Behavioral targeting is defined as the serving up of online advertising messages based on what pages the user has previously visited and/or what the user has previously searched for over a specified period of time. By tracking a user’s Web history, behavioral targeting allows publishers to serve up ads that are more relevant to the user by allowing publishers to change ad creative on the fly for different users. And, the future for behavioral targeting looks bright. According to an eMarketer report in the second half of 2007, spending for Internet advertising with a behavioral targeting component will increase from $575 million in 2007 to $1 billion in 2008.
Behavioral targeting can take place within an individual site or across a network of sites. If a publisher, Yahoo! for example, knows that a user visited a number of Y! Health pages of the site, they can then serve up health-related ads when the user hits any other page of the site whether that page is health-related or not. Since the user has shown a propensity to view health content, Yahoo! can track that user and serve up ads that may be of interest to that particular user based on previous page view history. This same method can work across a network of sites as well. For example, a user may visit several pages of FoxSports.com, then visit an automobile page of MSN.com and then check his email on Hotmail.com. In this instance, MSN would be able to theorize what type of ads the user would be interested in. So when he hits his Hotmail inbox page, he may see an ad for a new sports car, whereas another user with a different Web browsing history would see a completely different ad. According to a Forrester report on consumer attitudes toward advertising from November 2006, there are three main sources of advertising irritation to consumers: ads are too numerous, disruptive and irrelevant. Behavioral targeting was created to help answer these complaints, as well as command premium ad placement fees by serving up fewer, more relevant ads.
While different types of online targeting have been around for years, many people do not understand the differences – even between the two most common targeting methods, behavioral and contextual targeting. The difference is that behavioral targeting serves up ads based on previous search or browsing behavior while contextual targeting serves up ads based on the current content of a Web page. For example, Google AdSense ads are a form of contextual targeting, as is the serving up of a 2009 Honda Civic ad on a used Honda search results page of Cars.com. To lessen confusion, it is easiest to distinguish these two forms of advertising in this way:
Behavioral targeting – serves up ads based on a user’s search or browsing history
Contextual targeting – serves up ads based on current content the user is viewing
While publishers like the fact that behavioral targeting makes inventory more valuable and marketers are embracing this form of marketing for its effectiveness, consumer groups are not fond of publishers tracking users across the Web. In fact, some groups are calling for a national do-not-track list similar to the famous national do-not-call list to help curb this sort of tracking. Also, some groups are calling for sites to instantaneously disclose what a site intends to track. In an effort to head off these consumer group complaints, some of the larger publishers are putting increased emphasis on how, what and when they track. For example, AOL announced on October 31 that it will initiate a major campaign to educate the public that it only tracks non-personally identifiable information. AOL also announced that the company will offer a permission-based opt-in to behavioral tracking, which is something consumer groups have been calling for.
One company pushing the envelope of behavioral targeting is NebuAd. The company announced at the ad:tech New York Conference in November that their new behavioral targeting system generates a greater percentage of ad conversions and higher ROI than any other behavioral system. According to the company’s CEO Robert Dykes, NebuAd receives analytical information about which ads work best, and in turn, the higher ad effectiveness increases the value of inventory above and beyond what other behavioral systems offer. The driving force behind NebuAd’s system is that their hardware tracks at the ISP level rather than the site or network level. By using ISPs, it enables NebuAd to track a user’s movement across the entire Web rather than just a specific site or a network of sites. To protect consumer privacy, NebuAd uses one-way hashes to anonymize user identities. NebuAd takes the approximately 70 percent of ads that are currently untargeted and targets them by observing Web searches, Web pages accessed, and the ads consumers click on. It then creates and updates anonymous consumer profiles to better focus ads. The company charges advertisers and shares a percentage of those revenues with publishers and ISPs. It is too early to tell how effective NebuAd’s system is or what the consumer group reaction will be, but there are already copycat systems being announced, and as everyone knows, imitation is the sincerest form of flattery.
