Where Do You Go?

The event was standing room only.

This time it wasn't a U2 concert or a pop star's court appearance that drew a crowd  it was behavioral targeting. "We sold out the event; we had to turn people away!" says Andy Chen, online media strategist at Freestyle Interactive, recalling a behavioral targeting event held in February by The Boston Interactive Media Association.

Mention the term behavioral targeting to interactive advertising industry veterans and they're sure to share fuzzy memories of firms like FlyCast and Engage. They inevitably recount when DoubleClick's tracking of Web user behavior raised the ire of privacy advocates and made the practice of online ad targeting controversial.

Fuzzy memories aside, behavioral is back. While various industry players have their own way of describing it, most agree that with behavioral targeting, advertisers are no longer simply buying pages. They're buying people. In essence, the practice of behavioral marketing targets ads to specific groups of consumers based on their online interactions, as they travel within a site or across multiple sites.

"Chomping at the Bit" Burst! Media president and CEO Jarvis Coffin says he's had to rein in his ad sales force, "which is chomping at the bit because behavioral is hot." But he's quick to temper that enthusiasm, noting that behavioral targeting, like geographic-targeting, is an "add-on" to placing ads within relevant content. "The contextual advertising is what comes first." Burst! Media, a network of over 1,800 small publisher sites, began conducting tests of Tacoda Systems' behavioral targeting software across its network in March.

Coffin's contextual contention is disputed by advertisers that buy ads from networks and ad targeting technology firms that are targeted only to specific audience segments, not knowing on which sites or within which content categories their ads will be placed.

"Behavioral targeting affords us a much more robust proxy for a passion group as opposed to a demographic group," says Mike Zeman, associate director of insights and analytics at Starcom MediaVest Group's Starcom IP. By targeting ads based on what people in a specific audience segment do online, he believes, advertisers can reach niche groups more economically than targeting based only on age, gender, and/or articles they're reading at a particular moment. To Zemen, even if contextual relevance is lost, behavioral targeting technologies allow advertisers to maintain what he calls "mindset relevance."

Ready, Set, Aim Online ad spending continues its ascent, up nearly a third to $9.6 billion in 2004 over the previous year, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. Big brand marketers are spending more and are accustomed to garnering prominent ad positions alongside content. They're driving demand for those coveted placements, and in turn, supply is falling. Behavioral targeting to the rescue?

Not so fast.

Advertisers are requesting behavioral targeting capabilities 50 percent of the time now, up from about 10 percent last year, notes Randy Kilgore, senior vice president of advertising for Dow Jones Online, publisher of The Wall Street Journal Online ( and MarketWatch. But why bother paying a premium for behavioral-targeted placements on in the first place? After all, such sites already attract a relatively narrow segment of visitors, mainly business decision makers with higher-than-average incomes. Although Kilgore admits there is a question of redundancy for some advertisers, he adds, "Everybody on our site is a good target to sell a car to, but we want to suss out the ones closer to buying a car now, as opposed to next year."

"Behavioral targeting is not necessarily an exact science," cautions Robert Davidman, chairman and CEO of EarthQuake Media, "but I think it works." The agency employs behavioral targeting for its client, PhotoBlocker, which sells a spray that makes license plate numbers invisible to law enforcement's speed and traffic light cameras.

While travel, auto, technology, and financial services companies typically gravitate toward behavioral targeting, ad-targeting decisions are ultimately based on campaign goals and budgets. Snapple was on a tight budget when it wanted to shift the perception of its brand from quirky drink to healthy beverage in order to promote its Snapple-a-Day product. The advertiser ran behavioral-targeted ads for six weeks on iVillage, serving them to health-conscious women.

After isolating a group of iVillage visitors who frequented the site's Diet and Fitness section over a 45-day period, Tacoda's system tagged the users, who were then served the Snapple ads during subsequent visits to iVillage, no matter which sections they viewed. The ads carried a $10 to $15 cost per thousand, somewhere between the price of iVillage's premium channel and run-of-network charges. According to a Dynamic Logic study of the campaign, the Snapple ads achieved brand awareness of 76 percent and purchase intent of 37 percent.

Glacial Behavioral Embrace The ability to reach the right people efficiently is only half the battle. "The most important thing is that creative is a crucial element of behavioral targeting campaign success," stresses Freestyle Interactive's Chen. He argues that if advertisers don't alter ad creative and messaging based on behavioral tracking and targeting data, and serve up the same ad repeatedly, the promise of true relevance is diminished. He believes media and creative teams should work together from the start developing campaigns to ensure integration.

