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marketplace - behavioural targeting

By tracking online behaviour, marketers can be much more choosy about who sees their ads. Despite privacy concerns, behavioural targeting is one to watch. By Sean Hargrave

It is common sense that if you want consumers to interact with a brand it is best to place marketing messages in front of people who are most likely to be interested in the company and its products or services.

Traditionally this has involved media and marketing executives concentrating on the demographics of typical customers and then finding appropriate sites to advertise on. However, online marketing has now developed to a point where consumers can be tracked anonymously around a brand’s own site and around the wider internet. The types of sites they visit, the content they look at and the terms they search for, as well as behaviour on the company’s own site, can give a good inclination of what consumers are “in market” for. Target the people that have shown an interest in what you have to offer and, it’s not surprising to hear, brand awareness and response rates increase significantly.

The Internet Advertising Bureau (IAB) has noted a significant increase in spend on behavioural targeting as marketers look to cut wastage. According to its latest figures, display accounts for about 20% of online advertising (search is 60% and classifieds 20%). Of display’s 20% share, one-third is behaviourally targeted, making the UK market worth about £240m a year.

Premium price, premium profit

All the major advertising networks offer behavioural targeting, so campaigns can be centred on people who have demonstrated their interest in a brand’s areas of influence. Although such space does come at a premium, Zuzanna Gierlinksa, head of Microsoft Media Network, claims reductions in wastage make up for it.

“The price of run-of-site advertising on our network might be, say, about 75p per thousand impressions,” she says. “Behavioural targeting will take that up to £2.50 to £3, but it’s actually a really good investment because, though it can vary greatly from one campaign to another, we see click-through rates increasing four to six times. You have confidence that you’re not wasting eyeballs and, for branding, you’re being seen by the right people, even if they don’t click through there and then.”

Tom Braybrook agrees. As a senior digital planner at advertising agency Manning Gottlieb OMD, he claims that behavioural targeting is a part of nearly every campaign he is asked to plan and buy.

He says: “Although the rates can appear higher, they can actually be less than if you were to go down the demographic route and book space purely on the premium pages of prime sites, which will charge a fortune. With behavioural targeting you can reach the same people when they’re not on the prime real estate and for far less. They’re still in the market for your brand, it’s just that you’re reaching them on a more cost-effective part of a site.”

Katharina Lindmayer, online marketing specialist at Lufthansa, explains how behavioural targeting has worked for the airline. An appraisal of one past campaign showed that by targeting people who had shown an interest in airline sites or travel agents or had researched relevant destination content, the airline achieved a reduction in the cost per acquisition (CPA) of 35-40%.

“We’re a very results-driven company and behavioural targeting has delivered for us,” she says.

“That’s why we’ve continued using it in our online marketing. It’s about a third of our online advertising budget now. The beauty is we can match campaigns to specific target audiences.”

Lastminute’s experience appears to bear this out. It recently published the results of a campaign in which run-of-site ads were compared against behaviourally targeted inventory. The result was a 100% rise in conversions and a 45% higher propensity to visit the site.

Such campaigns require consumers to be tracked across a network of publishers to discern their interests and then, via a large advertising network, have relevant ads put in front of them.

Retargeting: second chance to see

A slight variation on this approach is behavioural retargeting. This normally relies on a marketer using technology to look at what a person is doing on their site and then, after they have left, retargeting them with appropriate marketing messages while they are browsing other sites. The data collated can also be used to ensure pertinent offers are placed in front of the same person the next time they visit the brand’s site, whether they arrive directly or via an ad.

Recruitment service Jobsite, for example, is using behavioural targeting, through I Spy Marketing, to reach out again to candidates who showed an interest in a position but did not apply nor upload a CV.

“We obviously do well when we supply quality candidates to our advertisers for the positions they’ve placed with us,” explains senior search marketer Katy Stanton.

“So our system looks at the types of jobs we have on the site to find out where we need additional suitable candidates. We then readvertise these jobs to people who have shown an interest, when they are on other sites. Often we feature a second, similar position as well. The results have been a doubling in click-through rates from retargeted users, compared to people who aren’t being retargeted.”

Shoe retailer Office is carrying out similar activity, retargeting people who have shown an interest in an item but have not bought.Ecommerce manager Corinne Poggi claims the technology has demonstrably helped to increase sales.

“We’ve seen conversion rates rise by an average of about 2% across the site,” she says.

“That’s a significant rise for any retailer. So far we’ve been retargeting people who have shown an interest in particular products, but we’ll soon begin targeting people who have abandoned shopping carts on the site because that’s a very clear sign of interest.”

Clearly behavioural targeting and retargeting appear to be catching on with marketers. If there is one thing holding brands back, though, it is concerns over privacy.

