Economist Howard Beales, who conducted the study, notes that "... behaviorally targeted advertising is a critical component of ad network, publisher, and advertiser success... significantly enhancing the advertising revenue engine driving the growth of the Internet."
Charles Curran, Executive Director of the NAI, says "... This study demonstrates the increasing significance of behavioral advertising to the economic model supporting free online content and services for consumers... we will continue to work closely with policymakers... to give consumers better information, tools and choices, while making online advertising even more relevant to their needs."
Key findings of the study include the following: ·
The study was conducted from January to March 2010 with the participation of twelve online advertising networks and marketing analytics companies that belong to the NAI. Study participants provided proprietary data on the revenue, composition and effectiveness of different types of online advertising on their networks.
The report includes a comprehensive chart that presents the weighted average CPM among participants for each of the three ad types, as well as conversion rates and revenues. The results show that BT provides significantly higher rates on an industry wide basis. For the full year 2009, BT CPMs were about double RON CPMs, while Retargeting rates were about 1.5 times as large as RON CPMs.
Key Survey Metrics | |||||
| Q1 2009 | Q2 2009 | Q3 2009 | Q4 2009 | FULL YEAR 2009 |
Average CPM (Weighted By Behavioral Targeting Revenue) | |||||
Run of Network | $1.94 | $1.98 | $1.89 | $2.06 | $1.98 |
BT | $4.09 | $4.22 | $4.07 | $4.11 | $4.12 |
Retargeting | $3.00 | $3.12 | $3.13 | $3.02 | $3.07 |
BT Avg. Relative Price Over RON Ads (X Greater) | 2.77 | 2.71 | 2.79 | 2.46 | 2.68 |
Retargeting Avg. Relative Price Over RON Ads (X Greater) | 1.98 | 1.84 | 2.11 | 1.59 | 1.88 |
Average Conversion Rate | |||||
Run of Network | 2.1% | 3.6% | 2.2% | 3.1% | 2.8% |
BT | 5.5% | 8.8% | 6.4% | 6.6% | 6.8% |
Revenues | |||||
Total Ad Revenue ($ Millions) | $708 | $780 | $795 | $1,040 | $3,323 |
Percentage Attributable to BT (Aggregated Across Firms) | 16.2% | 17.2% | 18.3% | 19.4% | 17.9% |
Avg. % of Display Ad Revenue Used for Inventory Costs | 54.7% | 56.9% | 53.0% | 53.6% | 54.6% |
Avg. % of Display Ad Revenue Used for Data Costs | 8.5% | 8.8% | 9.1% | 9.4% | 8.9% |
Source: NAI, The Value of Behavioral Targeting, March 2010 |
The results lead to 3 major conclusions, says the report:
For more about the study, a PDF file may be accessed here.
Targetted advertising has been the very successful basis of ad sales in radio since 1952. Nothing targets as well as radio and no content creators know their audience as well as radio programmers. Same can be set for segmented magazines. This is not new. Good article.
Twice the return at twice the cost? Where's the advantage?
I'm with Mike Einstein. This just suggests they've developed an efficient pricing model. If you account for all the additional thought and work that goes into creating and managing a BT campaign vs. a dumb RON campaign, this would show that it's cheaper, I mean "more efficient", to just buy RON. Am I missing something?
I have the same comment as Mike Einstein. This article says that it costs 2.68 times as much to run an average BT ad (vs non-BT ads). This article also says that the increase in revenue gain for the advertiser is 2.68 times as much (as non-BT ads).
is this a typo??
what it amounts to is an average revenue gain to the advertiser of $0. that can't be right...
please let me know if this is correct or not.