Over the years, the clear leader in online advertising has been search engines. The major reason why advertisers allocate more than 40 percent of their online budgets to this medium is based on the likelihood that the user's need for immediate gratification is high. Whatever users type into a search engine, most of the time their behavior indicates a direct need. The arrival of behavioral targeting (BT) has advanced a search campaign's ability to give us the direct needs of consumers and has brought this ability to display ads.
For years, display advertising has been among the most prevalent online ad alternatives to search engine marketing, but it may not truly reach the advertisers' target audience. Consequently, advertisers have gotten used to being held accountable by measuring the direct success rates of their online ad campaigns. The arrival of behavioral targeting (BT) has advanced a search campaign's ability to give us the direct needs of consumers and has brought this ability to display ads.
After all these years of BT, I still find that our agency has to face ambiguity in the marketplace about what BT is all about. Whether it is among marketers, industry peers or publisher representatives, there is still some misunderstanding about terminology, discrepancies about how it works and a lack of knowledge about the different types of behavioral targeting.
For this reason, here's a little cheat sheet about behavioral targeting to clarify its function and impact within the online industry.
What is behavioral targeting?
Definitions of BT vary. I looked at many sources and came up with the following: BT is the ability to display your ad on a publisher's site -- either textual or display -- to users out of context, based on their interests and needs from information that was gathered by the third-party publisher.
The important piece here is that BT has a direct relationship to placing an ad on a publisher's site. So we are strictly dealing with placing a marketer's advertising message with third-party publishers. In addition, it's important that we limit the term "behavioral targeting" to user behavior data that was collected outside of a marketer's own web properties.
Retargeting as BT
Retargeting is often used by publishers as a form of behavioral targeting. This happens when a third-party publisher places a pixel on the marketer's own website at different phases of the purchasing funnel.
The early phase of the funnel could capture users who came from an ad to a marketer's site but left early. A lower level of data capturing might occur when a user researched products but did not make a purchase. Both of these groups have indicated an interest in your products, or at least in your brand, thus the retargeting campaigns by third-party publishers focus on getting back to them with a unique message (such as a special offer or coupon), as they are more likely to convert than others who have not been in touch with your brand.
The major challenge for many advertisers using retargeting campaigns is the ability to deliver sufficient numbers of retargeted users to surpass the minimum level of inventory buys. Many publishers make retargeting an integrated element of the campaign buy to get around this issue. Recently, retargeting aggregators have surfaced, where several marketers pool their retargeting campaigns together in a single buy through this intermediary to surpass the minimum buys.
Take another look at my definition of BT. Retargeting takes advantage of a marketer's own data, not third-party data. I always recommend that publishers clearly separate the two in their pitches to clients. Many times, I have heard publisher reps talk about BT, only to discover that they really only offer retargeting.
BT segments
BT allows marketers to target campaigns based on predefined behavioral segments. Publishers develop target segments based on marketers' requests or most common user activities on their site or network. A sample segment is the travel and leisure segment, which includes users who have shown a need or interest in this area based on their past online research/surfing behavior over a certain period of time.
Each publisher establishes segments based on its own standardized parameters. Variables within the parameters of the segments usually include monitoring the time applied to a user's behavior to determine if they can categorize in the segment; the depth of the level of activity in a particular segment category, such as how many content pieces were viewed around a particular topic, and the types of activities used to create a behavioral category.
There are two types of behavioral categories:
- Singular channel (e.g., website content, URL)
- A publisher only uses a single channel of user activity to group users into a behavioral segment. Example: only monitor users based on what content they read. Content is being categorized through screening of keyword density.
- Multiple channels (e.g., search, email)
- A more comprehensive form of user categorization is done when a publisher uses multiple channels of behavior. In this case, a publisher uses such aspects as search activity, clicks on ads, videos watched and content. It is obvious that this form of categorizing a user is much more in-depth and leads to better targeting opportunities for the advertiser.
Publisher differences in BT setup
There is also a difference in where publishers gather the data about a user through cookie placements. The two forms of data-gathering methods that are available -- as I prefer to call them -- are proprietary and open network methods.
In the proprietary network environment, publishers -- both portals and ad networks -- only use data that was generated when users conduct their behavior while they are actually on that publisher's specific properties.
In an open network environment, a publisher places a cookie that tracks all activities of the users across the entire internet. The important point here, however, is that the publisher still only serves the ads when the user is back on the publisher's property.
Reach and conversion requirements
When conducting a behavioral campaign, your audience reach is likely to be significantly lower than if you were to conduct a demographically targeted campaign. In theory, however, this smaller audience is significantly more likely to convert.
In order to determine if you should conduct a behavioral campaign rather than a demographical campaign in the first place, look at the premium that an advertiser pays for the behavioral campaign over a demographics campaign. My agency works with our clients to establish the required success lift needed from the campaign and runs a small test campaign to see if the increased conversion rate is sufficient.
Also be sure to establish if there is an opportunity to integrate demographical data into your BT campaign; some publishers are unable to cross-reference the campaigns between demographics and behavior, so it is worthwhile for you to ask.
Demographics -- such as audience age, household income and geographic location -- obviously refine your campaign and make it potentially too narrow, so you should identify if it might make sense only to apply certain demographical filters to your audience in order to have an effective reach.
Future requests
BT is here to stay, and I predict it will increase in adoption over the next few years. However, in order to have advertisers take full advantage of it, I would like to make some requests to our behavioral community.
In order to properly and better target our audiences, we need to obtain as much information about them as we can. Publishers need to practice greater transparency with marketers to help identify where else users are going in order to take advantage of other opportunities.
In addition to just seeing how well a behaviorally targeted placement performs, deeper insights, which can help to better define who exactly that target is, would be extremely valuable to see for current and future marketing efforts. Getting more granular and seeing what site segments our online ads are performing best on, in addition to simply seeing how well "Behavioral Placement X" did, would also be very helpful. Taking a full-circle approach to reporting campaign performance, from marketer to agency to publisher, is beneficial for all in terms of growing the business.
Additionally, there needs to be a standardized definition of what comprises a behavioral segment. Every publisher defines their segments differently; one publisher may categorize a user based on one click or one purchase, whereas another may gauge the frequency and duration of the user behavior to categorize them for a particular segment.
By creating a standard of what constitutes a behavioral segment, the consistency among publishers will be more universal. With these advancements, the future of behavioral targeting will have room for improvement and increased opportunities.
Who posts these links every day and was the interaction team ever formally notified that such a great resource exists? Can anyone from our team post a link here?
Posted by: Ben | August 02, 2007 at 06:06 PM
Great post but can we cut down on the jargon next time, please? This one tends to read more like a physics lesson than marketing to human beings.
Cheers
Yousuf
Posted by: Yousuf Rangoonwala | August 07, 2007 at 06:03 AM