• by Phil Leggiere , October 24, 2007

In migrating from a traditional mass market "shotgun" approach to more targeted solutions, advertisers have developed ever more granular and sophisticated ways of segmenting consumers, both demographically and behaviorally. What they've yet to do, as Matt Sanchez, CEO of VideoEgg explains below, is rethink on a deeper level their model of what a "consumer" of information and entertainment is. To remain relevant in a user-generated media world, brands need to move beyond their current comfort zone of targeting unique but still passive consumers, to engaging active "prosumers."

Behavioral Insider: What is the biggest intellectual hurdle advertisers need to get over to grasp the potential of behavioral targeting in a user-generated network?

Matt Sanchez: Brands have a great deal of uncertainty as they try to wrap their minds around what user control really means. To really take the concept seriously is something which will take a brand used to traditional advertising out of their comfort zone. Because advertisers are used to thinking of themselves as in control of the marketing process and everything about social networks, user-generated content and increasingly user-programmed content is opposed to control. It's really uncharted territory for brands. So the first thing they need to do is recognize that they have to radically adapt their approach to integrate it into this new environment if they want to reach a younger audience. There's no other way, really, to hope to reach them.

BI: What sorts of adjustments do they need to make strategically?

Sanchez: The fundamental idea is that you need to give the user the same sort of control over your advertising that they already are used to having over all content. To put it in more traditional terms, your brand ‘message' has to function in a context where users, not publishers or advertisers, control the flow of content and communications. You can't minimize the shift that involves.

BI: How does VideoEgg's invitation-based ad platform operate in the context of your ad network?

Sanchez: What we've been doing is building out an audience network to create opportunities for brands to invite users they believe are most likely to really be interested in engaging the brand or product. Most targeting of video is based on guessing what consumers may be interested in based on content affinity, guessing that particular TV shows or Web sites will attract the right demographic, which may include a high percentage of people in the right psychographic. Our approach is to understand the audience based on the demographic profiles provided to the network and personal interests, the communities users have actually interacted with. The idea is to segment by sensibility, by the intersection of demographics and interactive engagement.

BI: Can you drill down a little further into how your segmentation works?

Sanchez: Social network data is enormously rich. It starts with age, gender, zip code, the basic demographics, but can extend into everything from political leanings to educational background, hobbies, job information, friends, relationships, communities of interest. It's a deep well of data every marketer dreams of.

But respectfulness of users is absolutely intrinsic. In a user-generated, user-controlled environment, users share information based on the premise that by declaring who they are and what their interests are, it will augment and add value to their experience. So if advertisers invite users to engage their brand they have to make sure that what they offer has direct value. In developing a segmentation by sensibility, the conventional behavioral data of search and browsing behavior are not unimportant. But they are less relevant than the information users themselves provide about their personal interests and how they actually pursue those by time spent in activities and communities.

BI: I take it engagement is the key metric?

 Sanchez: The approach we're finding most conducive to engagement is immersive content of all kinds -- videos, games, animations, and increasingly applications. The difference between inviting to engage and just force feeding ads is dramatic. We've seen, for instance, that if a consumer clicks on a video by invitation that two-thirds complete the video. That's way more than double the percentage of users completing a viewing after clicking on an uninvited pre-roll.

BI: The biggest rap on targeting and monetization of user-generated content is, you're dealing with such small granular micro-segments of interests that it's going to be impossible to scale. Where do you see that issue going forward?

 Sanchez: Scalability is certainly an issue. You need to develop new ways of scaling when you're trying to target based on depth of involvement. Because as online content usage becomes dis-aggregated, there's a high degree of fragmentation. There are over 8,000 applications developers just on Facebook. It implies getting at new ways of thinking about scaling. Because by their very nature user networks dis-aggregate the content distribution experience, the challenge of the ad network is to re-aggregate audiences. But it needs to be on the basis of locating shared communities of interest from the bottom up.

People in a social network don't consume videos in isolation. They consume them as part of a community. So if you're inviting a user to engage with your brand you're attempting to engage and interact with the community.