Targeting To Become Dominant Online Marketing Tool

Consumers must know that most supermarkets and retail stores not only have cameras to keep people from stealing merchandise, but monitor their traffic movement through aisles, too.

As a reporter in the mid-2000s, I visited IBM in upstate New York and got a sneak peek at some applications and platforms the research and development team were working on. The camera tracking software gave stores the ability to determine traffic patterns, providing insight into how people shop. That's part of the way Wal-Mart Stores, Target and others know the exact location on the shelf where Arm & Hammer baking soda or All detergent sells best.

Knowing this technology exists in retail stores, I'm confused as to why people can't comprehend that online behavioral targeting will become a routine tactic within four years, if not sooner, despite the movement by those who oppose the practice, including groups asking the Food and Drug Administration (FDA) to protect the health of U.S. consumers by conducting an investigation into the use of digital marketing technologies, such as behavioral targeting, social media marketing, online video and mobile.

The Internet continues to become the medium through which we read, learn and interact, though last week at the IAB conference, President and Chief Executive Officer Randall Rothenberg told attendees only 8% of advertising dollars are spent online.

Social networks like Facebook mine member profiles, and Yahoo Mail and Google Gmail tap into subscriber email accounts to build audience segments used to target ads.

About one week after researching a few companies to confirm statistics for a MediaPost article, I received an email from Demandbase. The subject heading read: "Someone from MediaPost visited the Demandbase website this week." The body of the email went on to describe my recent visit to the Demandbase Web site. "We hope you found the information you were looking for, as there are several B2B lead generation tracks you may have been interested in."

The email also included a sample Weekly Marketing Insight report to help me uncover the online perspective I should follow up on immediately. Someone tell me this is not targeting my behavior.

Targeting consumer behavior will drive all online advertising. Semantic technology also will support the targeting. It's not what I want, but I believe it will happen. But the industry still has work to do.

The industry needs to solve the problem of finding a way to scale the so-called promise of one-to-one marketing that the Web offers, according to Jeff Hirsch, CEO of AudienceScience. "Eight years ago geotargeting was unique and people wondered if they should do it," he says. "Now every campaign is geotargeted, because why would you want to reach someone with a local ad if they're not in your area?"

AudienceScience recently announced the results of a commissioned study from Forrester on the current state of audience targeting. The overall findings indicate audience targeting growth is rising as familiarity with and confidence in the discipline increases. Also, there's been a positive shift in marketers' understanding of the impact of audience targeting on direct response and branding.

In fact, 77% of marketers already use or plan to include audience targeting in 2010. This finding coincides with another recent Forrester report projecting overall spending on display advertising to double from $8.4 billion in 2010 to close to $17 billion in 2014.

The majority of marketers surveyed in the first study spend on average 23% of their digital marketing budgets on display media. Here display media was defined as all interactive advertising in the form of non-search text links, static and rich media ad units, sponsorships and video-based ads.

Marketers spending more than 10% of their display media budget on audience targeting responded that they believe audience-targeted display advertising is as effective at meeting branding objectives as it is for meeting direct-response objectives. AudienceScience points to this as a significant finding because it highlights display advertising as an effective branding tool regardless of ad click-through metrics.

When I asked Hirsch about technologies required to reach nirvana, he says targeting requires multiple layers of technology, data, partnerships with publishers and advertisers, and services to help marketers understand how to take advantage of the complete solution. Then companies need a way to define the audience and deliver the ads.

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10 comments about "Targeting To Become Dominant Online Marketing Tool".
  1. Privacy Dude from Self , March 3, 2010 at 2:18 p.m.

    You have to admire the self-delusory power of those claiming that all these technologies are anonymous when a presumably unlogged in trip to a website results in a follow up email saying "I don't know WHO you are (all I have is your email address) but thanks for making the anonymous visit"

  2. Paula Lynn from Who Else Unlimited , March 3, 2010 at 2:54 p.m.

    Paranoia is real. There are people following you everywhere. Aluminum hats may be all the rage.

  3. Nicolas Tabbal from Resonate Networks , March 3, 2010 at 4:02 p.m.

    Laurie,
    There is a huge difference between a publisher or merchant analyzing its own customer behavior (which is what Gmail, Yahoo, Facebook and Target do) and selling it to a dozen companies (which is what is happening in BT today). You imply that these two types of activities are similar, but we all know that they are not.

    When consumers find out that their behavioral data is being sold to dozens of companies, there will be a huge privacy backlash.
    Nick

  4. James Oppenheim from Peer39 , March 3, 2010 at 4:13 p.m.

    When ads are targeted based on consumer behavior or data, this is a serious and legitimate privacy concern. It may be effective, to a degree, but it is certainly obtrusive. Semantic targeting technology, however, does not face these issues, as it targets ads strictly based on the current content being viewed by the user, not relying on any previous user behavior. Semantics is noninvasive, operating on the belief that a user is interested in a product or service directly related to the piece of content being viewed at that moment.