Mark Kelly, ecommerce manager at clothing site Republic, reveals the brand, like any other, had to consider the public’s acceptance of tracking technology. However, he says, this is no longer a major issue, as the successful results prove: “We’re getting conversion rates for retargeted customers that are two to three times higher than our normal average.

“I think the public might have been cautious about this a few years ago but there’s more confidence now as people have begun to understand the technology.”

Nevertheless, in May, the Office of Fair Trading (OFT) expressed concern that advertisers need to be more open about tracking capabilities and has urged the IAB to work with the industry to provide clear notices alongside behavioural ads and to provide more detail about opting out.

The IAB claims many of the concerns are addressed by its Good Practice Principles, to which the major players in behavioural targeting have signed up. Roundtable talks this month between the IAB and OFT offer an opportunity to discuss the issues raised and the IAB expects ads will be more clearly labelled in the future. According to IAB director of regulatory affairs Nick Stringer, the extra precaution of labelling ads was being considered by the IAB before publication of the OFT’s report.

FACT FOCUS

All you need to know about behavioural targeting

  • What is behavioural targeting? It is smart technology that allows marketers to serve ads and incentives to people who have demonstrated an interest in what the brand has to offer.
  • How does it work? Consumers are tracked anonymously, via a cookie, around a vast network of sites, logging their interests through the content they visit, the search terms they research and the offers and ads they respond to. They are then placed into interest categories so relevant ads can be displayed to them.
  • What is retargeting? This is like behavioural targeting but centres on what happens on the brand’s own site. A brand will monitor a lead and if they show an interest they do not fulfil (such as putting an item in a basket that is later abandoned) they will later be served an ad for the brand or the goods to entice them to return

 

IN THE MARKET

10 Suppliers You Need To Know

  1. Google
    Has massive tracking and targeting capabilities through its search service and network of publishers which are part of its advertising network. www.google.com
  2. Microsoft
    Runs its own network on Microsoft properties as well as a wider network, which it claims reaches 90% of the UK surfing population at least once per month. www.microsoft.com
  3. Yahoo!
    Like Google and Microsoft, Yahoo! runs a massive behavioural targeted advertising network. It bought early leading behavioural targeting ad network BlueLithium in 2007. www.yahoo.com
  4. Specific Media
    Runs a targeted network which it claims nine in ten companies use again after their first trial. www.specificmedia.com
  5. ValueClick
    Runs an advertising network which offers behavioural targeting and has an extensive affiliate network. www.valueclick.com
  6. AudienceScience
    Tracks a site’s users and categorises them. The technology is used by big publishers to allow brands to reach premium audiences when not on premium pages (such as general news). www.audiencescience.com
  7. Criteo
    Provides technology to track consumers on a brand’s sites so they can be categorised for retargeting elsewhere online. www.criteo.com
  8. Struq
    Technology company that works with multiple publishers and networks to retarget consumers with personalised adverts. www.struq.com
  9. Peerius
    Specialises in on-site behavioural targeting, using info about a consumer to orientate a page and suggest products based on their past and current activity. www.peerius.com
  10. MyThings Media
    Specialises in placing banner ads on a brand’s site, normally for the host’s goods, which best suit the visitor’s past interests. www.mythingsmedia.com

Source/ newmediaage Marketing Services Guide 2010

 

FIGURE FOCUS

  • Display accounts for 20% of online marketing. One-third of this is behaviourally targeted.
  • This represents a market worth circa £240m, the IAB suggests.
  • Cost per thousand (CPM) rates are likely to be three to four times higher for behaviourally targeted advertising than for the lowest-cost run-of-site ad placements.
  • Click-through rates can vary: trebling or quadrupling is claimed. Brands questioned by Marketing Week report significant rises, with conversion rates of returning shoppers doubling or trebling.

 

Viewpoint

Stephan Noller - CEO Nugg.ad

Behavioural targeting is a big part of the industry already. The share of campaigns using targeting almost tripled last year - a big jump in the number of people using the technology.

The big trend in online advertising for the next year is the return of branding. It will be the main growth driver for online display. At Nugg.ad, we think targeting can do a lot to make branding campaigns more efficient. We see it as part of kicking out the click and replacing it with brand-based key performance indicators.

The other significant trend is that prices for behaviourally targeted advertising are rising while untargeted cost-per-thousands are going down. In other words, people are willing to pay more for targeting/ agencies and advertisers are really starting to understand what it can do. In addition, targeting was previously positioned as a performance technology - just a way of increasing click-through rates - whereas now agencies are seeing it as a way of reaching a campaign’s intended audience. They’re starting to see it in a similar way to advertising around relevant content, and they’re willing to pay similar rates.

The privacy question around targeting is still very much live. From the beginning, we have focused very strongly on privacy; we take it very seriously and think the rest of the industry should too, but we also believe that it’s absolutely possible to do targeting in line with consumers’ expectations of privacy. It’s much more about a lack of transparency and education in the market. We have to explain more about what we’re doing and how we’re doing it. Consumers will become more accepting of technology like ours, because we’ll have educated them and been more transparent about what we’re doing.

