2006: The Year of Behavioral Marketing

by Jean-Philippe Maheu, Dec 16, 2005, 4:00 PM

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Online behavioral marketing is an increasingly important, fast-evolving arena that can serve consumers' best interests, and 2006 is shaping up to be a watershed year for the industry. Behavioral marketing delivers positive,measurable results for publishers (higher eCPMs on their run-of-network inventory), advertisers (larger reach of their target audience) as well as many benefits to consumers (free content, free applications, and more relevant ads).

While companies like Tacoda, Revenue Science, Claria, and Direct Revenue have been focused on this market for some time, the large established online media companies like Google, Microsoft and Yahoo! have recently announced plans (and for some, preliminary results from early tests) to incorporate behavioral targeting into their advertising offerings. Without a doubt, behavioral marketing is here to stay.

But wait a minute... How do companies do the targeting?

Regardless of the methods (tracking cookies or downloadable applications), behavioral marketing requires some knowledge of users' computer and Web usage. This brings up a couple of interesting questions.

Do users know that their web surfing behavior is tracked--and should they know?

Users should be aware that their Web surfing behavior is tracked, but what most people don't realize is that when they visit the Wall Street Journal Web site, there is a high probability that they will receive some ads based on their surfing behavior over the past few days.

Clearly, more transparency is needed--and this should be an industry-wide effort, with large, reputable online media companies having a role to play. The New York Times recently published an editorial entitled "What Google Should Roll Out Next: A Privacy Upgrade," describing how Google keeps records of every search on its site and collects information about its users' activities online. Google, with its resources and public trust, could play a hugely positive role in engaging and driving this debate with consumers.

More transparency is also required from the anti-spyware software vendors. To that effect, the work of the Anti-Spyware Coalition to bring more consistency and clarity around the messages its members provide to their users after their scans is very important.

Increased transparency needs to be supported by consumer education around the topic of "what's in it for me." Consumers need to understand the following:
1. Innovation on the Web is primarily fueled by advertising dollars.
2. Behavioral targeting provides higher returns and a larger inventory for advertisers which, in turn, accelerates the transfer of ad dollars from offline to online.
3. Additional advertising dollars further fuel innovation, and with it the development of a multitude of compelling new free content, services and applications online.

Should online behavioral marketing providers get users' consent before they download something on users' computers?

The recent announcement by TRUSTe describing recommended practices for downloading software on users' machines is a great step forward. It provides a clear set of guidelines --guidelines that will ensure clear user notice and consent prior to any download. These guidelines will apply to any downloadable software including toolbars, desktop search software, monitoring software, and advertising software.

There is still a debate around tracking cookies, another technology that can be used to provide behavioral marketing services. I do not believe that tracking cookies are bad for users (hence I do not understand the ad campaign from one of our competitors with the tag line "No tracking cookies"); however, I do believe companies that use tracking cookies need to be more transparent with consumers about the fact that they do track online behavior.

Behavioral marketing has developed quickly over the past few years; consumer education and awareness efforts have not. A great deal of research exists demonstrating that, while our ability to better serve the consumer grows more and more effective, consumers are growing more and more suspicious of our efforts.

This erosion of trust in the medium, should it continue, represents a serious threat to the online behavioral marketing industry--a threat that can stanch the industry's growth potential. It is up to us to draw back the curtain and inform the public just what it is that we do, and how consumers benefit from our efforts.

The public's trust is a prerequisite for any free, ad-supported media environment to thrive. Restoring the public's--and advertisers'--faith in these new technologies will not be easy. It will require maturity, transparency, and cooperative dialogue from all parties, not hot rhetoric. But if public confidence is restored and the tools necessary for behavioral marketing do provide real benefits to consumers, this generation of industry leaders, on both the advocacy and business sides, will have accomplished something that will continue to pay dividends to the broader society for many decades to come.

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