Q1 Gut Check: Is BT Ready for Tough Times?
All media and ad platforms ended 2008 trying to make the best case for their efficiency and worthiness in an age of tightening budgets. No one knows yet where the budgets ultimately will shrink and move, but there have been no shortage of theories. CPMs were tanking, the story went. Display and brand advertising were at death's door, some cried, while search and performance programs were ready to serve as pall-bearers. Among behavioral practitioners, targeting and efficiency have been the constant cry. In hard times, marketers can't squander a penny, and behavioral segmentation reduces the waste. Doesn't it?
Or so goes the theory. As 2009 ad budgets start to flow, we asked some of our favorite contacts for a quick spot check on how behavioral and data-driven products are faring.
Much of the sell side continues to be optimistic, with some reporting encouraging signs. "AlmondNet is experiencing a higher demand for its data," says CEO Roy Shkedi. AlmondNet leverages post-search data with ad networks and publishers to increase targeting and CPMs. Shkedi argues that "ad networks are being hurt due to their focus on selling high volumes of low value ad space." They are coming to external data sources like his for that additional targeting that helps stem the CPM falloff.
Likewise, Collective Media CEO Joe Apprendi maintains an argument he voiced here in early November that buyers will no longer see content as the only vehicle to reach targets. "This shift is accelerating as a result of a slow economic environment," he tells us now. Advertisers are complementing their site specific buys increasingly with behavioral buys. But they are also becoming more careful media buyers, he adds. "As with the trend among advertisers to inventory quality versus commoditized ad impressions, marketers are becoming more discriminating about the quality and transparency of behavioral data."
Display advertising is under pressure all over, says Christopher Hansen, vice president, performance marketing, Innovation Interactive, so he claims more of that banner budget is coming his way. "We have seen increased interest and adoption of performance based display," he tells us. "The comes not just from economic challenges, but also as a direct result of innovations in the types of behavioral targeting techniques available and a better understanding of behavioral in the industry as a whole."
SEM veteran Kevin Lee, chairman and CEO, Didit, agrees that the pressure to achieve better ROI is dovetailing nicely with a better understanding of behavioral targeting's potential. After two years of the company's offering a behavioral solution, "only recently has it taken off." He reports at least increased interest among clients and many of them leaving old concerns about the technique behind once they grasp the logic. "[They] now realize that if only five percent of the search visitors to their site convert, 95% are still out there and in-market." Adding the BT component to search campaigns lets a client leverage that initial SEM investment more effectively.
While suppliers remain optimistic, buyers may be divided about where the money is heading. Media Contacts account director and longtime behavioral targeting pro Anna Papadopoulos is seeing the money shift. "I'm definitely seeing an increase in behavioral targeting and vertical networks and a decrease in general lifestyle areas," she says. "Minimizing wasted impressions is the mantra. No medium can do what online can do, and behavioral targeting is a great way to get it done. We're reaching prospects who have demonstrated some action of being 'in-market' or an 'active sufferer' or whatever terminology your category uses to identify someone who will buy a product soon. We're more likely to convert a prospect on an automotive site who is actively researching and shopping than a user on a news site who has shown no predisposition for being in-market -- even if their demographics are in line with the target market. Behavioral targeting therefore is an extension of this ideology. Basically, as budgets tighten, we need to justify that our money is working towards converting qualified prospects."
Davis Brewer, lead strategist, emerging channels, Spark Communications does his math a bit differently, however, and it may give sellers pause. "[BT has] been seen as a good place to trim from," because many planners place it somewhere between their persuasive branding plays and lower-funnel search and contextual display efforts. Under lean budgets, the BT calculus "does not look good" because the pricing premium over untargeted inventory does not always justify the incremental bump in effectiveness. He foresees buyers returning to contextual buys that get consumers when they are in market and in the mood. "A bank or brokerage advertiser might skip BT on Platform A and just buy AOL's Finance channel. An auto advertiser might just buy Yahoo Auto and search." Even when behavioral inventory makes it into the buyer's mix, he warns that sellers might have to eat the premiums to which they have become accustomed. "We have demanded BT come in at the same cost we are used to getting for untargeted run-of-site-type inventory," Brewer says.
So how can BT make or save money for marketers during this challenging ad environment? Where is the industry putting its theoretical advantage into practice and successfully making the case for continuing roles in dwindling ad budgets? Next month's OMMA Behavioral conference, "Targeting Tough Times," (Feb. 26, New York City)
aims to address this very issue. The emphasis will be on best practices, delivering ROI, and hard cases where BT is adding value to marketing plans. Companies with cases and learnings to share still have time to participate by submitting a speaker proposal on site or contacting me directly at email@example.com .