At the same time we have to take the views of the European Commission very seriously. I’m the chairman of the Internet Advertising Board Europe Policy Committee, and what I’ve learnt from dealing with Brussels is that they’re very concerned about behavioural targeting, and that there’s a chance they’ll move to regulate it, but they also say that if the industry improves the education it does and the level of transparency it offers, we’ll be allowed to move on without regulation.

FUTURE TRENDS

What does the next year hold?


Mark Rabe
Managing director, Yahoo! UK & Ireland
“Behavioural targeting based on analysis of online usage data, including search terms, content viewed or ads clicked, has provided insights that have allowed marketers to become much more relevant in their advertising. As the discipline evolves, behavioural targeting will improve the accuracy of modelling and spread into new areas.

“The discipline is moving beyond direct response marketing into wider brand development, as well as much more sophisticated audience targeting. To succeed in this space, providers must develop partnerships enabling them to combine anonymised online data with third-party data, including that relating to offline behaviour. In the future, media owners and agencies will be defined by how well they use data/ their own and third parties’.”

Sam Barnett
Chief executive, Struq
“The behavioural targeting system relies on a creative team producing generic ads and a network targeting a user with those ads. However, the content within the generic ad is static - it can’t change - and this is the problem.
“Customers want relevance in real time - ads for products and services they want now, not last month. Current behavioural targeting systems can’t meet changing customer needs, making display ads mostly irrelevant.
“The role of creative teams will diminish as efficient targeting uses machine learning to assemble an ad on the fly and customise the content in real time. This will increase relevance and improve results.”

Nick Stringer
Head of regulatory affairs, IAB
“Internet platforms are converging/ from the PC and laptop to the TV, games console and mobile device. It’s not a new phenomenon but such convergence enables the delivery of customised content and advertising to whatever we’re doing, wherever we are located. Consumer trust and transparency is fundamental to realising this vision. The US market is setting the direction for industry self-regulation in behavioural advertising by offering consumers ’enhanced notice’ in or beside an advertisement on the viewed web page, as well as providing users with the controls over data use for this purpose. EU markets will follow, thereby safeguarding privacy while building a more relevant digital experience.”

Tom Braybrook
Senior digital planner, Manning Gottlieb OMD
“Regulation and data are two themes we believe will really shape behavioural targeting. With privacy concerns still very much in the spotlight, the industry will need to become even more transparent with regard to data collection; while recent pressure from the OFT is likely to accelerate the need for a universal ’opt out’ for users. In terms of data, the integration of additional data sources such as pay per click, ecustomer relationship management and social media data is crucial in providing a more holistic and intelligent approach to behavioural targeting. Retargeting is often the jewel in the crown of a behavioural programme and dynamic retargeting specialists such as Criteo and Struq should continue to gain traction among advertisers in the coming years.”

Zuzanna Gierlinksa
Head, Microsoft Media Network
“Technology development will force consolidation in media ownership. Media owners will have to find new ways to deliver value as data moves out of the hands of networks and publishers as a result of the advent of demand- and supply-side platforms and due to the ability to layer on targeting.

“A common language will be developed around booking, buying and measurement of targeting, making buying decisions easier and performance comparable.

“Offline data will increasingly be used in building online targeting segmentation and will provide the capability to follow a user to the offline store.”

Ian Dowds
Vice-president UK, Specific Media
“I’m a 44-year-old ABC1 male; I enjoy relaxing holidays and drive a nice car. At present I’m in market for neither, yet I receive advertising for both regularly, presumably due to my demographic profile. While you can’t discount demographic targeting entirely, it’s a measurement that’s remained static since the Fifties and does little to reflect today’s consumer habits. This is why it will increasingly become supplemented by behavioural targeting.

“We’re all in market for something until we buy it and online targeting technologies provide dynamic insight into user behaviour, intelligently pinpointing in-market consumers along their paths to purchase and creating greater efficiencies and return on investment by helping to find those who are in market, wherever they may be - because it’s now all about the user.”

IN PRACTICE

Top tips you need to know

  • Test the water. Start off by comparing behavioural targeting against run-of-site adverts to see whether the technology works for you.
  • Consider how long a lead is ’in market’ for. Hotel room buyers, for example, are not in the market anywhere near as long as holiday buyers. So ensure you are targeting within the optimum window.
  • Frequency-cap campaigns. If you keep bombarding the same person with the same targeted offer, it may become annoying and counterproductive.
  • Scale is a big issue. Ensure your network of choice can deliver. It is one thing being able to recognise and categorise consumers; it is quite another to have the capacity to serve millions of impressions when the brand wants them.
  • Play by the rules. Familiarise yourself with the IAB guidelines on behavioural targeting and ensure you and your partners are compliant.

 

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