• by Phil Leggiere , January 30, 2008

In just a few short years behavioral targeting has moved from a strange novelty (looked at curiously and skeptically by marketers) to an over-used buzz term, looked at all too often naively by marketers as a technological panacea.  To make BT truly live up to its potential, however, as Jon Mendez, founder of OttoDigital and blogger at optimizeandprophesize.com explains below, marketers need to learn to look at it in another way: less as a technological magic bullet and more in terms of overall strategic optimization.

Behavioral Insider: How does Otto Digital see the relationship between site optimization and behavioral targeting?

Jon Mendez: Behavioral targeting is one of a number of strategies that should be employed to optimize site performance. It can be a stand-alone strategy or it can emerge from segmenting test results, discovering what matters and then targeting where we know it will improve performance. Our segmentation strategy falls into four distinct buckets and includes not only typical behavioral segments but also source segments, temporal segments and environmental segments.

For example, temporally we know that site performance and behavior vary considerably due to time of day, day of week and time zone. With environment, language and geo are huge drivers of relevance. We're also getting great success with things like screen resolution that can be used to target specific presentations or delivery of content with great results. To use a media/banner analogy, think of all the ad impressions that are paid for and never viewed because people are on 800x600 resolution or their browser window is not maximized. We make sure to optimize site side with this in mind.
 
BI: In what senses is behavioral targeting being over-hyped and/or over-sold by technology vendors and networks?

Mendez: I think there are real questions to the value, let alone the understanding of how that value is being created, but this may be less to do with the technology and more to do with how it is being used. We're constantly testing and validating segmentation strategies, and sometimes they work to great effect and sometimes they do not. Also much of what we see is counterintuitive, so there is no magic bullet with BT. This is not unlike most advertising/marketing technologies where success is less about the technology platform and more about the strategies, creative and execution. It's hard work, and I think that is part of the disconnect since it's often sold as instant & automated ROI.
 
BI: What realistic benefits does BT seem to have in actual practice?

Mendez: The benefits can be profound when you deliver a higher degree of relevance to people based upon what you know. What you're doing is creating a better experience. This has all kinds of quantitative value in improving media performance, conversion rate improvements, page views, etc. It also has amazing qualitative benefits that result from the positive emotions created when someone is having a good experience with your brand and business. We're trying hard to quantify these brand metrics for our clients  -- and though challenging, they're real and tremendously undervalued.
 
BI: What are some of the most common misconceptions about user behavioral targeting publishers bring with them in setting up an optimization plan?

Mendez: The biggest misconception is that content targeting will hurt their business. Many publishers leverage their brand value for traffic and then seek to monetize that by providing a poor experience since that results in more page views as people fish the site for relevance. This is suicide, especially since publishers are increasingly competing with Google who is all about delivering a higher degrees of relevance closer to the user.  However, many publishers are paralyzed to do anything because of short-term revenue goals. It's a catch-22.

The other big misconception is that the value in targeting is created in the micro-segments. Actually, the larger or ‘thick-slice' segments are where we see the best results -- meaning greatest overall impact on performance, with statistical confidence that the result data is valid and sustainable.

BI: What are the biggest challenges in generating actionable behavioral data?

Mendez: The largest challenge in generating actionable data is attaining enough data. There needs to be statistical confidence in your results. That comes from making sure there are actions you can measure.

This is one reason why BT in display is challenging. You need to generate lots of clicks and lots of post-click actions to quantify the value and reduce the margin for error in the results set. It's easier in paid search, which is something I stress to search marketers all the time -- SEM is the original BT! The entire campaign hierarchy is built and delivers in that manner. It's something I think gets lost in the conversation about BT, though I don't think many people would argue now that Google is the top company doing BT both in terms of technology and results. Much of that goes back to all the ‘action' data they collect.
 
BI: What kinds of metrics are emerging as the most important in wedding optimization to behavioral targeting, and in reality-checking whether, and how and in what circumstances, it really is useful?

Mendez: Targeting is simply an optimization that enables marketers to make our messaging and creative more relevant, thus improving the user experience. I think that's useful in every circumstance.

As far as metrics, the only metrics that matter are how much money was spent and how much money was made. All digital marketing spends (and services) should be quantifiable and held to an ROI. This means you must judge success on outcome-based definitions that marketers can optimize the presentation and delivery of content against.
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