• by Gary Stein , November 5, 2004

Around January or February of each year, here on the JupiterResearch Online Advertising Campus, we write a report titled "Agenda: Setting Priorities for the Upcoming Year." Surveys are sent out to both advertisers and agencies, asking a number of questions about their plans, their experience, and their expectations for the year ahead. The goal is to create a single report that matches the responses from the two camps to create a unified vision of online advertising.

Feeling cocky about the year ahead was going to be a good one, we asked our "optimism" question: "which of the following do you think will have the greatest positive impact on online advertising this year?" Essentially, we wanted to know what people saw as the best opportunity for the roaring comeback we all anticipated. From a long list of possible responses, the No. 1, most-popular answer was "the ability to target ads based on behavior." That's from both the advertisers and the agencies.

Interesting, right? Even more interesting was when we compared that data point with another: we asked each one which online ad methods and tactics they had used. Targeting ads based on behavior was way down the list, not broadly used at all.

Is it wrong to say that this is the sort of data that gets marketers all hot and bothered? When you see that a group believes in the value of something, but doesn't engage with it? This just screams latent need.

It became clear that advertisers (and their agencies) wanted to use behavioral targeting, but weren't quite sure how to do it. Who could blame them? The first releases of behavioral targeting tended to be imprecise, inefficient, and expensive. Another set of options promise to track all the sites that a user visits, which raised a few privacy and ad clutter concerns. Then, the bottom fell out of the online ad market and no one was doing anything.

But now advertisers and publishers operate in an entirely different world. Advertisers seek out and pay for effective media and publishers find their top-notch inventory sold out. A solution is needed, and behavioral targeting appeared to be it early this year.

Sure enough, this year saw a flurry of announcements from companies like Tacoda, Revenue Science, 24/7, Kanoodle, and more. I even hear that MediaPost is launching a distinct newsletter about and behavioral targeting.

But these are just tools. Stein's Law: the availability of tools always predates the understanding of how to use the tools. Right now, we're in an open space between behavioral targeting tools being available and advertisers (and their agencies) completely understanding how to use them.

How the behavioral targeting market moves forward, though, isn't a function of education. Advertisers don't need to know how the systems work, in the same way they have to learn how to use a software tool like Atlas DMT or Photoshop. Rather, what they need is to be given a chance to take the opportunity to target behaviorally and work it into their overall strategy. That's not happening yet.

What I mean is that, right now, we're seeing media buyers beginning to ask publishers "can you place 10 percent of my ads based on behavior?" That is, the notion of behaviorally targeting ads enters the conversation only at the moment of actually placing the ad units. That's fine, but it is a limited view of how to use the tool. The next generation of use will be to think through how an understanding of behavior can influence the generation of a communication strategy.

That will come of course. Behavioral targeting is really just coming into its own right. There are still a lot of questions. But we know that, for advertisers, the interest is there, as is an awareness of the value proposition for behavioral targeting. Those two things may be the most important steps.

Gary Stein is a senior analyst at JupiterResearch, covering advertising and marketing.