Behavioral Targeting Reduces Waste

April 28th, 2010

Here’s a shocker:

Advertising costs money. Sometimes it costs a lot of money. So when you and your company pay to market and advertise, you want results. You need results. You deserve results. Well today, with all the advances in technology, it’s getting easier and easier to increase your return on marketing investment.

Just look at digital and online media. These two elements alone have changed the underlying media ecosystem and the nature of the audience and exposure promise. Online advertising creates different kinds of exposure opportunities and provides new metrics that are more 

accountable. Rather than offering statistical estimates of audience exposure to advertising messages, precise individual level-data can be tracked with click-throughs, downloads, cookies and other techniques.

Another way advertising can be more effective is if it’s highly targeted – eliminating waste from advertising to people who won’t purchase your product or service. Well how do we do that? One of the fastest growing methods of targeting is online behavioral advertising. And compared to direct mail targeting, online behavioral advertising is cheaper, easier and more effective.

Here’s how it works:

If “Joe Consumer” has been looking at reviews for ebooks and browsing at various ecommerce sites, it’s pretty likely he’s in the market to buy. So if he sees an ad for the Kindle while reading a weather story on CNN.com, he’s much more likely to click.

He is also more likely to view the advertising as an information service, rather than disruptive nuisance. That’s the premise behind behavioral targeting.

Companies like Google, Yahoo and AOL have invested billions in technologies to automatically analyze Web audiences and sell relevant ads. But all of this highly effective targeting is causing a heated debate over potential online privacy issues. Because in addition to monitoring page visits and purchase data, we can now track a vast amount of personal data consumers leave in their online wake, as well as analyze what people say about brands and products on message boards, social networks, blogs and Twitter.

In July of 2009, hoping to avoid formal regulatory action by the Federal Trade Commission, a group of advertising industry associations published a set of voluntary 
self-regulatory principles addressing online behavioral advertising:

  • Transparency and Consumer Control
: Websites have to tell customers what type of data they are collecting and how 
it will be used. They also have to give users the choice of opting out.
  • Data Security: Companies can only retain user data as long as it fulfills a legitimate business purpose and must prevent information from falling into unauthorized hands.
  • Consent for Policy Changes: If a company decides to change the way it uses previously collected user data, it must notify users in advance.
  • Consent for Sensitive Data: 
Companies must obtain prior consent from users before collecting sensitive personal information.

Online Advertising 
Targeting Options:

  • Geographic/Demographic Targeting is the most straightforward and most widely understood, and is often referred to as general display advertising.
  • Contextual Targeting matches ads to the content of the page that a consumer is currently viewing. A consumer who visits a sports site may see advertisements for golf clubs or baseball tickets on that site. Google AdWords are also a good example.
  • Behavioral Targeting matches ads to a consumer’s interests by compiling detailed information about their online activities.

The regulatory principles do not apply to general display advertising or contextual advertising, only to targeted advertising based on user behaviors/activities across various websites.

The bottom line is your bottom line. More information on a consumer leads to a more concentrated target audience, in turn, giving you a more efficient marketing push. But it might also mean infringing on someone’s privacy. So where do we draw the line? It’s an issue that will see the light 
in the coming years. Stay tuned.

Consent for Policy Changes: If a company decides to change the way it uses previously collected user data, it must notify users in advance.

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