For agencies, behavioral targeting (BT) solutions are usually flexible enough to accommodate the various business models of their clients. As more traditional advertising dollars are shifting to the online market, advertisers are willing to pay higher rates for highly targeted ads directed at their most valuable customers. They understand that the ROI can compensate for the premium costs of a campaign that incorporates BT.

Joe Gallagher, Sr. VP of Sales, Tribune Companies: As more and more executives and more and more clients see the viability of the internet… you are going to see greater client comprehension about behavioral targeting, but right now, most of that understanding resides with the agencies. I think it’s pretty difficult still for clients to understand it, and that’s where it becomes a more challenging sell on the agency’s side.

Helping clients understand BT: Communication between the agency and the clients can be a key factor in the client’s willingness to accept BT as an option. Understanding how BT works and following through are important accordingly.

Nick Pahade, Managing Director of Beyond Interactive: Our clients are receptive to it when it is clearly and concisely explained to them and there is an understanding as to how exactly it works. It does require a carefully formulated taxonomy, constant monitoring and analysis to reach its full potential… and of course it can still only be as effective as the quality of the creative and/or the receptivity or attractiveness of the message/offer that the marketer is trying to communicate.

Others are even more enthusiastic in their recommendations…

Jim Warner, President, Avenue A/Razorfish: Behavioral targeting is one of the “killer” options that we recommend to clients because it can deliver outstanding results and it plays on the measurability and accountability of the interactive medium. Our clients are generally receptive to BT because it can make campaigns more efficient and effective by reducing waste and increasing relevancy. We recommend that our clients test two broad kinds of BT: publisher-side targeting which uses data collected on publisher sites and ad-server targeting which uses data collected on our clients’ sites.

Overcoming the Obstacles: BT can sometimes be a hard sell, with clients voicing concerns about privacy issues and a need to see more of a history in successful BT campaigns. Those who are afraid to dip their toes into the waters of BT are looking to agencies for assurance that may not yet be available statistically.

Louis Jones, U.S. Director, MPG/Media Contacts: [Media] Contacts describes the difficulties this way: BT is a strategy we look at for all clients as we evaluate what the right opportunities and online mix is for any given campaign. Not all clients are receptive -- there is the privacy speed bump, but then some clients truly want to know whether BT can add value in the form of a stronger ROMS (return on marketing spend). BT comes at a premium. The results we have seen to date are very mixed. It works in some cases, but not in all. In cases where it does not, the price premium certainly comes into question. It is great when it works because it proves the premium worthwhile.

Privacy is a constant concern. According to responses to the iMedia Communications/ Ponemon Institute survey question as to why some of the agencies were not using BT, about one third reported that they, or their company, were concerned over privacy and data security. [The iMedia Communications/Ponemon Institute survey was conducted exclusively for this report.]

Dr. Larry Ponemon, Chairman & Founder, The Ponemon Institute: This finding is not surprising given that behavior targeted advertising requires companies that use this technology to have strong data protection safeguards in-place to protect consumers.

Resistance to BT may come from a lack of understanding as to what it can provide.

Paul Lewis, Sr. VP Sales and Marketing, MindComet: We suggest our clients should explore and test BT options to compare results against control groups of traditional and existing online initiatives. Some clients are not receptive to this, primarily for the following reasons: they don’t understand it, they are busy (or) overwhelmed with too many other options, (and) they are concerned with associating their brand with anything that walks a grey area of consumer privacy.

Others find the issue is even more complex.

Jeremy Helfand, Senior Vice President, Advertising.com: While personally identifiable information is not necessary for behavioral targeting, I think a perceived problem is consumer privacy. Agencies can assuage advertiser fears by choosing a behavioral partner with strict privacy policies that adhere to industry regulations. In addition, the cost of behavioral targeting can be a bit daunting to advertisers at the onset. Because they are reaching a richer audience, CPMs are typically higher than standard campaigns. However, a closer look at backend performance will reveal, in the end, an overall increase in efficiency as fewer impressions are needed to achieve the advertiser’s goals.

How much and how often: Once a client is sold on BT, they still expect agencies to guide them in the process. What percentage of their campaign should include BT? What are the best methods for their particular circumstances?

Alan Schanzer, Managing Partner, The Digital Edge: It is very hard to say the BT inventory has X premium. Like anything else, the pricing for BT inventory is publisher-specific and dependent on the marketplace. That being said, based on benchmark testing, we are willing to "risk" a 15 percent premium for BT targeted inventory versus the standard rate for the buy. From an RFP perspective, we now request BT opportunities on about 75 percent of our buys. We see no reason not to request BT targeting solutions unless we have tried the technique and did not see value for a particular client or category. We are currently deploying BT for about 30 percent of our clients.

BT hasn’t worked in every situation flawlessly. For example, branding is often suggested as an inefficient way to use BT.

Gregory Smith, Executive Vice President, Carat Interactive: We use BT primarily for clients who are operating with some sort of CPA goal. Conceivably, BT can be used for pure branding, but we haven't found a way to efficiently employ it in that way.

There are those who are still not convinced and the “wait and see” attitude is not uncommon.

Elias Plishner, VP Interactive Marketing, UniversalMcCann: We really are only testing publisher side and network side so far. We’re not willing to invest the dollars into computer side testing until we see that it can move the needle.

Ownership and proprietary: There are other concerns when implementing BT campaigns. At a recent conference hosted by the Business Development Institute discussing online BT, panel member Andrea Ching -- partner and group planning director at mOne reported that keeping custom designed BT categories proprietary is a massive issue with her clients.

Andrea Ching, Partner and Group Planning Director, mOne: Competitive accounts absolutely cannot get learning from another client for free through BT suppliers. There’s a real “emotional response” to this concern.

As an example, if an ad optimization company designs a custom group for SUV buyers for a particular car maker (advertiser), and they refine and it and develop it so it works well, it becomes a proprietary group of features and can’t be handed over to another advertiser for them to take advantage of. Sometimes these special groupings of characteristics are based on the client’s own studies, making it all the more proprietary. If the confidence agencies have in online BT does indeed transfer to advertisers, some see a large increase in the amount of programs using BT.

Jeremy Helfand, Senior Vice President, Advertising.com: Behavioral targeting has become a top priority for agencies. It’s a no brainer -- behavioral targeting increases the efficiency and effectiveness with which campaigns are delivered. We have seen priorities shift for our direct advertiser clients as well. Last year was all about search, 2005 is all about behavioral. Why? Because it works. Period.

Understanding how it works: There are some who believe that the lack of understanding BT works on both sides, and often it’s the agency that lacks a full understanding of BT.

Lorraine Ross, VP of Sales, USA Today: I get the impression sometimes that the people who work at interactive agencies are so immersed in technology and the back end measurements that they’re not really marketers they’re really just technologists, accountants.

Some believe there is an overall awareness of BT that will eventually lead to a better understanding and more usage.

Peter Naylor, VP & GM, iVillage: I think people are finally realizing that the gap between the media usage and the advertising expense is going to start closing. If 15 percent of people’s time is spent on the internet but only three percent of marketer’s dollars are spent there, there’s still this big gap.

Getting BT accepted is a start, but once the ball is rolling, how do you keep it going? In the next chapter, the need for standardization and the hopes that some measurement of scope and scale can streamline BT are discussed.

Buy the complete report, Demystifying, Defining and Profiting from Behavioral Targeting, today!