It's probably just a footnote buried beneath the press clippings amassing in the inboxes of network executives this morning, but I'd suggest that the TV industry take serious note of Yahoo's $300
million acquisition of BlueLithium. "What's BlueLithium," you ask? It's a leading behavioral targeting firm. "What's behavioral targeting, and why should people in the TV industry give a hoot?" Well,
that's the reason for today's TV Board post.
Behavioral targeting is a small, but rapidly growing segment of the online advertising marketplace that some people -- me among them -- believe
could ultimately change everything about the way advertisers and agencies use electronic media to target their messages to consumers. Unlike traditional methods of targeting, which place ads in
editorial or programming content deemed relevant to consumers marketers are trying to reach, behavioral targeting enables advertisers to target people based on their past media behavior. Why is that
significant? More importantly, why does that represent a breakthrough in media planning? Good questions. Let me explain.
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Behavioral targeting disassociates advertising messages from media
content and focuses not on what the media are doing, but on how people are consuming it. Here's how it works. Let's say I'm someone who's in the market for a high-end performance car. As part of my
purchase planning I may tool around BMW's site, or drive-by BMW's Web pages. I might also stop by Edmonds.com or any number of auto purchasing sites to do some research on pricing, performance and
comparisons between models. Naturally, those are all good places for auto marketers to reach me with their brand pitches, but there is only so much inventory on those sites that can actually reach me.
In fact, after doing my initial research, I may not go back to an auto-related site again until I'm ready to actually purchase the car I want. Or I may just stop by a dealer instead. So how can BWM
reach me to make sure I don't end up buying a Mercedes, or vice versa? Well, they can use firms like BlueLithium to target me behaviorally.
Utilizing tracking cookies -- simple pieces of
computer code that tell online publishers who I am when my computer browser lands on their page -- firms like BlueLithium can tell BMW where I go when I leave the car company's site, or Edmonds.
BlueLithium can follow me and serve an ad aimed at me -- and only me -- when I scan the headlines on MyYahoo news feeds, or when I click through to a story on the New York Times Web site. They can get
me when I check the weather on accuweather.com, or they can catch me when I click back to the TV Board blog page to see what comments readers like you ultimately make to today's post.
In the
old days, placing ads in such content might have seemed completely irrational to a media buyer or brand manager. These days, it's increasingly being seen as the most logical step. Putting aside the
whole debate surrounding the so-called "engagement" effect of media, who's to say that an ad placed adjacent to relevant editorial content is the most effective? Isn't the most effective advertising
message the one that's most relevant to the consumer at the time he's being exposed to it? If my online navigation behavior shows that I've been frequenting automotive sites, how rational would it be
to serve me an ad for Calloway golf clubs when I check out stats and rankings on the PGA tour on ESPN.com? It's not. Ultimately, all that should matter is my consumer behavior.
That's why
Yahoo just paid $300 million to acquire BlueLithium. It's also why Time Warner's AOL unit recently agreed to pay an estimated $275 million to buy BlueLithium rival Tacoda. And it's why some other big
media concerns are likely to grab other behavioral marketing firms like AlmondNet, Revenue Science, and Undertone Networks. It's because behavioral targeting works. And it's because the secret of its
success is starting to get out.
According to the most recent estimates from online industry stats keeper eMarketer, the behavioral targeting market is set to increase to $3.8 billion by 2011,
from $350 million in 2006. It could actually be bigger than that if, as I suspect, it ultimately begins to infiltrate the television industry.
To do that, some pretty big changes would have to
occur. But from where I'm sitting, they're starting to occur already. The biggest change that would need to happen, would be for the TV industry to begin providing marketers with information on
consumers' TV viewing behavior. And I don't mean proxy samples like Nielsen ratings. I mean actual data derived from the set-top devices sitting in their living rooms. This is starting to happen,
albeit excruciatingly slowly. TNS has begun working with local cable operators, and has even commercialized a digital set-top data service in at least one market. Rentrak has also gotten into the
game, as has Nielsen. And the industry shouldn't completely rule out spunky digital set-top ratings service erinMedia, which is owned by regular TV Board contributor Frank Maggio. While erinMedia has
deactivated its operations pending the outcome of its federal antitrust suit against Nielsen, Maggio says he is committed to getting back in the game as soon as the courts or regulators can create an
open playing field.
Other forces are at work that could facilitate the free flow of digital TV set-top data. Invidi, a digital switching technology player that could enable that market
overnight, continues to court cable operators, which have been loath to come on board to date, citing consumer privacy concerns.
Another big player could be Microsoft, which has agreed to
acquire digital marketing giant aQuantive, which also happens to own Atlas DMT, one of the leading online ad serving firms, and one of the few to begin developing ad-serving capabilities for
interactive TV platforms.
Another relationship worth keeping an eye on is Google's deal to sell TV advertising avails on satellite operator EchoStar's DISH network. A key element of that
relationship has to do with opening EchoStar's database to Google's ad targeting systems.
But the biggest reason why television ultimately will embrace behavioral targeting may have less to do
with television and more to do with the Web. As the super targeting ability of the Internet makes it a more effective marketing platform, TV will inevitably have to follow suit. In the meantime, the
Web also will become an increasingly important distribution platform for television content, and as TV programming "publishers" discover the power of behavioral targeting, it only makes sense that
they will want to migrate that back to their other telecasting platforms.