Ten things you need to know about behavioural targeting
Finding the right ad for the right customer at the right time is an advertiser's dream. Alexandra Jardine talks to those who are working to make that dream come true.
The answer is almost definitely not. With marketers increasingly turning to the web, the internet ad space is getting crowded.
Popular sites are often "sold out"; brands need to find better ways of targeting their audiences on the sites where they know they spend time. Cue a huge upsurge of interest in "behavioural targeting" - that is, serving a customer with ads based on their previous online behaviour.
Since behavioural targeting first emerged three years ago, advertisers have scrambled to buy into technology that makes it possible for them to reach a more relevant audience.
So, what is the lowdown on this emerging phenomenon?
strong>WHAT IS IT AND HOW DOES IT WORK?
Behavioural targeting (BT) basically means targeting an online consumer based on the actions and profile they have demonstrated in the past. This could be linked to a page of content they have viewed, a search they have done, or an ad they have clicked on.
It can work in several ways. In some cases, a network of sites tag pages according to their content. "Cookie" technology is then used to track users, following them around the sites and targeting them with advertising based on their previous behaviour.
In other cases, companies or media owners create "pre-canned" segments of people who have responded to specific types of campaign, then sell these segments to advertisers.
Other sites - retailers for example - might re-target users with ads once they have left their site, based on whether or not they have completed a desired action.
The term "behavioural targeting" can also mean other things: for example, modifying site content or special offers based on previous user behaviour, or targeting customers based on preference data that they have actually supplied.
However, Phil Macauley, head of planning and strategy at Yahoo Europe, argues that the latter is misleading: "True behavioural targeting is not about hitting a consumer with what they claim they are interested in - it's what they actually do that counts."
WHAT ARE ITS ADVANTAGES?
The immediate advantages are obvious: the more detailed a profile you build up of a specific user, the more targeted your campaign can be. This not only enables brands to target a more relevant audience, it allows publishers and site owners to sell their sites more efficiently. As Jeremy Mason, managing director European operations at behavioural targeting specialist Revenue Science, puts it: "As more money goes online, premium inventory is selling out very quickly.
"Behavioural targeting means advertisers can target their audience via a different page based on past behaviour."
This allows advertisers to target consumers "out of context" - for example, on Yahoo's portal, a financial brand could target a user who is viewing news or sport pages, knowing that they have previously looked at a finance page - and can also save them money. Ed Stevenson, managing director of 24/7 Real Media, says: "A known reader of FT.com could be targeted with a financial ad while on their Facebook page, for a much cheaper price."
ANY OTHER PITFALLS?
The other thorny issue for behavioural targeting is privacy. Providers of behavioural targeting technology claim to have rigorous privacy policies - targets cannot be personally identifiable, and consumers are able to opt out of having their cookie data used. However, some consumer groups, particularly in the US, vociferously oppose firms "following" users online, saying it's predatory. Some sites have started to offer more obvious tools for users to opt out of cookies - for instance, Ask.com has launched AskEraser.
But advocates of behavioural targeting argue that most users would actually prefer to be targeted in this way, so that the ads they see are more relevant. A study by Revenue Science and the Ponemon Institute found that 63% of users would always prefer advertising based on their interests, and 55% said that it improved their online experience.
Paul Goad, managing director of Tacoda, says: "The industry needs to come together on this and educate the consumer about how behavioural targeting can actually make their internet experience better, not worse."
WHO OFFERS IT?
In addition to several specialist behavioural targeting networks, including Tacoda, Wunderloop and BlueLithium, there are other specialists that sell their technology to media owners. For example, Revenue Science works with major UK publishers such as Guardian Unlimited and FT.com.
Web portals such as Yahoo and AOL are also muscling in on the behavioural targeting game. Yahoo allows its advertisers to target audience segments based on data from search, content and ads that they click on. However, Yahoo has now also acquired BlueLithium, which specialises in re-targeting consumers that have shown an interest in brand ads with tactical, direct-response ads.
BlueLithium European managing director Tim Brown says their combined reach will be vast: "An advertiser could buy a brand campaign on Yahoo and then blast a particular segment of people with a tactical message. It's about targeting the consumer right through, from the beginning to the end of the sales funnel."
