Here's Some Interesting Behavior You Might Want To Keep An Eye On
Behavioral targeting is a small, but rapidly growing segment of the online advertising marketplace that some people -- me among them -- believe could ultimately change everything about the way advertisers and agencies use electronic media to target their messages to consumers. Unlike traditional methods of targeting, which place ads in editorial or programming content deemed relevant to consumers marketers are trying to reach, behavioral targeting enables advertisers to target people based on their past media behavior. Why is that significant? More importantly, why does that represent a breakthrough in media planning? Good questions. Let me explain.
Behavioral targeting disassociates advertising messages from media content and focuses not on what the media are doing, but on how people are consuming it. Here's how it works. Let's say I'm someone who's in the market for a high-end performance car. As part of my purchase planning I may tool around BMW's site, or drive-by BMW's Web pages. I might also stop by Edmonds.com or any number of auto purchasing sites to do some research on pricing, performance and comparisons between models. Naturally, those are all good places for auto marketers to reach me with their brand pitches, but there is only so much inventory on those sites that can actually reach me. In fact, after doing my initial research, I may not go back to an auto-related site again until I'm ready to actually purchase the car I want. Or I may just stop by a dealer instead. So how can BWM reach me to make sure I don't end up buying a Mercedes, or vice versa? Well, they can use firms like BlueLithium to target me behaviorally.
Utilizing tracking cookies -- simple pieces of computer code that tell online publishers who I am when my computer browser lands on their page -- firms like BlueLithium can tell BMW where I go when I leave the car company's site, or Edmonds. BlueLithium can follow me and serve an ad aimed at me -- and only me -- when I scan the headlines on MyYahoo news feeds, or when I click through to a story on the New York Times Web site. They can get me when I check the weather on accuweather.com, or they can catch me when I click back to the TV Board blog page to see what comments readers like you ultimately make to today's post.
In the old days, placing ads in such content might have seemed completely irrational to a media buyer or brand manager. These days, it's increasingly being seen as the most logical step. Putting aside the whole debate surrounding the so-called "engagement" effect of media, who's to say that an ad placed adjacent to relevant editorial content is the most effective? Isn't the most effective advertising message the one that's most relevant to the consumer at the time he's being exposed to it? If my online navigation behavior shows that I've been frequenting automotive sites, how rational would it be to serve me an ad for Calloway golf clubs when I check out stats and rankings on the PGA tour on ESPN.com? It's not. Ultimately, all that should matter is my consumer behavior.
That's why Yahoo just paid $300 million to acquire BlueLithium. It's also why Time Warner's AOL unit recently agreed to pay an estimated $275 million to buy BlueLithium rival Tacoda. And it's why some other big media concerns are likely to grab other behavioral marketing firms like AlmondNet, Revenue Science, and Undertone Networks. It's because behavioral targeting works. And it's because the secret of its success is starting to get out.
According to the most recent estimates from online industry stats keeper eMarketer, the behavioral targeting market is set to increase to $3.8 billion by 2011, from $350 million in 2006. It could actually be bigger than that if, as I suspect, it ultimately begins to infiltrate the television industry.
To do that, some pretty big changes would have to occur. But from where I'm sitting, they're starting to occur already. The biggest change that would need to happen, would be for the TV industry to begin providing marketers with information on consumers' TV viewing behavior. And I don't mean proxy samples like Nielsen ratings. I mean actual data derived from the set-top devices sitting in their living rooms. This is starting to happen, albeit excruciatingly slowly. TNS has begun working with local cable operators, and has even commercialized a digital set-top data service in at least one market. Rentrak has also gotten into the game, as has Nielsen. And the industry shouldn't completely rule out spunky digital set-top ratings service erinMedia, which is owned by regular TV Board contributor Frank Maggio. While erinMedia has deactivated its operations pending the outcome of its federal antitrust suit against Nielsen, Maggio says he is committed to getting back in the game as soon as the courts or regulators can create an open playing field.
Other forces are at work that could facilitate the free flow of digital TV set-top data. Invidi, a digital switching technology player that could enable that market overnight, continues to court cable operators, which have been loath to come on board to date, citing consumer privacy concerns.
Another big player could be Microsoft, which has agreed to acquire digital marketing giant aQuantive, which also happens to own Atlas DMT, one of the leading online ad serving firms, and one of the few to begin developing ad-serving capabilities for interactive TV platforms.
Another relationship worth keeping an eye on is Google's deal to sell TV advertising avails on satellite operator EchoStar's DISH network. A key element of that relationship has to do with opening EchoStar's database to Google's ad targeting systems.
But the biggest reason why television ultimately will embrace behavioral targeting may have less to do with television and more to do with the Web. As the super targeting ability of the Internet makes it a more effective marketing platform, TV will inevitably have to follow suit. In the meantime, the Web also will become an increasingly important distribution platform for television content, and as TV programming "publishers" discover the power of behavioral targeting, it only makes sense that they will want to migrate that back to their other telecasting platforms.