What’s Next for Behavioral Targeting?

Dave Morgan

Updated · Dec 02, 2004

Behavioral targeting continues to enjoy industry attention and trade media coverage at a level far beyond its actual current usage, probably because many believe it’ll help fulfill some of the Internet’s original promise to advertisers: reaching the right consumer with the right message at the right time. I lead a company heavily involved in this space, so naturally I follow the coverage with great interest. Still, I spend an enormous amount of time asking myself, our customers, and others in the industry, “Has behavioral targeting arrived yet?”

My answer and those of most people I talk to are the same: No. Today’s behavioral targeting applications are still a long way from fulfilling that elusive promise we all signed up for in helping build the marketers’ “perfect medium.”

Publishers, marketers, and agencies all seem to be comfortable with some of behavioral targeting’s basic notions. They understand you can now target people, not just pages. The value of a publisher’s Web site is no longer just about the quantity of pages it can deliver; it’s also about the quality of people it can deliver.

They understand you can now target people out of context. The publishers’ ability to deliver value for a travel advertiser is no longer limited to its ability to deliver ads in its travel content. It can deliver ads to “frequent travel” audiences in all of its content, regardless of context.

They understand ads can be varied according to what ads the user has seen before or how she reacted to them before. Thus, we have the notion of “retargeting”: An e-commerce marketer can deliver acquisition-focused ads to new users and retention-focused ads to returning customers.

These concepts are beginning to be understood, but they’re still new to much of the industry. JupiterResearch (a Jupitermedia Corp. division) recently pegged the percentage of marketers who used behavioral targeting in 2004 at 16 percent. However, behavioral targeting is now quite routine to those using it. From my discussions with many marketers, I’ve learned behavioral targeting’s early concepts and applications are only a place for them to start. They want and need much more. And, of course, as the applications become more sophisticated, marketers need them to be much simpler to operate.

What’s next for behavioral targeting in early 2005?

I looked around the industry recently for the next big things in behavioral targeting. Some of the more sophisticated publishers, agencies, and marketers are already pushing the applications forward on their own. They’re creating some pretty compelling applications of next-generation behavioral targeting services. Here are two examples:

  • Look-alike targeting. A natural extension of retargeting people is targeting ads to people who look like a marketers’ previous clickers/browsers/buyers. It takes retargeting to a whole new level. Instead of just targeting people who’ve actually taken a desired action, as retargeting does, this method targets people who look just like them, people who consume the same kinds of content, have similar demographic characteristics, answer polls in a similar fashion. Not only does this create a lot more targetable inventory, look-alike audiences typically outnumber retargetable audiences exponentially. And they tend to perform almost as well if segmentation is done correctly (with lots of testing and adjustment).

    For example, a marketer segments a small pool of online consumers (maybe 10,000) by brand affinity by fielding a survey to them. He then finds hundreds of thousands or millions of other consumers that look just like his original pool and targets specific brand messages to this new segment.

  • Life-stage targeting. Marketers have long sought to track and profile consumers whose behaviors strongly suggest they are at certain life stages, such as wedding planning, pregnancy, or home buying. Unlike simple behavioral segments, such as “business travelers” or “gadget geeks,” life-stage segments can offer value to a wider range of marketers with a wider range of products and services. In addition, membership in one life-stage segment can evolve into membership in others. For example, a member of a wedding-planning segment might move into a pregnancy segment a year later and into a home-buyer segment a year after that.

These two examples only scratch the surface. I’m sure there are dozens of exciting, new applications of behavioral targeting that publishers and marketers are experimenting with this quarter that hold lots of promise for 2005. The industry will need hundreds of new ideas and applications to fulfill its promise. In a future column, I’ll discuss new behavioral targeting applications and experiences. Send me your case studies and experiences, your ideas for potential applications, and I’ll include them.

What’s next in behavioral targeting? You tell me.

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