The tantalizing promise of behavioral targeting -- delivering ads precisely to the right internet users at the right time based on their past web behavior -- has been touted for nearly a decade. While advertisers have been relatively slow to adopt BT as a mainstream marketing method, there are indications that this technology is gaining traction and may even be reaching a tipping point. A recent eMarketer report projected that advertisers will spend $1 billion on behaviorally targeted ads in 2008 and upwards of $3.8 billion on them by 2011. As marketers, and brand marketers in particular, start to test these waters, they will need to quickly come to grips with a still-evolving landscape and integrate some of the key lessons of the past 10 years.
Ad networks and publishers that offer BT develop audience segments based on common content consumption patterns (say "Sports Enthusiasts" who consume a threshold level of sports pages in a certain time period), then use information collected on individuals' web browsing to categorize users in those segments. BT providers then sell advertisers media buys that deliver ads directly to segments likely to be influenced by them.
This approach requires a shift in thinking for many marketers. BT is about buying relevant audiences, not relevant context. If a user's consumption of auto content suggests that he is in the market for a car, behavioral targeting offers automotive advertisers a way to reach that user with a relevant message when that user is not consuming auto content.
The benefits of BT can be significant, especially in categories like automotive, travel and pharmaceuticals in which certain predictable patterns of online content consumption strongly suggests immediate interest in buying something:
- Behavioral targeting can make acquisition marketing easy and powerful by generating "lists" of good prospects that can be mined efficiently and anonymously.
- Behavioral marketing can be used on its own or in conjunction with other forms of targeting based on factors like geography or demographics.
- Audience-based targeting enables advertisers to reach audiences of interest beyond limited, and often expensive, contextually relevant inventory, thereby increasing frequency and the potential for cost efficiency.
While the benefits of behavioral targeting can be impressive, marketers must evaluate whether or not BT is a good fit. Limitations of BT include these:
- BT is really good at generating small lists of buy-now prospects, but not so good at achieving mass levels of reach or addressing and developing consumers who are "up the funnel" from the immediate point of purchase.
- The lack of standard segment definitions across BT providers puts the burden on advertisers to cobble together disparate groups in an attempt to replicate its real target, with limited ability to plan and view a cohesive whole.
- For the most part those offering behavioral targeting have yet to define an application for marketing "upstream" -- in the areas of awareness building and preference shaping that account for the bulk of media spending by large, sophisticated brand marketers.
- The direct response metrics typically used to measure and manage behaviorally targeted campaign effectiveness may not be relevant to brand marketers.
Three themes for the future
As more and more marketers turn to the web to help them achieve their branding objectives, the following three themes are likely to shape the structure of the industry and new product innovation:
When assessing the validity of any behavioral target classification, it is essential for the marketer to understand the assumptions used to define the target. All too often the assumptions used are not particularly transparent and are shrouded in "black box" mystery. This is particularly an issue as firms work to standardize segment definitions in an attempt to increase their potential reach. Is someone who has visited auto content once in 45 days really an "Auto Enthusiast"? Increasingly savvy buyers will demand more transparency around qualifying behavior.
2. Privacy Protection
A global concern often associated with behavioral targeting is whether a user's privacy is compromised in the process. The simple answer is no. Behavioral targeting only tracks where an individual has been online; it does not identify the individual through any personal data such as name, address or email.
However, consumers increasingly are concerned that personally identifiable information is mingled with non-personally identifiable information, which they fear might be used to discriminate against them at some point in the future. Groups representing a small handful of privacy-concerned consumers have pressured the FTC to make all cookies opt-in rather than opt-out, a radical approach that would bring the entire internet advertising industry to its knees. Unless the industry quickly develops privacy protocols that are effective, the government is likely to step in with solutions of its own.
3. Predicting Behavior vs. Reacting to It
Rather than picking off individuals who have "tripped a trigger" indicating they are in the market for something and attempting to influence their decision at or close to the point of purchase, the next generation of targeting will focus on helping marketers "fill the funnel" with more of the right people before they register interest.
One such approach is psychographic targeting. Marketers have long known that psychographic characteristics correlate strongly with brand affinity and buyer behavior, but they have had no way of targeting them in media. Psychographic targeting would enable marketers in highly competitive categories, where psychographic traits such as spontaneity, pragmatism and assertiveness spell the difference between brand devotees and the merely indifferent, to effectively turn up the volume against their most important consumers.
Without question, it's an exciting time to be in the media and advertising business. Today, the leading behavioral targeting firms are effective list generators for direct response advertisers. But as brand dollars follow mass audiences online, behavioral targeting is destined to become a more important tool for marketers looking to efficiently and effectively reach their target audiences. Those firms that are able to define relevant segments for brand advertisers with mass reach will succeed.
Sarah Welch is COO and co-founder of Mindset Media, an internet ad network for brands. .