Google's recent announcement that it is rolling out a personalised banner ad service has brought behavioural targeting back into the spotlight.
The search giant, keen to build its display business, has introduced a feature it calls 'remarketing'. This records when a user visits a brand's website and then serves ads for that brand when they access sites within Google's Content Network. Samsung and Center Parcs (see casebook) are among a number of brands already signed up to the service.
Google's remarketing initiative is one of a growing number of behavioural targeting options available to advertisers. As well as major content networks such as those operated by Google, Microsoft and Yahoo!, there are plenty of niche operators emerging. For example, Struq is a company that studies a user's web activity and develops personalised banner ads. It has worked with recruitment firm Jobsite to display ads for jobs that match a viewer's profile.
Such services require the tracking of user behaviour, usually via cookies. The purpose, of course, is to increase relevance of online ads and make them more effective - Struq claims its personalisation service makes a user 12 times more likely to click on an ad and buy a product.
Yet these techniques are not without controversy. In its Media Democracy study, Deloitte & Touche found that around half of consumers would be willing to click on more online ads if they were targeted to their needs (this figure rises to 75 per cent for teenagers). But only 20 per cent of consumers were comfortable with having their web usage tracked.
So how should marketers approach behavioural targeting? And how can they benefit from it?
Zuzanna Gierlinska, Microsoft
Gierlinska, head of Microsoft's media product sales group, admits that one of the biggest challenges facing providers of behavioural targeting technology is the huge range of options out there, with lots of companies offering different products.
Microsoft itself offers a range of targeting tools on its network, from what Gierlinska calls "basic retargeting" (tailoring ads based on a user's previous activity) through to complex data-heavy solutions that combine search information with demographic data. She says the most common briefs her team receives at the moment are for targeting based on age, gender or location.
Gierlinska believes that the behavioural targeting industry will consolidate over the next few years, but argues that there is still a major education role for the sector. "At the moment everyone has their own flavour of targeting and calls it by a different name. It can be very confusing for clients and agencies."
To this end the IAB is trying to introduce a degree of standardisation, not least to implement common definitions for terms such as 'retargeting'. However, this is still in its infancy.
For Gierlinska, one of the most exciting developments is 'dynamic loading', which means delivering content as well as ads based on user behaviour and profiles. She also points to the growing importance of multiple data sources, such as combining web and offline information with a client's database or lifestyle surveys.
For brands, the important thing is to start from a reasonably broad base and then keep refining as they discover what works. "As with search, they should start with a loosely defined target and then focus on certain audiences," Gierlinska says. "If you use only a small network, there is only so far you can refine."
Bearing in mind consumer concerns over data privacy, brands must also consider the source, and owner, of the data. The IAB's Good Practice Principles detail what steps a behavioural network should take when using data for targeting.
Ian MacDonald, Trader Media Group
Trader Media Group has used behavioural targeting to increase the relevancy of acquisitional online advertising and retention-focused below-the-line marketing. The company's e-marketing manager, Ian MacDonald, points to an improvement in website performance as a result. "Click-through rates are generally higher for behaviourally targeted ads, and any additional cost is usually offset by the improvement in post-click behaviour," he says. "This offset is always observed closely to ensure efficiency, and where it does not materialise the activity is reconsidered."
Auto Trader now targets motorists who are likely to be in the research or decision-making phase of a car purchase. By sending users messages and offers based on their on-site behaviour, it has been able to increase open and click-through rates fourfold, compared with blanket emails sent to its database. "This has yielded some big wins in cross-selling our range of support products for UK car buyers and sellers," says MacDonald.
However, he acknowledges that there are problems in the market. Like Gierlinska, he believes the lack of clarity about what targeting is and what marketers can and can't do with it is unhelpful. He also believes there is a risk of segmenting too far.
There are several consequences of over-segmentation - a rise in cost-per-acquisition, depressed total volumes and declining brand awareness. But one of the biggest dangers is that users are targeted (or rejected as prospects) inaccurately because their observed behaviour has been misunderstood.
