Most initial discussion about behavioral targeting is based on the assumption that data -- and more specifically, data crunching technologies -- are what drive BT e-mail campaigns. While this is true enough on its face, the deeper issue is aligning customer-centric and ideally customer derived data with well understood goals, explains Arthur Sweetser, vice president of marketing at e-mail optimization firm e-Dialog.

Behavioral Insider: What is the current status of behavioral methodologies among your e-mail marketing clients?

Arthur Sweetser: We do performance reviews on a regular basis, and every time we report, behaviorally based email campaigns outperform promotionally based ones. The differentials are huge, by nine or ten times or more. It's very clear and compelling that if you send a message to a 35-year-old man who very recently abandoned a shopping cart while shopping for a blue shirt, you're going to do much better than if you sent him a generic newsletter.

The challenge is that the numbers are not nearly as big. We're used to doing batch and blast mailings up over seven figures -- but by their nature, behaviorally driven mailings have a far smaller scope, maybe in the thousands. And of course, once clients see how much more impact [behavioral mailings] have, they want behavioral to ramp up right away in the millions too. But of course we have to explain it doesn't work that way.

BI: Do you see progress being made in scalability?

Sweetser: The databases are growing and getting deeper, but we're still very early. It's only been about three years that we've had online behavioral targeting at any scale. At first it was just get a list and start mailing. Now we're growing historical data based on numerous campaigns, data on who opens emails, and when and where they are in the sales cycle. As the quantity of data explodes, the race is on for quality of data and relevancy.

In many ways, when it comes to email behavioral is still a bright shiny toy that nobody quite knows how to play with yet. I mean, you get just mountains of data from Coremetrics and Omniture, click stream, search history, browsing history, sales history -- and the question becomes what to focus on. For many clients the first instinct is confusion.

BI: Given how overwhelming the choices can be, how do you advise marketers entering the behavioral arena?

Sweetser:Yes, there are clear guidelines. The main thing is always to start with the basics. For one thing, we've never had a client who hasn't made money by focusing on abandoned shopping carts. Beyond that, there's a clear lesson that to be successful at behaviorally based mailing, you need to think in terms of service first and promotion second.

The most relevant data and thus the most effective communications we find come from dialog related to actual service. Netflix is a great model. They take the occasion of a sale, or the time between an order and when it's delivered, not only to tell the customer that an order's shipped -- but to find out what else the customer might be interested in. When an order's on the way or has just been delivered, it's the perfect time not only to say thank you but to survey customers about what they think about products and solicit their opinions about likes, dislikes and other interests. We're big champions of those kinds of transaction-based, consumer-driven data points.

BI: What is the role of creative in the process?

Sweetser: The next step, once you've begun to know more about who a customer is, is the creative challenge of customizing a message. Hand-in-hand with the analytic challenges are creative ones -- which is why customizing dynamic publishing platforms to tailor content is such a crucial area of technology.

Clients are getting a lot more savvy. They're getting that you can't just grab a list, 1990 style, and start mailing. Before you start you need to step back and make an effort to bring together all the data you have internally on your customers. Many new clients now take at least two or three months to load all the data they can from their central CRM databases before they begin mailing.

Underlying this is a realization that while lists are growing, they're not growing as fast as they were. There's increasing saturation out there. The last I heard, consumers were seeing an average of 36 emails incoming every day -- and over half of those were permission-based. So to differentiate yourself from the pack, relevancy and timing are now all-important. Innovation is being pushed by a healthy dose of paranoia. Customers have much higher expectations for online shopping than they do when they walk into a Wal-Mart. There's now zero tolerance for irrelevance.

BI: What do you see as the most important challenges and issues in the short term as behavioral gains more traction in your space?

Sweetser: Part of drilling down is technology, but there's also a need for intellectual capital on the part of the client, a vision of where they want their marketing to go, and a clear sense of what they want from a campaign. The norm, unfortunately, is that people start with loads of data and then try to derive a strategy from it. ...We're looking to get clients... to reverse that order.