  5. Neil Capel from Sailthru , March 3, 2010 at 5:41 p.m.

    Thanks for this insightful posting, Laurie. Two quick points that I'd like to make. First, the big one: despite Mr. Hirsch's assertion, the technology required to make behavioral targeting really work isn't as complicated as one might think. But it does require a platform specifically built to handle 1-to-1 mass messaging as opposed to one hacked for the purpose. No matter how you try, you just can't shoot the rapids in the QE II. Here at Sailthru we've begun deploying BT features that dynamically select relevant subject headings, content, send times, etc. based upon user behavior that we pick up. Our initial testing has shown a 15% increase in opens, 30% increase in clicks and a staggering 60% increase in traffic. Honestly, we believed in the process but have still been astounded at how dramatic the rise in engagement has been.

    And this increase stems at least partially from my second point: there are important privacy issues that we should be concerned about in considering BT, however, it's also a technology which we're finding users are desperate for. We're all drowning in a sea of irrelevant and unwanted messages and BT is one way to mitigate the fatigue and frustration it causes and supercharge user engagement.

    Finally we take data security very seriously, and make our clients do the same. We want to improve the end user experience, get email that you want, when you want, with the content you want - we don't want to sell your data or expose your PII.

  6. Paula Lynn from Who Else Unlimited , March 3, 2010 at 8:05 p.m.

    Neil, when the time comes and all the BTing gets in your face and you find it making decisions for you that involves a major incident in your life, you will be begging for the days of drowning in your sea of irrelevant and and unwanted messages and all of its frustrations.

  7. Krishnan Parasuraman from Netezza, an IBM company , March 4, 2010 at 2:28 a.m.

    Privacy concerns are not necessarily the biggest barrier for adoption. There are ways to circumvent that - by using intent-based models for example.
    The biggest challenge is that the technologies needed to provide behavioral targeting capability has not yet been commoditized. Most of the companies who are doing some sort of behavior targeting have built their own custom solution using multiple piece parts. These piece parts may be good at
    (a) managing web ad campaigns for media planners
    (b) providing sophisticated models and algorithms for Audience segmentation
    (c) integrating with 3rd party data sources such as cookie data exchanges, Website analytics platforms and social network data providers
    (d) serving ads based on inferences or dynamic rules

    However, the fundamental "glue" that binds all these pieces together is a scalable, high performance data management platform. Behavioral targeting is relevant within a temporal context and if the solution is not able to deliver speedy results on large volumes of data it will fail. Understanding those intricacies and their relevance is what Hirsch was alluding to in his "multiple layers of technology and data" comment.

  8. Neil Capel from Sailthru , March 5, 2010 at 4:30 p.m.

    Paula, I really do understand your concern, but to us the goal is to prioritize relevant information and to improve the relationship between businesses and consumers.

    Anywhere I venture online, all kinds of ads are being placed in front of me, but I only click the ones that are the most relevant and interesting (usually in my gmail). In fact, we're all being marketed to all day (online and off) to within an inch of our lives. Isn't it desirable for that ad space, those articles, newsletters--and the space that they take in our lives--to be filled with material that is as relevant and interesting as possible?

    Though a healthy skepticism is necessary, the ability to better understand end user interests need not be greeted with alarm. And in fact, BT is only useful, and will only be used, to the extent that it's predictive capabilities provide desired outcomes. If we don't like the results, these techniques won't get used: systems with unwanted outcomes become roadkill.

    Krishnan, yes, BT technology needs to get to the point where it's just there, running in the background. But again, we're doing this at Sailthru already with a scalable database, the nexus residing at the email send point. We're driving the dynamic content selection for our clients in the background; what the email recipient experiences is a highly targeted, highly relevant, and thus highly anticipated, message.

  9. Paula Lynn from Who Else Unlimited , March 5, 2010 at 8:33 p.m.

    No No No Neil. It's none of your business what soap I use (and who doesn't use some kind of soap) or to what health care facility I go or whether my parents are alive. If you want to know and know me, ask. If you don't know me, it's none of your business to ask. Advertising/PR was created (even in ancient times) to persuade, to change, to impress to advise people decisions on what they buy and what they think. To find out what is available is good. To influence people to believe false gods (translate into anything) that mull destruction especially to those with faulty wiring cause more than simple disaster. General demographics are one thing; BTing is another. Apologizing for getting it wrong even once - e.g. credit card info distribution - oops - will not cut it. Google buzz stung those who fell for their influence and now they changed it or so they say...for now.

  10. Sacha Carton from Ogmenta , March 19, 2010 at 3:44 p.m.

    Great progress has been made and continues to be made on improving targeting methods, be it on the audience or content targeting front. Having said this, Semantics not only yields astounding results when applied to content based targeting but also when used to enrich user profiles to establish behavioural patterns through the semantic analysis of the content a user is reading. Both targeting methods and their underlying technologies are destined to co-exist in this evolving online advertising landscape.