"The danger is to assume that certain behaviour explicitly denotes certain needs and wants, as opposed to more accurately appreciating them as trends and clues to a user's profile - they are not given facts," says MacDonald. "In some circumstances, where behaviour may be ambiguous, it is often better to keep costs- per-impact lower and reach broader by simply using good value inventory with good scale."
Trader Media Group tries to avoid cutting too finely by comparing test cells with the performance of equally funded, but less sophisticated, activity. "We must resist the urge to use technologies just because we can, to no actual incremental end benefit to our campaigns and brands," explains MacDonald.
Alex Marks, eBay Advertising
Ebay runs a number of targeting technologies on its site. For example, it can combine contextual targeting (the current page a user is viewing) with behavioural targeting (the pages accessed on previous visits). For the latter it can analyse up to 90 days worth of usage history. A test of this technique on eBay Auto achieved a click-through rate 60 per cent higher than the control, and a conversion rate 8.5 times greater.
However, eBay Advertising's head of international business marketing, Alex Marks, also warns against the multitude of targeting technology available. "What some companies call 'behavioural' is really just contextual targeting with bells on," he says. "There needs to be greater education about what behavioural targeting really is and how it can benefit businesses. Yes, we need greater clarity in the different approaches, but first and foremost there must be industry-wide education on behavioural targeting as a whole."
For marketers using behavioural targeting for the first time, the initial step may seem obvious but remains crucial: they should consider exactly who it is they are trying to target and at what stage they are in the purchase process. If they want to encourage people to buy their product, then targeting audiences around a complementary interest group is a good start. What might be more effective, though, is targeting through life stage or associated purchase behaviour.
The second thing to consider is that customer behaviour online can differ according to the item being bought. An eBay study into the purchase behaviour of online shoppers found that grocery and entertainment items are brand-led. Other categories might be more price-led, or lend themselves to being 'discovered' via search. "Brands that take note of changing customer purchase behaviour will be able to develop online campaigns to target the right customers at the right time," Marks concludes.
Zuzanna Gierlinska is head of Microsoft's media product sales group and is a member of the IAB's committee on behavioural targeting.
Ian MacDonald is the e-marketing manager at Trader Media Group, which publishes a range of multi-platform magazine brands including Auto Trader.
Alex Marks is head of international business marketing at eBay Advertising. He has also worked at Microsoft and i-level.
Smart think!ng Personalised Ads
1. Don't make consumers feel their privacy has been invaded. Rather than 'We know you are looking for a car', a line like 'Are you looking for a new car?' will elicit a better response.
2. Don't make assumptions about what behaviour tells you about the user.
3. Make sure you find out exactly how, where and when the data that is being used for targeting is collected and stored. Work with reputable vendors only.
4. Always evaluate targeting options against less targeted ones using the same investment, for volume and quality of traffic and the loss of reach.
5. Test, learn and refine constantly.
Casebook: How Center Parcs trebled conversions
Retargeting refers to the practice of identifying consumers who have shown an interest in your brand and targeting them later on as they move across other websites.
Center Parcs in the Netherlands was an early user of the Google service's beta version.
Center Parcs used cookies to identify people who had visited its website. It then used the Google service to ensure that when they visited sites within the search giant's Content Network, an ad appeared offering them incentives to return to the Center Parcs site and make a booking.
The conversion rate for the campaign was three times higher than for a regular campaign, according to YouTube's head of sales, Bruce Daisley, who is overseeing the roll-out of the Google service.
"The power of the technology is that you can give different messages to different people," he says. That means Center Parcs could vary the cookies depending on whether a user had looked into a New Year break for two, for example, or a week in the summer with the kids. It could then vary the ads accordingly.
Daisley says the service, which can be bought through Google's standard auction process, is relevant for any brand that encourages users to visit its site.