Although behavioral targeting has become a popular topic lately, it is not a new idea. Behavioral targeting identifies the behavior of an individual online, collects and gathers data on what their interests are, what they search for, what sites they visit, and uses this information to determine what ads should be displayed for them. The concern on the part of the consumer is that there is no limit to what marketers can access, and, therefore, no protection of privacy.
Companies that benefit most from behavioral targeting have a clearly defined target audience. It doesn't work for every company, but it increases measurable results for companies that can profile and segment their target audience. Forrester Research shows that behavioral targeting offers the following top three benefits:
1. More click-throughs (35 percent)
2. More conversions (26 percent)
3. Improved return on investment (21 percent)
With the ability to record behavior on the Internet, behavioral targeting's popularity is growing as companies search for solutions that are more cost efficient. Once upon a time, key words were the only search marketing that was targetable. Technology today allows us to track the entire purchase life cycle. We can understand consumers' patterns of behavior and begin to predict what ads will generate the best response at a particular time in the purchase cycle.
For many years, advertisers and agencies have segmented audiences and tailored advertising in the offline world to target these audience segments. Media buyers and account planners research their consumers to understand their behavior patterns pertaining to the type of television programs and networks they watch and publications they read. Advertisements are customized to reach these audiences and placed in the best environment to speak to the consumers when they are ready to purchase. Behavioral targeting moves us from reaching our targets through mass media to specifically talking to them one-on-one right when they are ready to make their decision. The benefit of behavioral targeting online is that each consumer move leaves a footprint and teaches us how they make decisions. We can speak to our best customers individually, when they are ready to be spoken to.
Behavioral targeting is expected to grow by 468 percent for U.S. ad expenditures by 2012. At the end of 2008, behavioral targeting ad spending was $775 million. By the end of 2012, it should reach $4.4 billion (David Hallerman, "Behavioral Targeting: Marketing Trends," eMarketer, June 2008). Consumers' online activity keeps growing every year, and more and more transactions are being conducted online. This activity gives marketers more and more data to analyze and use to their benefit. One of the latest trends involves taking past behavior to model future behavior (or predictive modeling, which is knowing what consumers will do and the steps they will take before they even take them). Advertisers are increasingly concerned with their ROI, and technology will help them get there by delivering their message to the exact audience they seek.
Direct-response advertising always has centered around being accountable, and delivering a specific ROI for advertisers. In every medium used, direct-response advertisers strive to track and measure every dollar spent and the leads generated from their advertising. This translates perfectly into behavioral targeting. As people respond to advertising online, they conduct research and use online resources in their purchasing decisions. Tracking and measuring their behavior allows all advertisers to use direct-response best practices. Every dollar spent can be attributed to more effective placement that will increase conversion to a sale.
The largest obstacle to the growth of behavioral targeting has been the consumer's privacy. In 2008, the Federal Trade Commission reviewed and revised its Online Behavioral Advertising Principles. The House Energy and Commerce Committee looked at online advertising practices and now plans to introduce an online Bill of Rights that requires consumers to opt in for the tracking of their behavior. The government will continue to watch this closely, and further advances may be hindered by future laws. The flip side of this argument says consumers will benefit from being tracked, as they will receive advertising for products they are interested in. Companies that understand consumers' needs will become trusted partners in their decision-making process.
Behavioral targeting offers insight into customers' behavior patterns that can directly impact the way we deliver our messages. However, it is important not to limit all advertising to this one source. Legislation may limit the growth, and behavioral targeting could go away altogether. It is critical to learn what we can from our consumers to make our advertising programs more robust. But when consumers feel their privacy has been invaded, this only causes larger problems. Consumers have to feel that advertisers' products and services are a solution to their problem. This ultimately will cement the relationship.
Stephanie joined Gragg Advertising as a Media Manager in 2002 and was then promoted to Media Director in 2003. Her responsibility is to oversee the Media teams and their development and implementation of strategic media plans for all Gragg clients. She currently serves as a board member for SafeNowProjectA, a not-for-profit organization that raises awareness for children's safety and protection against all forms of child abuse.For more information, visit www.graggadv.com.