Behavioral Targeting Revisited
Wednesday, February 10th, 2010After years of being under-utilized, if not completely ignored, behavioral targeting has re-emerged as an attractive technology in the online advertising marketplace. In light of this renewed interest in behavioral targeting, now is a good time to reconsider the technology’s strengths as a marketing strategy and discuss how advertisers and agencies can capitalize on them. Think of it as a refresher on behavioral targeting. Let’s examine what behavioral targeting actually is, the reasons for its slow penetration and the factors precipitating its resurgence.
Behavioral targeting is simply a way that parties on the demand (e.g. advertisers, agencies, technology vendors, etc.) and supply (e.g. ad exchanges, ad networks, publishers, etc.) sides of the online media business can harness data about users’ online behaviors to increase the value of online inventory as marketing media. The behaviors that companies involved in behavioral targeting track generally include browsing Web sites in specific content categories, visiting an advertisers’ Web site, completing or abandoning an online transaction or entering specific keywords into a search engine but can potentially encompass any and everything a user can do online. Typically the data is collected via publisher or third-party cookies.
In the early days, behavioral targeting vendors – such as Audience Science (formerly Revenue Science) and Tacoda (now part of AOL’s Platform-A) – struggled with a number of obstacles as they attempted to sell their solutions. The major obstacle was scalability. Behavioral targeting vendors are basically ad networks comprised of non-guaranteed or remnant inventory across a set of publishers. This means that desired behavioral segments are frequently small, often too small to meet the particular advertisers’ reach goals. As a result, most advertisers have used premium inventory to meet their reach goals and publishers’ user demographics as a proxy identifiers for their target audience. Other challenges included user privacy and brand integrity (advertisers often had no control or knowledge regarding the content adjacent to which their ads were being placed).
However, despite the challenges, several factors have arisen that are making behavioral targeting a hot topic once again. The most important of these factors are the saturation in premium display inventory and the increasing fragmentation in the online media environment. Premium display has reached a saturation point in terms of supply while increasing media fragmentation and competition with offline channels has placed definitive limits on the price publishers can charge for premium placements. This development has shifted the focus on the supply and demand sides of the online media business to non-premium display inventory. However, non-premium display buying raises the issue of identifying the audience target since publishers can no longer be used as proxies, at least not at scale. This is where behavioral targeting enters the picture. In addition, the launches of behavioral data exchanges (e.g. BlueKai and eXelate) as well as meta ad networks (e.g. MediaMath, [x+1], Varick Media Management) have made behavioral targeting more scalable as user data is now available across networks and networks themselves are now customizable around specific behavioral targets. Meanwhile advocacy groups have been working with major industry players to introduce legislation that would provide opt-out mechanisms for consumers averse to the idea of being tracked online.
Now that behavioral targeting has returned to the spotlight, let’s turn to how advertisers should use the technology for best results. (more…)
