Behavioral Targeting: Ads That Follow Your Audience

Your Consumers Are Easier to Spot Online

Behavioral Targeting (BT) – the practice of directing advertising at users whose online activities suggest an interest in a specific product or service – is one of the hottest trends in online advertising today. User interest can be gauged using existing technologies that track a user’s activity online, over time. This information can be used by marketers (like you) for a customized online advertising campaign targeted at the individual users who are most likely to be interested in your ads.

Tracking technologies include: third party cookies, flash cookies, and beacons (little text files that are downloaded onto a user’s hard drive), upon visiting a site, which then track search queries, pages visits, ad clicks, and purchases.

You may be familiar with Amazon.com’s on-site Behavioral Targeting, which, based on tracking your searches and purchases, will recommend other related or complementary items that may interest you. Behavioral Targeting advertising takes it a step further, applying the same concept to the entire Internet.

Here’s a basic example: a site that offers insurance rate comparisons – say, Insurance.com – will allow an ad network to track who is looking for a home insurance policy on their website. After the user has left Insurance.com, the next time they browse the web, a service like AngiesList.com (which targets homeowners) may be able to use the ad network’s data to display targeted ads to that consumer, promoting their own service (based on the assumption that someone who needs home insurance also needs the types of homeowner services AngiesList offers). These ads could could even follow the user when they continue browsing onto other websites, including social and search sites.

The behaviorally targeted ads appear just like normal ads, but they are displayed based on a user’s previous activity – not just the context or content of the page they are currently viewing (which is how most ads on the internet are displayed today).

Predictions from eMarketer (as presented by AdWeek) are that behavioral targeting will continue to see steady year-over-year growth in adoption among advertisers (see chart).

As you might expect, advertisers often pay a premium for Behavioral Targeting. Per the WSJ, Behavioral Targeting ads are approximately double the average cost of untargeted ads. But marketers are willing to pay more for advertising that results in higher click-through, conversion rates, and ROI.

What About User Privacy?

There is quite a bit of on-going discussion about Behavioral Targeting’s impact upon users, specifically, privacy concerns for consumers. See the five- part series in the WSJ that ran in July/August, 2010. The issue garnered a great amount of media and federal attention once Google began to offer Behavioral Targeting advertising back in March of 2009 (after Google completed the purchase of Doubleclick, the technology leader in Behavioral Targeting).

There have been enough rumbling about privacy concerns that the advertising industry has been moved to self-regulate user privacy, or risk facing government regulation from the Federal Trade Commission.  Google responded by making an effort to be more transparent than their competitors, allowing users to see what interests are being tracked (something that others claimed would be too difficult to do) and including an opt-out option. The latter has now become the industry norm. Along with Google, opt-outs are provided by Yahoo and Microsoft, among many other ad providers and networks.

Online advertisers understand the urgency of self-regulating, per Media Post’s Behavioral Insider:

The coalition of advertising associations (AAA, ANA, BBB, DMA and IAB) is about to deploy the long-promised set of standardized “Power I” icons that will accompany many ads and eventually Web sites. Better Advertising is being tasked with implementing the back-end verification system that will ensure the tracking technologies advertisers and publishers use are obeying the self-regulatory guidelines and offering consumers the ability to opt out easily.

If the industry’s self-regulation is successful in keeping the FTC at bay, behavioral targeting will continue to be an increasingly powerful online marketing tool for advertisers (and web publishers).

image credit: Echoforsberg

Predictions from eMarketer as presented to AdWeek anticipate continued steady growth in behavioral targeting (see chart).

Comments

  • Great article – very informative. And I do agree that transparency is key in making consumers comfortable with the idea of retargeting. The truth is, it’s actually beneficial to consumers. We’re all going to be exposed to ads whenever we’re online, right? Wouldn’t it make more sense if they were for things we actually like and can use? As long as it’s done right, retargeting is a win-win for all parties involved. (See article on how to avoid being “creepy” when retargeting: http://bit.ly/a4nLTI)

    • Yes, avoiding creepiness is a key consideration – especially since we are still in the ‘early days’ of retargeting…because some of the creep factor is due to many consumers still not being used to retargeting (so it feels creepy). As the practice becomes more common, more consumers won’t even think twice about seeing an ad for a product they were just researching minutes earlier. That is, unless, the they were shopping secretly for, say, a divorce lawyer, and then divorce lawyer ads start appearing all over the news websites they’re browsing. Advertisers will always have to be aware not to cross the line.

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