Behavioral targeting has many benefits, including increased ad effectiveness, increased value of ad inventory and even an increase in ad relevance for the consumer. These benefits have caused explosive growth in the marketing dollars allocated to behavioral targeting, which shows no signs of slowing down in the near future. However, consumer groups see behavioral targeting as a violation of privacy and are doing everything they can to limit the depth of tracking. Publishers have responded by trying to make their tracking methods more transparent, as well as beginning to create voluntary tracking opt-ins. No matter which side wins the battle of public opinion, one thing is certain: behavioral tracking systems will continue to evolve by increasing the depth and breadth of information collected in an effort to optimize ad trafficking while at the same time addressing consumer concerns before legislation forces it.
Tuesday, March 18, 2008
Wednesday, March 05, 2008
Relationship-building, Email Style
In a July 2007 The McKinsey Quarterly study, email marketing spending scored the lowest projected increase in a list of popular online marketing tactics and finished with the highest projected decrease in spending over the next three years. While it’s true that, on a whole, online marketers are planning to pull back on email spending, consumers are still signing up to receive newsletters, promotional emails and new product and service announcements at a steady rate. Long story short, no matter what online marketers say, consumers are still asking for relationships with the brands they love and email is still a big part of that relationship.
Over the recent past, consumer patience with non-solicited email (spam) has fallen to an all-time low, there has been a steady increase in the adoption of more efficient information delivery methods such as RSS, and there has been a continued rise in the use of spam blockers. One would think that these forces would indeed put negative pressure on overall email use and spending by marketers. However, Penton Media Custom Research reports that of the online marketing tactics used by US marketers in February and March 2007, email marketing and email newsletters were used more often than any other tactic including banner ads, blogs, viral campaigns, search engine optimization and podcasts.
Adding to what Penton found, we recently conducted an online survey for a consumer packaged goods client where over 95% of the more than 800 respondents said that they prefer email communication as the primary means of brand communication, above RSS, text/mobile messaging and five other online marketing tactics. Beyond just preferring this method of information delivery, more than 90% said they prefer email communication more often than just once a month. Consumers are looking for relevant, targeted, personalized content from their favorite brands and beyond tolerating email communication, they are asking for it.
Consumers are asking for relationships from their preferred companies and are looking to build relationships with their favorite brands. According to Silverpop, retail marketers understand that building a relationship with consumers is important and leads to long-term sales. As such, retail marketers are making it easier to opt in and out of campaigns, and they are learning to ask customers for more than just e-mail addresses to help craft personalized messages. eMarketer states that in 2007, nearly six out of 10 companies will send their e-mail recipients to pre-populated Web forms if they want to opt-out, up from 30% who did so in 2005, making it easier to end communications on the consumer’s terms. In addition, nearly two-thirds of e-mail opt-out links in 2007 led to a page for registrants to make changes to their preferences. In 2005, only 12% of e-mail marketers did so. Not only does ease of opt-out help build a trusting relationship but taking consumers to a preference page instead of a simple opt-out may convince consumers that the company has something else of interest, even if they no longer want a particular communication.
Not only is it important to communicate with consumers when and how they want, but it is important to build trust from the beginning, by starting the conversation when a consumer asks for it. eMarketer reports that Mike Weston, managing director of Silverpop EMEA, believes effective e-mail marketing tends to resemble polite conversation. "There are rules of conversation," Mr. Weston said. "Companies that fail to respond when someone gives them an e-mail address are doing the equivalent of ignoring them face to face in a store."
If consumer desires aren’t enough to convince you to continue the use of email communication, listen to online marketers who reported to MarketingSherpa in March that more than one-half of US marketers stated that e-mail marketing produced the second best ROI of any marketing tactic. Only search engine optimization was more highly regarded for ROI. Yet, eMarketer predicts that US e-mail marketing spending will reach $1.65 billion in 2011, up from $1.5 billion in 2007, so the annual growth rate will slow from 5.6% in 2006 to 1.5% in 2011. Consumers are asking for relationships with brands and the ROI payouts are there, so why is email spending predicted to decline? Researchers believe that while the number of emails sent will actually continue to increase steadily, efficiencies in email delivery will offset those larger increases in number of emails sent by reducing costs. As such, email spending will increase at a slower rate than the rate at which the number of emails sent will increase.
