message, the sequencing, everything about its campaign to know who has and hasn’t seen it at the user level.
So why aren’t companies spending money on behavioral? Well, there are not a lot of big behavioral marketing companies out there. Gator is and we have over 900 clients spending lots of money and moving elements of their budget because it works for them. We have a 92% renewal rate. But they don’t have a lot of options to spend money efficiently with behavioral marketing companies because how many behavioral marketing companies do you know of?
iMedia Connection: What kind of systems does an advertiser need to run a behavioral marketing campaign?
Eagle: That is what is beautiful about this – really nothing. You need to have a market need, a vision of who you want to reach and what your value proposition is.
You don’t need to have creative capabilities or agency capabilities, but if you have it that’s great. We help craft the campaign, the strategy and the tactics and the vehicles that we work together on.
So you don’t need great sophistication, you just need to know you have the need. And we will help make you more sophisticated as a marketer because we will provide those insights and show you how you can benefit from them with all your marketing.
iMedia Connection: Is there something beyond behavioral marketing? Does online advertising have another level?
Eagle: People talk about, “Is online branding or direct response?” You’ve heard that debate. And I laugh because at the end of the day, no one advertises for the sake of advertising. I advertise to sell products.
Advertisers want to sell products. And they want to sell products efficiently. They want a high return on their investment, they want to advertise to their highest potential audience, they want to craft a message and eliminate waste.
You ask, “What’s next?” Advertisers seek out efficiencies. They seek out things that provide value to consumers and that is just understanding a behavior. The next level may be making all advertisement across the Web be behaviorally targeted. Why should anyone come and see a demographic ad online, five years from now? Wouldn’t it be great?
You are going to have to see ads. Ads keep content free and services free on the Web. So the average consumer might see hundreds, if not thousands, of embedded ads, banners, skyscrapers, page take-overs. If you can target any and all ads online behaviorally, it adds more value to consumers, it is more relevant and of tremendous value to advertisers. And I think that is the next way, it is just smaller ads, better targeted at consumers, everywhere they go on the Web.
In fact, give less ads! Which is better -- giving 100 ads and a random two make any sense for the consumer, or giving them two, three, four great ads? If a consumer has to see 500 ads in a week, then behaviorally target them.
Consumers would rather not see ads. But to the extent that they are getting something for free and there is a value exchange, I think every consumer would say, “If I have to see 100 ads embedded, make them relevant.”
iMedia Connection: What is the future of behavioral marketing?
Eagle: It’s just continued adoption. We have had incredible acceptance. It’s continued growth and the movement of more budget into behavioral marketing.
I keep hearing, “What percentage of your ad budget should be spent online?” It should be whatever percent of your budget makes sense for you and your brand, based on the value of what you get spending it online versus offline. If somebody can more effectively deliver audience to you, and put buyers and sellers together for you, and drive market share for you, and it is more effective to buy online, then you’ll spend all you can online. If it is not effective for you and you are comfortable offline, then you are going to spend more money offline.
The fact that all the big publishers are starting to come out and embrace it and are attempting to at least get a component or two of behavioral marketing is a testament to the value of behavioral marketing and what the publishers are hearing from the advertisers. I am not going to just buy a demographic online. So you are going to come up with ways to deliver a form of behavioral marketing to me.
And I think the industry is responding to the success they’ve seen with Gator. They’ve also seen the success of contextual with Google and Overture and people move and adopt their models to things that are working for consumers and advertisers. And that’s why I think the future is pretty bright for behavioral marketing.
