Behavioral Targeting

Ten things you need to know about behavioral targeting
by Alexandra Jardine Media Week 05-Feb-08

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.

If you have spent any time at all online recently, you might have spotted something. There you are, perusing a TV listings page perhaps, and an ad pops up for a last-minute travel deal to Barcelona - something you were researching just yesterday. Is it just a coincidence?
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?

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:

1. 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.

2. 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.

3. 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.


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.

"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.

The Welcome Ad Break
07-Feb-08

If TV viewers want to avoid ads, they can. It's never been easier because they have the most intuitive and easy-to-use technology to avoid them: digital television recorder (DTR) devices, such as the Sky Plus box.

The DTR's arrival sent a ripple of fear through the TV advertising industry. It assumed that, given the choice, consumers would skip ads. However, research shows that, rather than avoiding ads, most DTR homes actually watch more in real time.
People don't get DTRs to avoid ads; they get them to find content they want to watch.

Ads are also spotted and rewound to watch fully. Thinkbox found there was a greater appreciation of good ads and of the timeliness of some advertising, especially on live TV: for example retail sales, films and trailers. DTRs renew their owners' interest in the relevance of advertising. There will always be a minority who wish for an ad-free media world but the research showed DTR owners were more circumspect. Many acknowledged advertising's funding role and rejected the notion of paying more for ad-free TV.

It is also easier for viewers to engage and be loyal to programmes they like with a DTR. For existing series it removes some stresses and strains, including the need to be "there", the pressure of seeing every episode, the disappointment of missing out and the inconvenience of setting the VHS. For new series it prevents accidental dropping and encourages long-term sticking with a series, especially to longer-run series that require real commitment in busy lives.