The goal of behavioral targeting is to deliver relevant messages to consumers across any and all content channels and platforms. In practice, of course, that sort of channel-agnostic flexibility remains more hope than fact. In the conversation below, Alexandra Tibbetts, Microsoft adCenter director of product management, outlines Microsoft's evolving strategy for 2007 in moving BT beyond its current "silos."

Behavioral Insider: Could you highlight Microsoft's major targeting initiatives over the past year?

Alexandra Tibbetts: At Advertising Week 2006, Microsoft announced the worldwide launch of Microsoft Digital Advertising Solutions, which is designed to connect advertisers with their target audiences across multiple devices including PCs, Xbox, Web-enabled mobile phones and PDAs. The initiative is a response to one of advertisers' key 'pain points.' As today's consumers spend more and more time online across various digital devices like cell phones and video games, advertisers are finding they can no longer reach their entire target audience by advertising on a single medium. We think we are uniquely positioned to connect advertisers with a million different audiences of one.

BI: Does behavioral targeting have a role in more closely aligning and integrating search and display ad campaigns?

Tibbetts: Absolutely. Our behavioral targeting segments are informed by the keywords that end users are using in our search engine. Behavioral targeting can help advertisers reach customers in coordinated ways across the content and services they are consuming. Microsoft launched behavioral targeting to help bring relevant advertising to consumers and to help advertisers connect with more people that are likely to be interested in their products and services, targeting users further down in the purchase funnel. This is more valuable to advertisers and provides end users with a more relevant, engaging experience. Further, we are currently incubating numerous projects in the Microsoft adCenter Labs that will continue to innovate on behavioral and other enriched targeting capabilities.

BI: How will the new targeting tools you've introduced change how advertisers can approach tracking and targeting consumers?

Tibbetts: By relying on demographic data that customers often provide during the sign-up process for Windows Lives services and by tracking usage and behavior across the network, advertisers are able to better understand customers and their needs. For instance, if a customer looks up 'Ford Explorer,' configures an auto and obtains price quotes, that user is going to be placed within our new auto buyer segment. Similarly, if a user went to CNBC Money and looked for new auto loans, chances are that user is going to be placed in our new auto buyer segment. The next time that user is on e-mail, he may get an ad for an auto. Examples of additional verticals in which we build segments include travel, financial services and entertainment.

BI: What kinds of data will be employed?

Tibbetts: In accordance with our privacy statement, we blend information that customers offer to us, such as their age or gender, along with browsing and search histories to serve more relevant advertising to them. Microsoft never releases personally identifiable information. All targeted advertising is implemented in accordance with our privacy policies. We're building a long-term business for Microsoft, and we want to build it in a way that fosters consumer confidence and trust. We want to be on the side of the privacy advocates. That's why we're spending time with regulators to make sure we're deploying the right way.

BI: How do you add value to more traditional approaches through targeting by content and demographics?

Tibbetts: AdCenter's targeting capabilities utilize data captured from a variety of sources. For example, using Windows Live ID Passport data, we are able to gather information about our audience's age, gender and location, and then utilize this to allow customers to target these specific audiences with their ads. By using adCenter's reporting capabilities, adopting future planning tools through adCenter Labs, or leveraging existing customer research and knowledge from other mediums, advertisers can bid higher when a target audience searches on a particular keyword. In this model, if a female customer age 18-25 searches on the keyword 'blouse,' then advertisers within this age group and gender specified will potentially see their ad show up [at a higher ratio] than, say, for a male, age 65+.

BI: Any examples you can cite of how behavioral data has been leveraged successfully in targeting/retargeting by clients?

Tibbets: We have seen widespread use across industries and fantastic results. During our pilot, advertisers found that click conversion increased as much as 76%, and favorable brand association nearly doubled for behaviorally targeted ads. Since launch, every one of our behavioral targeting segments has been ordered by an advertiser, and we continue to see increased demand.

BI: Looking forward, how do you envision behavioral targeting evolving to suit a more multichannel, multi-device world?

Tibbetts: In the future, behavioral targeting will not solely reside on the PC, but also across multiple devices and platforms. Targeting will be the key capability that will enable advertisers to reach their intended audience across diverse and fragmented media experiences. Targeting models will have to adapt to these new developments.