The ad industry is consumed by keyword search advertising and the growing search wars. A Jupiter Conference taking place in New York right now proclaimed: "Search is the hottest topic in marketing. Period." And Microsoft is muscling up to go against Google for what many believe is the biggest prize in online marketing: the sidebar ads, pop-ups and banners that appear whenever a search is performed. With the billions of searches conducted every day, that would seem to be a fat prize indeed.
Although search ads are a significant development, it's important to understand why all that Googles isn't gold.
First, when you think of everything people do online, search is just one behavior that makes up a tiny percentage of their overall experience. The number of Web users who are not searching -- and their spending potential -- is enormously larger than the number of those who are.
Second, search is a direct response model that reaches individual users at the "bottom of the funnel" when they are close to making a purchase. The big advertisers and their agencies are less than overwhelmed with the search ad paradigm. Just type the words "beer" or "cola" into Google to see what I mean. Fortune 500 advertisers put the vast majority of their ad dollars against branding campaigns that build awareness and loyalty with a larger audience at the top of the funnel.
Bottom line? Search is great and it's helped drive online ad revenue, but it's only one part of the marketing mix. It is not the Holy Grail advertisers and publishers are waiting for.
The true buried treasure of online advertising is behavioral targeting because it incorporates a myriad of behavior -- including search -- to build specific, targeted audience segments. That allows advertisers to reach their key audiences, no matter where they go on a website.
Behavioral targeting is the mirror image of keyword search. Where search brings a single user to a variety of relevant advertisers, behavioral targeting brings a single advertiser to a sizable audience of relevant prospects.
The implications cannot be overstated. Behavioral targeting enables highly-targeted online brand campaigns for the first time. For example, if Ford is interested reaching car enthusiasts, they don't have to wait for an individual action, like search, to respond. Ford can deliver its ads to this audience everywhere that audience goes on a website.
By coupling standard behavior with the behavior of the at-work online audience, advertisers can even target ad campaigns to specific job functions, industries or companies. That means an enterprise software company advertising on WSJ.com can be assured that their ads reach only CTOs, CIOs and others who have the greatest say in the decision to buy their products. And because this targeting is done at the campaign level, the company can build loyalty over time, rather than relying on instantaneous interest-a rare occurrence with senior decision makers. This is critical because brand impressions at the top of the funnel are what drive clicks at the bottom where search ads reside.
The added benefit of behavioral targeting is that, unlike search, it also addresses one of online publishers' biggest concerns: unsold inventory. The reason for this is that behavioral targeting-based advertising is delivered to an audience, rather than to a place. Traditionally tough-to-sell pages are now not only an integral part of an ad buy, their advertiser value increases, enabling publishers to sell them at a higher CPM than run-of-site. This found inventory creates an entirely new way for publishers to monetize their readership.
Behavioral targeting is creating a fundamental shift in advertising, and there are numerous reasons why it's well poised to have a tremendous impact: double-digit growth in online advertising last year, a shrinking TV audience, and leaner ad budgets that demand more creative and efficient spending, for example.
Search has its place, but only behavioral targeting has the potential to unlock billions of dollars from the largest advertisers.
Bill Gossman is CEO of Revenue Science, a provider of customized audience segments to Web publishers and advertisers.