Online advertising specialists also offer their clients behavioural targeting services: for example, 24/7 Real Media is now offering clients a service called "search re-targeting", which allows brands to retarget customers that have already shown an interest in their products via searches.
WHAT'S THE BIGGEST CHALLENGE?
Perhaps the greatest challenge in behavioural targeting is finding an audience that's targeted, but not too niche.
Revenue Science's Jeremy Mason says: "There are cases where you can limit your audience too much - sometimes agencies want to go too specific. For example, if you want to target people who read a review of a particular car, it could be that you should step back and target those who read five or six different car reviews."
Paul Goad of Tacoda agrees: "The majority of advertisers are looking at reach - although if you are Porsche, you probably want to look at just a few hundred people."
ARE THERE OPPORTUNITIES OUTSIDE ONLINE?
Although behavioural targeting is still mainly an online phenomenon, opportunities are emerging on the mobile platform. Revenue Science is about to conduct a mobile advertising experiment in Japan, targeting users of a mobile web portal, Mediba, with ads based on previous behaviour such as downloading ringtones and games, visiting news sites, and e-commerce.
Blyk, the opt-in mobile phone network for 16 to 24-year-olds, which gives free texts and calls in return for brands targeting them directly, also claims to offer behavioural targeting. Brands can target customers with mobile ads based on previous responses: L'Oreal sent users a quiz asking which celebrity they looked most like, and tailored future offers to their replies.
WHAT DIFFERENT TYPES OF AUDIENCE CAN IT SEGMENT?
Audiences can be as specific or broad as advertisers choose. Tacoda, for example, offers 350 pre-qualified segments to advertisers, but it can also "mix and match". For example, advertisers can target someone interested in business and travel, but also in buying an air ticket.
Yahoo says that it has 114 defined audience segments for advertisers to choose from; for instance, HSBC targeted a segment of 100,000 people looking for current accounts. It experienced an 86% click-through rate increase with its ad.
WHICH ADVERTISERS ARE USING IT?
Automotive, travel, finance, technology and entertainment are the most common categories where behavioural targeting is used, but specialists predict that more niche brands will begin to use it soon.
WHAT WILL HAPPEN IN 2008?
This year looks set to see a behavioural targeting explosion. A recent e-Marketer report predicts that US spending on behaviourally targeted advertising will almost double from $575m (£288.5m) in 2007 to $1bn (£0.5bn) in 2008.
Although the UK is some way behind this, interest is strong. "There is very high demand," says Yahoo's Phil Macauley.
"We were completely sold out across the board in the final quarter of 2007."
Meanwhile, the technology looks set to develop apace, with better ways of segmenting audiences and more data shared across networks. Revenue Science, for example, is to pool all its participating publishers' data to target users across multiple sites, while Yahoo is starting to develop bespoke audience models for advertisers.
It seems as if brands are finally starting to tap into the real potential of the internet.
HOW EFFECTIVE IS IT?
- According to a study by Jupiter Research, conducted for AOL and Revenue Science in June 2007, behavioural targeting is a more effective form of online advertising than contextual ads placed alongside related content.
- 63% of consumers targeted by behavioural advertising were receptive to the ads, compared to 49% targeted by contextual ads. This was consistent across several categories including entertainment, pharmaceuticals, fashion, government services and classified.
CASE STUDY: VAUXHALL
When Vauxhall wanted to attract young online users to its Astra model, it chose behavioural targeting to optimise a brand campaign.
The first stage of the activity, which ran in late 2006, was a brand ad aimed at young car buyers. Working with Initiative Media and BlueLithium, Vauxhall placed a BT "pixel" within the creative, so that it could identify and create an audience of people who had been exposed to the campaign on any site.
For the next step, users exposed to the brand ad were targeted via direct response-oriented tactical ads, to drive brochure requests and on-site demonstrations. Users were invited to click through to view financial incentives such as "nil deposit, free insurance".
Although the ads showed an attractive click-through rate, on-site conversions were lower than expected. So, to optimise the campaign, BlueLithium further refined the audience to include those who had both been exposed to the brand campaign and actually shown an interest in the tactical ad - an audience of 341,000.
The optimised campaign saw a 46% uplift in click-throughs and a 52% uplift in brochure requests, and Vauxhall's target cost per action for the campaign was halved.
This article was first published on Media Week
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