Behavioral Targeting is Nothing New to Savvy Digital Marketers

Every so often a new buzzword shakes up the mass communications biz, with digital marketers eager to cash in. Podcasting was the term of 2004; social networking, of 2005; vlogs, of 2006. Social networking has made a comeback as the hot sector of the year, thanks in part to the promise of another new buzzword: Behavioral targeting. Just last week, Silicon Alley Insider ran an interview with News Corp sales chief Mike Barrett on his latest plan for MySpace – a new program that lets marketers target ads based on users’ behavior.

And like most new buzz topics, behavioral targeted advertising is expected to boom. According to eMarketer, behavioral targeted ad spend totaled just $350 million in 2006, but will grow to $1 billion next year and rise to $3.8 billion by 2011.

Thing is, the practices behind targeted advertising have long been in place with email and SMS marketing. The idea of giving a consumer information he or she really wants – whether it be about clothes, beverages, or movies – is the philosophy on which targeted messaging has succeeded. Online advertising, in comparison, may not be as accurate as targeted messaging in gauging consumer interest – and could ultimately suffer backlash from advocates worried about privacy issues.

First, let’s talk about how behavioral targeted advertising works. On the technology side, algorithms track a user’s clicks, visits, and other behaviors. This allows a company to analyze what might interest a consumer based on the types of links they clicked, the kinds of sites viewed, or the category of items they appeared to be buying – and then place a relevant ad on the site the consumer is visiting. For example, someone who clicked on a link to a personality quiz could next see an ad for eHarmony; or a person checking out TV models on an electronics site might then be served up an ad for a Toshiba flat-screen.

While this is a very important phase in the evolution of online advertising, similar concepts have been used in mobile and email marketing for the past few years. In these cases, targeted messages, based on one’s database of email and SMS subscribers, are both initiated by and measuring of consumer behavior. This first step is similar to that of behavioral targeted advertising. A marketer can segment a campaign based on specific criteria gathered about subscribers – such as age, gender, and whether they prefer Laphroaig or Maker’s Mark.

However, the crucial difference with email/SMS marketing is that information is obtained from the consumers themselves via a subscriber form. Then, platforms like mobileStorm’s Stun! can track opens on emails as well as on SMS messages sent over certain cellular networks. They can also track clicks on links sent on emails – thus measuring the success of a particular campaign not only at the meta level but also at a much more detailed view, depending upon the type and scope of information that they collect from their subscribers. Such data is so valuable that companies like the Danish marketing startup Come&Stay offer a list of some 270 million willing email recipients and 27 million receptive mobile phone users (see BusinessWeek’s recent profile).

Besides having engaged in behavioral targeting longer than online advertising companies, one could argue that email/SMS marketing can also do it better. That’s because while such ads are based upon patterns of a consumer’s behavior. targeted messages are a two-way street. Consumers can respond specifically to a message – like agreeing to attend a promotional event, or filling out a questionnaire with hopes of getting some kind of freebie or discount – which both indicates a campaign’s success and gives marketers even more information to stuff their databases.

On a more serious note, as mentioned earlier, behavior-based ads on the web have a major drawback: They worry consumer advocates in terms of privacy issues. Some folks fret that such technology could lead to the identification of individuals, and that consumers’ personal information could be at risk unless those monitoring behavior can also guarantee security protections (see the U.S. Federal Trade Commission’s upcoming Town Hall on the matter). However, permission-based targeted messaging doesn’t suffer from these problems, since the recipients actually choose to be contacted by marketers and give out some of their personal information.

Maybe that’s why the targeted messaging market is so promising. In Europe alone, according to Forrester Research, email marketing is expected to grow from $2.1 billion this year to $2.8 billion by the end of the decade; and Telephia says the number of SMS users rocketed to 63.7% of all U.S. cell phone subscribers in the first quarter of this year, up from 41% the same quarter in 2006 and 25% in 2005. The ultimate goal, of course, is to have such targeting across an entire marketing mix and use each piece wherevever most effective. While it’s important for any marketer to include a healthy mix of different communication vehicles, companies should realize that in terms of privacy and relevancy, messaging seems a clear winner.

-Eydie Cubarrubia, Marketing Communications Manager


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