Like many other groups of insiders, those of us immersed in online advertising 24/7 tend to live in a professional bubble. Within this particular bubble, "everybody" knows about the inner recesses and nuances of behavioral targeting. In the conversation below, Fetchback CEO Chad Little explains why, despite all the dutiful lip service paid to the notion of the long tail, behavioral concepts have a long way to go before they become truly relevant to the middle market.
Behavioral Insider: How would you characterize the progress that developing behavioral targeting strategies, especially retargeting, has had in 2007?
Chad Little: It's always hard for those of us on the inside of this space to put ourselves into the heads of those outside the industry. We feel by now that behavioral targeting, especially retargeting, the most basic and practically applicable part of BT, should be a line item for everybody. But once you get beneath the really big advertisers, everyone on the 'inside' hears about into the mid-market of smaller or more regional businesses, you see that's surprisingly not really the case at all. So there's a lot of educational work ahead to explain what all this buzz is about, and whether and how [retargeting] can really be applied to the real world most advertisers live in.
BI: How is retargeting perceived by those businesses?
Little: People have a vague sense of what retargeting is, or more precisely that it's something they ought to know about. But when it comes to actually trying to implement it, they don't know where or how to start. There are all sorts of misconceptions and, unfortunately, some ad networks, touting the virtues of behavioral retargeting, haven't been educational. There's a lot of miseducation or just ignorance.
BI: What kind of ignorance?
Little: I liken it to the early days of search. If you recall when paid search was new, everybody bought their 50 keywords, wrote some copy and threw it out there. That's about where we are. The majority of advertisers still utilize the same creative for re-targeted ads as they do for driving people into the front door.
BI: How are you addressing that or trying to speed up the learning curve?
Little: The first step -- and I'd again make the analogy somewhat to early search -- is to make more sophisticated campaign development and management simple and accessible. Where we're trying to focus is where advertisers really are. Of course it's natural for them to start with a customer prospect who went to their home page. But once they begin that, you can show them that there's also enormous untapped value in customers who've abandoned their shopping carts or repeat customers. Getting them to focus on those most basic elements and think about varying creative, and then from there paying attention to sequencing of messaging, are the building blocks. Doing them well is as far as many, perhaps most, advertisers, will ever go, or need to go.
BI: So you don't really see a role for more granular content segmentation, the semantic web?
Little: We promote sub-segmentation of different elements and pages on the site, and by customer type, in situations where it makes sense. Comparison shopping sites, for instance, have so much rich data to leverage. Or, if you talk about the really big guys where a one-half point difference means tens of millions of dollars. But for the mid-market the value of segmentation at that level is not clear at this point. It's relatively easy to develop great technologies. The issue isn't that. It's that you need a critical mass of a million advertisers and publishers, whether it's contextual or behavioral. You can do category-based targeting if you have lots of advertisers and a critical mass of auto shoppers. But for most companies out there, these segments are just not going to be sliceable and diceable, and at the same time big enough to really move the needle.
BI: What does move the needle?
Little: The value proposition of behavioral targeting that really does move the needle for a small company is that it's a lot more efficient in terms of marketing resources to close a warm lead than it is to develop a new cold one from scratch. I'm continually surprised by the numbers I see for marketers on ROI. Certainly ROI is important for all marketers. What I push clients to do is define what it means, and that means you have to go beyond clicks or even the ratio of clicks to conversions. I think there's actually more interesting work being done in Europe now focused on the metric of impressions to clicks.
For the mid-tier marketer, clicks are everything because they can't afford display ads. Retargeting can change that. The idea is to use display as economically as search has been used. The goal is to get education to the point where the conventional premise of advertising, that 99% or 100% of your budget should go to drive traffic to your site, ignoring the 98% of prospects who leave and never come back, can be challenged. It's a premise that goes against every bit of marketing common sense.
BI: Looking ahead to 2008, what are the priorities for pushing retargeting out to the mid-tier?
Little: What's missing is a unified way of serving sequential ads across multiple sites. The way things work now, advertisers need to separately tag each type of traffic source. One way of working at serious scale is to allow advertisers to work with multiple sites and networks with just a single line of code. If we had the platform, the fragmentation and complexity which makes campaign reporting a nightmare, especially for mid-market advertisers, could be overcome. This is a priority area for us going into 2008. We're piloting a project which is designed precisely to get at this issue, an exchange-based retargeting system about which we'll have a lot more to say soon.