The Revolution Online Advertising Report: Predict a click

yet potentially radical.

Early results have been impressive. Tiscali UK began allowing
advertisers on its 25 channels to use behavioural targeting in their
campaigns in early 2007. Alex Hole, online media director at Tiscali UK,
says: "We've seen click-through rates on many of those campaigns
increase by up to 500 per cent. What is more, our users are now getting
served with ads that are more relevant to them."

There is still a great deal of confusion and scepticism surrounding
behavioural targeting. Not everyone believes it can work, few marketers
know how to make it function for large-scale online campaigns, and even
fewer have actually tried it. Yet, the potential is so great that no one
can afford to ignore it.

So why are marketers slow to jump on this particular bandwagon? A
significant factor in the slow take-up of behavioural targeting is the
general confusion about what it actually is. Jim Sterne, chairman of the
Web Analytics Association, says: "Very often, people mistake contextual
advertising for behavioural targeting. Contextual advertising is easy to
understand because we've been doing it in print for ages. If you sell
golf clubs, you'll want your ad to show up on a website all about
golfing."

TMP Worldwide recently ran a campaign for GCHQ, a government
intelligence organisation. TMP placed billboard ads inside six Xbox Live
games to encourage recent graduates with an aptitude for problem-solving
to visit the GCHQ recruitment website. Andrew Wilkinson, chief executive
of TMP Worldwide, says: "The campaign was highly effective. Three
thousand people visited a specific landing page advertised in the game,
and it produced a great uplift in visits to the recruitment
website."

But while this may have been a successful campaign, it was not
behavioural targeting in the purest sense. It was targeting by context.
Sterne goes on to define behavioural targeting: "This is showing your ad
for golf vacations to people who have exhibited a specific interest in
the topic over time. It's more than just reading one article about one
faraway golf course, but consistently choosing articles, typing in
searches and clicking on links that indicate a propensity toward your
offer."

There are two ways of applying this principle online. First, you can use
business rules. For example, if a user clicks on a certain number of
articles that are tagged with the appropriate keywords, then they get an
ad associated with the subject matter. Second, you can use collaborative
filtering, which is where you predict the ads a consumer will want to
see, based on their past behaviour and the stated preferences of other
people who have exhibited the same behaviour.

For most, however, the greatest obstacles to running this type of
campaign are practical. Louis Fernandes, account director at online
marketing agency Acxiom Digital, says: "There have been very few
examples of online ad campaigns using behavioural targeting. Generally,
this is down to how organisations plan to use data in the context of the
campaigns that they run, how they collect this data, how they process it
and finally how they store it. The sheer volume of data available is
outstripping the processing capabilities available to most
organisations."

Ray Welsh, sales and marketing director at digital marketing agency
Mailtrack, agrees that finding meaning in a large volume of click-stream
data and altering the next communication based on that knowledge is very
daunting for many marketers.

However, he says: "This process isn't actually half as complex and
expensive as most people think it is. The CRM functionality needed to
gather, store and analyse behavioural information is no longer only
found in high-end systems."

Yet, marketers are not rushing to try it. Kit Desai, country manager of
online advertising provider Adtech, part of AOL, says: "In my
experience, usage is small and selective and not large scale. Clients
are trialling it and slowly building traction."

The evidence from Tiscali UK certainly seems to suggest that it can
work. We can surely expect more and agencies to start picking up on this
and exploring how clients can benefit from behavioural targeting. They
will be encouraged by the arrival on the market of more software that
automates the tricky data collection and processing. We can also expect
greater integration of offline and online behavioural targeting data to
produce even more accurate and effective customer profiling.

As Mike James, managing director at digital advertising network
Adconion, concludes: "Behavioural targeting is fast coming of age. I
expect that as large brands start to dip their toes in the water, more
and more will start seeing the benefits of creating sophisticated
messaging tailored to an audience that is becoming increasingly
sophisticated in its buying habits."

HEALTHIER WEIGHT CUTS WASTE WITH BEHAVIOURAL TARGETING

Healthier Weight is a Birmingham-based company that offers surgery
programmes to the morbidly obese. It offers gastric banding and similar
operations by surgeons in Italy, as well as a range of food and drink
products that are designed to reduce weight.

It hired online marketing agency Acceleris Marketing Communications in
2006 to drive traffic to its website and then encourage visitors to the
website to make a phone call to the company. Acceleris began with
small-scale campaigns placing ads on health-focused websites, such as
netdoctor.co.uk.

Jane Slimming, digital specialist at Acceleris, says: "This just wasn't
getting the volume necessary. To meet its sales targets, Healthier
Weight needed to increase the number of visitors to its site, and it
needed more of those visitors to phone the company. So the team there
came to us and asked us to run a larger scale campaign."

Although the budget for this campaign was increased to £50,000, it
was still necessary to make this work as hard as possible. So Slimming
went to Yahoo!'s blind network. She explains: "Blind networks are a
great way of getting a large number of impressions for low investment.
They're much cheaper because you don't know which sites they're coming
from - they're blind - and so you tend to get a lot more wastage."

However, by using behavioural targeting, Slimming was able to cut this
wastage. She says: "Yahoo! has just started offering behavioural
targeting on its blind network and it's great. Basically, it only serves
our ads to those users who have behaved as though they're interested in
dieting. Those behaviours might be clicking on a diet ad or entering a
dieting term into a search engine."

The time users spent on the website also increased, indicating that the
campaign was indeed attracting people with a genuine interest in
Healthier Weight's products and services.

Slimming is convinced behavioural targeting is appropriate for
large-scale campaigns such as this. She says: "Previously, the ability
to target was limited to matching up the message to the site. For
example, if selling cars, you'd advertise on a niche car-enthusiast's
website. This type of targeting saw high click-through rates but
couldn't deliver a broad reach."

She concludes: "Demographic and geographical targeting are steps in the
right direction, but are limited in their recency and accuracy. It's
only behavioural targeting that allows you to reach a large number of
people who have recently done something to suggest that they are
currently interested in what you have to offer."