• by Scott Howe , April 29, 2005

Smart marketers can sometimes be pretty secretive. After all, in the competitive online marketing industry, why would these savvy marketers want to share their recipes for success? And when it comes to the subject of targeted online advertising, you might be surprised at what some of the world's best marketers are doing.

Online targeting adoption is increasing rapidly. In 2004, eMarketer predicted that behavioral targeting would grow to represent more than 8 percent of online advertising dollars in 2005. It appears that smart marketers may be moving more quickly.

Michael Hayes, vice president of Initiative Interactive, recently pegged their targeting usage at more than 30 percent. "Two years ago, we did virtually no targeting. Now we buy as much as we can. It works," said Hayes.

Others seem to agree. Alan Schanzer, managing partner for The Digital Edge/MEC, estimates their targeting usage at 60 to 70 percent of all online impressions purchased. In addition, Carl Fremont, senior vice president and media director of Digitas, estimates their targeting usage to be as much as 75 percent of impressions purchased. While these figures also include other targeting methods (e.g. broadband, demographic, and contextual), the takeaway is clear: Smart marketers are aggressively embracing online targeting to improve results.

Targeting appears to work for both direct response and brand. When asked which clients were most suitable for targeting, Digitas' Fremont didn't hesitate, "We're driving toward it for every campaign, and utilizing a wide variety of techniques." The Digital Edge's Schanzer went further, "Too many buyers still think of targeting as solely a direct response mechanism, but we believe it has broader applicability. My job as a buyer is to show my messages to their most relevant audience - whether my objective is to build brand or generate direct response."

Regardless of campaign objective, targeting campaigns and methodologies seem to be growing more complex. Smart marketers are experimenting with multi-variable targeting campaigns. One recent campaign success involved targeting demographic variables within certain ZIP codes filtered by past behavior, and everyone pointed to the increased importance of robust segmentation modeling and strong analytics.

Improvements are still required. While leading marketers appear to be embracing targeting, they also recognize that current technology is still in its infancy. One frequent complaint was scale. "We would buy more if we could find it," lamented Hayes. Also cited were standardization of targeting nomenclature across the industry, the full integration of targeting with rich media, and increased visibility into how current targeting solutions work.

In addition, everyone preached patience. "It's not enough to simply know whether something works," said Fremont. "We also need patience to understand why people are responding, and then refine our campaigns based on these insights."

On one topic, there was no debate: Targeting has become an essential tool for online marketers. "There is plenty of inventory online, but it's not always relevant," explained Schanzer. "By increasing relevance, everyone wins - especially consumers."