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It Knows If You’ve Been Bad or Good: A Guide To Behavioral Targeting Internet Ads

Authors: Jay Baer Jay Baer
Posted Under: Digital Marketing
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Internet advertising is an orgy of choice. There are literally tens of thousands of potential sites on which an ad could be placed, and dozens of different ad sizes and formats. Add a variety of pricing schemes and an often inexperienced sales force, and you get a casserole  of confusion that makes buying radio or newspaper ads look like a game of Go Fish.

The one comfort for the online advertiser has been the relatively narrow targeting alternatives available. There have really only been two ways to segment your audience online: basic demographic characteristics (location, gender, age, Internet provider); and content type (ESPN site reaches exceedingly bored hockey fans, CourtTV site reaches Michael Jackson fans, etc.).

Now, however, the online advertising game is changing, adding a new wrinkle that geometrically increases the complexity – but also the potential power – of Internet ads. The age of behavioral targeting is upon us.

A behavioral targeted ad is an online marketing message that appears on a Web site for you to see based on actions you have previously performed online. For instance, if you’ve searched for “Nissan Maxima” on Google, and then went to to look at the Maxima review, under a behavioral targeting scenario you would see an ad for Nissan (or a competitor) shortly thereafter. There’s no question that this is vaguely creepy, but you better get used to enjoying your online ads with some fava beans and a nice Chianti, because unlike the pilloried pop ups, these ads won’t be easily driven away by a pitchfork wielding online mob.

To date the most successful behavior targeters are consumer product advertisers such as Snapple and American Airlines, whose deep pockets and legitimacy are imperative if the Internet ad business is going to continue stealing dollars from other media types. No invasion of privacy outcry is going to curb this advance – the financial stakes won’t allow it. Further, the ubiquity of today’s Internet has made the hard core privacy advocates look downright quaint when they pine for the good old days of anonymous surfing, butter churning, and barn raising.

And in truth, while the notion that a database is tracking many of my online moves and subsequently sending me ads it believes I’ll respond to is unnerving, these newly enhanced targeting methodologies don’t know it’s me. They just know me by my computer’s IP address.

This provides at least a modicum of privacy, which is a lot more than was intended for this technology originally. Long-time Internet watchers may remember the first shot across the behavioral targeting bow, when ad network DoubleClick bought Abacus – a huge catalog and database marketing firm – and attempted to hook up their targeting apparatus with Abacus’ information to sync online and offline behavior and track people by name. That was back in 1999, and the whiplash of negative reaction to that scheme required chiropractic care, and nearly brought down the whole company. The idea never took flight.

This new more acceptable behavior targeting opportunity comes in three flavors. Ads can be purchased on an individual site (most of the big national sites either have it or are rolling it out in 2005). Ads can also be purchased on advertising networks (conglomerations of thousands of sites, mostly mid-sized). These networks, such as 24/7 Media, and others, offer a good option for first time behaviorists since their pricing and minimum buy is generally lower. Last is the behavior ad software companies such as Claria, WhenU and others. These firms use software included as part of presumably helpful downloads such as password storage wallets or browser toolbars to track usage and deliver behavior targeted ads. These “adware” firms are especially noteworthy (or dubious depending on your perspective) for their ability to handle competitive ambush advertising whereby an ad appears on your screen for the direct competitor of the site you are visiting, usually hawking a discount offer.

Imagine you’re walking into Bashas’ and right when you reach the door a guy jumps out from behind one of those benches featuring an ad with a glamour shot of a smiling Realtor and hands you a coupon for 10% off for the Safeway across the street. That’s what adware firms do online. If you’re  Safeway in that equation, you’re laughing all the way to the bank. If you’re Bashas’ you want to hunt down the Safeway marketing director and make him watch Fear Factor reruns over and over and over. As you might imagine, the adware companies are embroiled in several lawsuits brought by competitors of their advertisers.

Behavior targeted ads cost more than regular ads of course, generally 20% or so. The philosophy is that since these ads are based on your proclivities they are more likely to be viewed favorably and acted upon by you, thus boosting response rate and justifying the increased cost.

This idea of targeting based not just on what people want, but also when they want it most is a unique attribute of online ads and behavioral targeting. The fine points are still being worked out, and determining when it’s most effective to show behavior targeted ads (after two similar actions? Four?) is as mysterious as the Cardinals’ faux logo change.

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Projections from analysts at eMarketer show that behavioral targeting will account for just 8.3% of the $11.3 billion in total online ad spending this year. So, it’s not huge yet and there’s still plenty of time for you to outfox your competition by ramping up this tactic first.

But, like all Internet advertising, the key to success is to start small and test results before expanding the program. Like most things Internet, not a perfect system. And remember, multiple people use the same computer (driven home recently when I recently borrowed my wife’s computer and was startled to receive a series of what I imagine were behavior-targeted ads for Vitabath Shower Gelee).

The good news? My skin is now moist and supple.

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