Behavioral Targeting
Or how to get the haystack to help you find the needle.
January 2008 By Mark Taylor
Today’s consumer is proving to be increasingly elusive. The multiplication of channels and the fragmentation of audiences have driven two imperatives for marketers online. The first is to better identify potential consumers in the funnel early and attract them at the appropriate time. The second is to ensure that your Web property (site, landing page, etc.) is immediately relevant to your visitors’ needs. In response to these challenges, some marketers are turning to a useful technique called behavioral targeting.
Behavioral targeting: two types
There basically are two types of behavioral targeting — one that’s getting increasing attention, and one that has perhaps been around longer but is still getting less attention than it deserves based on its merits and capacity to completely transform online marketing efforts.
The former is what I’ll call off-site behavioral targeting, which is a way of anonymously targeting (or retargeting) relevant ads based on browsing behavior. There are many pros and cons here — mostly around privacy concerns — that we can chew on another day. Companies that focus on this kind of targeting include TACODA (purchased by AOL), Revenue Science and 24/7 Real Media.
The latter is what I’ll, not surprisingly, refer to as on-site behavioral targeting. This is where one uses data about anonymous browsers to present the most relevant content possible. The advantages of doing this are simple to understand. Relevance, after all, is the mother of engagement — the more relevant your content immediately appears to be, the more likely customers are to want to engage with you. That’s obvious, right? And it wouldn’t be an issue if we were collectively doing a reasonable job of engaging our customers on our sites.
However, that is not the case. In spite of the growing online audience, (there were 60 billion individual searches worldwide in November alone last year), and the increasing budgets — more than $16 billion in online alone, not including offline work that is focused on driving eyeballs to the Web — we are still seeing conversion rates of less than 4 percent. That’s a lot of traffic that we have either paid for or otherwise earned that finds no compelling reason to further engage with us.
This is a number that drives me nuts. When you consider the amount of time, effort and investment that we have collectively made in ensuring that the whole search engine marketing industry becomes one of the most efficient markets ever seen, and that search optimization basically is a science in itself, how can it be that the online destinations proposed are so completely irrelevant to the customers’ declared needs that 96 percent of them go somewhere else without leaving a trace?
It clearly is time for us to balance the investment that we’re making to attract a motivated visitor to our site with what we make in ensuring that, when we have the visitor, we actually have a relevant and appealing experience to propose to an engaged prospective customer.
On-site behavioral targeting on the rise
Enter on-site behavioral targeting. This technique uses evolving marketing technology to turn the Web analytics data your site is generating (and that you probably are using to demonstrate the site’s lack of effectiveness) to create an anonymous visitor profile.
Simple data, such as the referring ad or search engine, the computer’s IP address and browser settings, can go a long way in helping us present immediately relevant content. The work obviously doesn’t stop there; the tools continue to anonymously collect and collate the different variables that arise during each visit. Each of these segments of data contributes to a self-learning, predictive model that discerns the best content to present to keep the visitor engaged and moving to the conversion point.
If the predicted action does not occur, the model adjusts itself in real time. Enriching the existing profile in this way ensures that a conversation that was started correctly continues to be on target. If, as Jim Stengel, global marketing officer at Procter & Gamble, says, “Marketing is becoming about listening and being a starter of conversations” (2007 AAAA Media Conference & Tradeshow), then this kind of automated dialog optimization based on active listening is essential.
Static Web pages are dead
Any Web property must be able to present the most appropriate content, offer, call-to-action or creative execution to visitors at the appropriate time. Our landing pages and other Web properties must be considered blank pages that we are allowing our consumers to create for themselves. My company (a direct and relationship management firm) has long believed that the acronym CRM means that Customers Really Manage — the Web makes this truer than ever, and success will come to those who provide the tools to allow our customers to manage their relationship with us.
This is a new stage in the evolution of digital marketing, where we have successively moved away from worrying about site stability and accessibility. We have nearly worked out measurement and monitoring. And today, our focus is on testing and predictive targeting and, therefore, about the customer.
Is on-site behavioral targeting critical to the future of on-site marketing? Is the move toward relevant personalization inevitable? Many industry experts, such as Forrester Research, think so.
There are some excellent companies providing services in this space, and a recent spate of acquisition activity indicates the growing importance of the sector. Acxiom purchased Kefta, Omniture purchased Offermatica and Touch Clarity, and Interwoven purchased Optimost. Forrester Research produced a report in July 2007 that ranked this emerging category as the No. 1 area for planned investment in marketing technology during 2007.
My recommendation? Take 20 percent of your online advertising budget, including search, and reallocate it into on-site behavioral targeting. You won’t regret it.
Reach Mark Taylor at mark.taylor@wunderman.com
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