• by Steve Smith , Staff Writer @popeyesm, April 28, 2006

David Hallerman is bullish on BT. In his new report from eMarketer, "Online Ad Targeting: Engaging the Audience," the senior analyst for the research firm predicts that spending on behavioral campaigns online will more than double from last year's $925 million to $2.1 billion in 2008. While the new report embraces targeting overall, both behavioral and contextual, Hallerman pored over most of the recent research on BT for this report and spoke with many principals along its value chain. Who better to ask for an impartial reality check on where the model sits with publishers, buyers, and consumers?

Behavioral Insider: In your projections, you track a big bump in BT spending in 2008, from $1.5 billion the previous year to $2.1 billion. Why then?

Hallerman: It's a question of a couple years of just more and more uptake, and there are more companies doing branding. Even though BT so far has been positioned for direct response, it also has quite a bit of usefulness for branding. Advertising is demanding that exceptionalism from the Internet. It's not enough to have their ads online and to market the brand, but let's really find an audience that is going to be receptive.

BI: How about the client education piece of BT? Does that continue to be an issue, just getting them past what some consider the creepiness of it?

Hallerman: And that is a key roadblock, those privacy issues that may be concerns more than actual facts in most cases. But still, they need to be addressed. It's one area where the publishers too can help. They want to be able to sell their lesser inventory with [BT], and they need to take part. I think that's also something that is being understood more. As behavioral is done more, and there is the lack of push back from consumers, it helps advertisers realize that it isn't necessarily invasive.

BI: In the report you reference an Advertising.com survey that found the share of online publishers offering BT jumped only from 24 percent to 29 percent in the last year. Isn't that surprisingly low?

Hallerman: It is. One of the things they mentioned is that it was a question of investment in technology, that more publishers than you might expect need to feel that it's going to be worth it. It's a question of prioritizing budgets. This is going to be a chicken and egg [thing]. The publishers feel it's worth it when enough advertisers want it, and enough advertisers want it when they have enough sites and networks to make it worth their while. However I think as advertisers find BT and work with the existing networks or sites that offer it, more publishers who don't have that capability will see they are losing out on potential income.

BI: Is there reticence for branded sites to join the BT networks rather than restricting the BT program to their single site?

Hallerman: There has been. I don't know a specific answer to that resistance. By joining the networks you may get fewer individual ads from any one advertiser because it will be spread across a wider network, but the wider network makes it more valuable to advertisers. Therefore more campaigns will be coming on board using BT. That scale is really the key. It's the crux here that makes many aspects of the Internet more valuable for all. I think that is part of the education that is needed, how you gain by being part of something larger because there's just more potential from the larger scale.

BI: You mention in the report that publishers fear having their inventory commoditized.

Hallerman: And that's what does happen to a certain extent. But if you are getting the revenue, especially some of these nonpremium pages that might not have sold as well, it is to a certain degree a commodity. Now I think what will make it less so, will be a greater reach. Reach will allow a combining of contextual and behavioral, or demographic and behavioral, without the reach being sliced too thin. So in that sense [there] may be a process of commoditization we'll go through to allow that greater fine tuning.

BI: I gather that on the privacy side, BT is not raising any red flags among consumers?

Hallerman: No. In a lot of cases it because of how it is done and how, when done correctly, there is a degree of subtlety. Individuals aren't necessarily aware it's happening, since it isn't targeting them as individuals. The previous forms of adware were invasive and they have kind of blown away pretty much. This form isn't.

BI: What do you think happens when the search engines start ramping up their inevitable BT plans? Doesn't that raise the profile of BT generally and bring forward discussions that we haven't had very publicly yet?

Hallerman: Anything that Google does bring forward discussions. There's not been much mainstream publicity about this, which is also why there is no concern. I think the search engines are going to have to be very wise in talking and positioning it and then explaining that to the public in order to avoid pushback. The search engines are going to have to tread carefully, meaning a certain degree of transparency and certainly honesty about what is entailed. And potentially there may have to be a means of opting outs.

BI: So is BT adding up to be a good solid niche of online media, or will it be the dominant model?

Hallerman: I think we are looking at the future model, with the scale needed to make the pricing more mainstream. The report focuses on targeting, finding someone who considers the advertising relevant enough that you might have some chance they will pay attention to you. Maybe if you host something they are interested in they may pay attention to it. And that is a constant need in all advertising.