Many people believe that email marketing is dead or is in the process of a slow death. However, consumers are still asking for brand relationships that are buoyed by email communication. I would highly recommend against using email as your only means of communication with consumers, but it should not be ignored in the face of negative publicity. In addition, the ROI payouts have been proven, so it shouldn’t be too difficult to sell your CMO on the tactic either.
Over the recent past, consumer patience with non-solicited email (spam) has fallen to an all-time low, there has been a steady increase in the adoption of more efficient information delivery methods such as RSS, and there has been a continued rise in the use of spam blockers. One would think that these forces would indeed put negative pressure on overall email use and spending by marketers. However, Penton Media Custom Research reports that of the online marketing tactics used by US marketers in February and March 2007, email marketing and email newsletters were used more often than any other tactic including banner ads, blogs, viral campaigns, search engine optimization and podcasts.
Adding to what Penton found, we recently conducted an online survey for a consumer packaged goods client where over 95% of the more than 800 respondents said that they prefer email communication as the primary means of brand communication, above RSS, text/mobile messaging and five other online marketing tactics. Beyond just preferring this method of information delivery, more than 90% said they prefer email communication more often than just once a month. Consumers are looking for relevant, targeted, personalized content from their favorite brands and beyond tolerating email communication, they are asking for it.
Consumers are asking for relationships from their preferred companies and are looking to build relationships with their favorite brands. According to Silverpop, retail marketers understand that building a relationship with consumers is important and leads to long-term sales. As such, retail marketers are making it easier to opt in and out of campaigns, and they are learning to ask customers for more than just e-mail addresses to help craft personalized messages. eMarketer states that in 2007, nearly six out of 10 companies will send their e-mail recipients to pre-populated Web forms if they want to opt-out, up from 30% who did so in 2005, making it easier to end communications on the consumer’s terms. In addition, nearly two-thirds of e-mail opt-out links in 2007 led to a page for registrants to make changes to their preferences. In 2005, only 12% of e-mail marketers did so. Not only does ease of opt-out help build a trusting relationship but taking consumers to a preference page instead of a simple opt-out may convince consumers that the company has something else of interest, even if they no longer want a particular communication.
Not only is it important to communicate with consumers when and how they want, but it is important to build trust from the beginning, by starting the conversation when a consumer asks for it. eMarketer reports that Mike Weston, managing director of Silverpop EMEA, believes effective e-mail marketing tends to resemble polite conversation. "There are rules of conversation," Mr. Weston said. "Companies that fail to respond when someone gives them an e-mail address are doing the equivalent of ignoring them face to face in a store."
If consumer desires aren’t enough to convince you to continue the use of email communication, listen to online marketers who reported to MarketingSherpa in March that more than one-half of US marketers stated that e-mail marketing produced the second best ROI of any marketing tactic. Only search engine optimization was more highly regarded for ROI. Yet, eMarketer predicts that US e-mail marketing spending will reach $1.65 billion in 2011, up from $1.5 billion in 2007, so the annual growth rate will slow from 5.6% in 2006 to 1.5% in 2011. Consumers are asking for relationships with brands and the ROI payouts are there, so why is email spending predicted to decline? Researchers believe that while the number of emails sent will actually continue to increase steadily, efficiencies in email delivery will offset those larger increases in number of emails sent by reducing costs. As such, email spending will increase at a slower rate than the rate at which the number of emails sent will increase.
Many people believe that email marketing is dead or is in the process of a slow death. However, consumers are still asking for brand relationships that are buoyed by email communication. I would highly recommend against using email as your only means of communication with consumers, but it should not be ignored in the face of negative publicity. In addition, the ROI payouts have been proven, so it shouldn’t be too difficult to sell your CMO on the tactic either.
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