"I'm still waiting for customers to learn from users' past behavior and change messaging midway," admits Dow Jones Online's Kilgore. This is already possible through a number of behavioral targeting technologies, including one marketed by Revenue Science, the firm that handles behavioral targeting for and MarketWatch. The thing is, most advertisers aren't that sophisticated yet. According to Kilgore, advertisers aren't using information gathered in the middle of a campaign to their advantage. "They need to cycle back information into the creative process," he says.

Clearly, advertisers remain in the testing phase when it comes to integrating behavioral targeting into their campaigns, so it makes sense that many haven't quite made it to the creative optimization level yet. However, there are other forces keeping behavioral targeting in the testing stage, rather than the full-fledged application stage. Perhaps the biggest stumbling block is lack of scale. The fact is, the more an audience segment is refined, the smaller it gets. So, by the time an audience segment is sifted from a site's general visitor population, it can end up being too small to achieve the reach and frequency advertisers require.

Alan Schanzer, managing partner at The Digital Edge, MEC North America, sees behavioral targeting as a valuable means of reaching a desired consumer, as opposed to the most obvious consumer. But, he continues, "For us to go full-scale depends on if there's enough inventory to buy."'s vice president of media, Eric Valk Peterson, agrees that lack of ad impression volume is a big obstacle. "Due to lack of scale," he concludes, "behavioral targeting is never going to be a huge part of the overall mix in the near future." has been taking advantage of Yahoo!'s in-house behavioral targeting capabilities for over two years. Even on a large portal site like Yahoo!, which doesn't always have the level of inventory scaling problems that smaller publishers do, the ability to reach a large number of people with a narrow set of characteristics can be a challenge.

If advertisers choose to use publisher-side behavioral targeting technologies like the ones marketed by Tacoda and Revenue Science, they must buy media on a site-by-site basis. Plus, in most cases, the behavioral targeting data are only distributed within each individual site.

So, if the à la carte model doesn't satisfy inventory volume requirements, why haven't advertisers embraced advertiser-side networks such as to fulfill their broader-reach behavioral targeting needs? "Marketers are used to saying, 'I want to be in Time magazine on the right-hand page, close to the front,' and [the network] kind of system removes a lot of the control," says Jim Nail, principal analyst at Forrester Research. Especially for brand advertisers, the content their ads are associated with is a major consideration.

Simply, they want to know where their ads will be placed. This typically isn't possible when buying inventory across big ad networks which don't publicize all of their publisher partners. "It is a little bit of a black box," Nail explains.

Perpetual Privacy Struggle Direct response advertisers that are more concerned with a call-to-action than brand association may be more receptive to network models, or advertiser-side technologies that act like intelligent ad servers, such as the ones offered by Poindexter Systems and 24/7 Real Media. However, in addition to having less control over content, some advertisers worry that network opacity precludes them from ensuring that their ads are always in a privacy-protected environment.

Privacy protection is an even more direct concern when it comes to the behavioral targeting technologies themselves. All companies providing such technologies insist that no personally identifiable information (PII) is collected by their systems. Adware company Claria has been quick to point out its commitment to consumer privacy regulations when touting its new BehaviorLink service.

The software places ads on publisher partner sites that are targeted to consumers who have downloaded Claria's software in exchange for being tracked across the Web and receiving ads. Claria, best known for delivering pop-up ads to users who have downloaded its software (and sometimes neglected to read the fine print about being tracked), has been working with privacy experts to obviate potential privacy concerns about its new offering.

Yet, consumers are increasingly aware of and preoccupied with privacy issues. When Burst! Media conducted a survey of its network users for MediaPost in June 2004, nearly 57 percent of participants said they would mind if their non-PII were collected, even if it resulted in more relevant ads. A March 2005 JupiterResearch report on consumers' perception of cookies  the digital markers that enable everything from ad targeting technologies to e-commerce sites to identify one computer, or site visitor, from the next  doesn't bode well either.

According to the report, 39 percent of online consumers delete cookies from their computers on a daily, weekly, or monthly basis, and 38 percent believe that cookies are an invasion of their security and privacy.

Behavioral targeting, as well as many other forms of online ad targeting, would not be possible without cookies. Dave Morgan, CEO of Tacoda Systems, and other industry players think Jupiter's numbers are too high. "But that doesn't diminish the importance of the issue," Morgan maintains. He insists that the industry needs to educate consumers about the benefits of cookies, otherwise, "We're going to find that we lose our core technology because of legislative action or consumer action."

Once bitten by allegations of privacy infringement, DoubleClick wants "to see where the [behavioral targeting] industry goes before getting in too deep," according Doug Knopper, the company's senior vice president and general manager of advertiser and publisher solutions. While Knopper declined to discuss speculation about a new behavioral targeting offering from the campaign management firm, he was willing to say that "behavioral targeting has the potential to pay off one of the original value propositions of the Web, which was very vast and fine-tuned targeting."

Next story loading loading..