Balancing the Value Equation

Last week, Ted Shergalis' Behavioral Insider article made the analogy between behavioral tracking via cookies and barcodes, basically outlining that consumers have faced data tracking in the past and that acceptance boils down to value, i.e.: "What's in it for the consumer?"

I couldn't agree with Ted's point more. Certainly there will always be a portion of the population that distrusts and avoids any type of observation. However, for many, the value side of the equation must simply outweigh the privacy concerns.

In my last article I talked with Tacoda Systems and iVillage. This week I chatted with Scott Eagle of Claria about the value proposition for consumers. As you may know, Claria distributes software that runs on the desktops of millions of consumers. The software tracks consumers' online behavior and Claria uses the value of free software to garner consumer permission to have their behavior observed.

Scott elaborated on what he saw as the three primary values for end consumers:



Paid for software and content Since behavioral ads can deliver significantly higher click-through rates than standard run-of-site ads (and thus higher CPMs, CPAs, etc.), they allow software and content publishers to offer more tools (such as IM, calendars, etc.) and content for free or at reduced costs. Magazines have long made revenues on selling mailing lists based on consumers' interests and consumers have enjoyed reduced subscription costs or sometimes even free periodicals (often requiring detailed profiling information).

Relevant Advertising Most consumers recognize they are going to see advertising, whether it is banners, pop-ups, or interstitials; it is part and parcel of the online experience. What behavioral marketing attempts to provide is relevancy. Again, I think of magazines such as Auto Trader, Dupont Registry, or the original Computer Shopper - magazines that contained NO content other than advertisements - and consumers were even willing to pay for them. As relevancy increases, advertising moves from nuisance to value.

Customized Content Scott highlighted an interesting fact that most people don't customize their online portal start page, but when they do, they spend 55 percent more time within the portal's content. What if your behavioral profile could automatically customize the content of the Web pages you visit?

Let's take that one step further and poke our nose into the search space. Today, Web sites are given mysterious numeric "rankings" based upon the secret algorithms of the search engine giants. However, the problem is the algorithms are not so secret and people scam the search engines into questionable relevancy rankings by engineering their Web site to perform well.

Ever search for "vacation" but get "Viagra"? Well, now inject behavioral marketing into the search equation. What if part of that ranking score was based upon how long people stay on a site after they clicked-through on a search term or, even better, how many return visits? All of a sudden, the Web sites with the valuable content are back on top and the scammers are out in the cold (not to mention some interesting fallout in the SEO world...), but the real winner is the consumer who again finds more relevant search results based both on behavior and the behaviors of like-minded users.

In the end, Shergalis and Eagle are right. The winning equation is all about adding relevant value - value to advertisers, value to publishers, and perhaps, most of all, value to consumers.

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