08 The Year Ahead – Online

Why behavioural targeting is as much about ‘when’ as ‘who’

Increase your engagement with consumers by using behavioural targeting to get your message to the right people at the right time. By Michael Steckler, AOL UK

Abasic premise in marketing is that to sell your product or service more effectively, you need to understand how your customers’ minds work. As media changes pace, then consumer attitudes, needs and behaviours will evolve more rapidly. The digitisation of media is developing new challenges, and new opportunities are emerging. 

2008 should be the year where we start to see a real growth in behavioural targeting. AOL’s study, “Brand New Britain” demonstrates that targeting should become increasingly about mode and mindset and less about demography – it is as much about “when” as it is “who”. As brand advertising becomes increasingly important online, understanding and targeting different consumer mindsets, and responding effectively to these (both behaviourally and contextually) will become more significant.

Unlike standard ad platforms that target sites and key phrases, behavioural targeting studies a user’s behaviour across a network of sites and then produces the best ad for a relevant consumer. Targeting in this fashion ultimately increases the returns on advertising spend.

Right message, right context
Media as a whole is set to become more congested and if the challenge is to break through the noise and deliver accurately targeted messages to an increasingly fragmented audience, then behavioural targeting is a solution to ensuring timely delivery of the right messaging, in the right context, to the right people. It is the future for more penetrative and cost-effective marketing and is about becoming more customer- centric. 

Behavioural targeting is a significant part of the future of online advertising and AOL’s recent high-profile acquisitions in this area reflect this. AOL’s strategy seeks to offer access to the largest online display-advertising network across Europe and reach 95% of the online audience by 2009. The recent acquisitions all sit within Platform- A, which brings together the most sophisticated targeting and measurement tools available in the market across a network of third-party sites and AOL’s owned and operated sites. 

Platform A incorporates TACODA’s behavioural targeting software to serve highly relevant ads based on consumers’ online behaviours. We have also entered into an agreement to acquire Quigo, a content-matching network, which is able to discern the content of a Web page and match ads to those topics, offering maximum flexibility and reach that advertisers are now demanding from the internet. 

Different creative treatments
So who benefits from behavioural targeting? Marketers and advertisers reach a targeted audience with the right message leading to increased brand awareness and direct results. Publishers and media owners enjoy better inventory management, helping them monetise more effectively, and consumers will find ads targeted by their actions to be more relevant to their needs. A recent study by Jupiter Research, commissioned by AOL, demonstrates that online consumers are consistently more responsive towards behavioural- targeted ads than contextually-based equivalents – by 22% in some categories. In this brand new world, advertisers will be required to develop different creative treatments, no longer producing a single version for everyone.

Privacy is a big issue and concern to online consumers and advocacy groups during the development
of behavioural targeting networks and this should be balanced with the need to provide users with a more rewarding online experience. Challenges over data ownership and privacy are areas that the behavioural targeting industry is working to minimise through education, advocacy and product constraints.

Overcoming hurdles will be vital. As the importance of customer lifetime value is increasingly recognised, behavioural targeting can be a foundation for creating a continuous analytical study of consumer trends and patterns, bringing increased audience understanding across sites. Those few people who can understand an individual’s behaviour from their online activities and that can aggregate audiences in some way will become disproportionately important and behavioural targeting is well placed to help facilitate the direct response marketers desire. 

Michael Steckler, Managing Director, AOL UK www.aol.co.uk/mediaspace

 

Targeting gets serious

As behavioural targeting moves from niche to mainstream, advertisers must avoid consumer backlash. By Nathalie Kilby

Despite pervading economic gloom, planning and buying agency ZenithOptimedia recently announced a remarkably upbeat outlook for advertising. It predicts global ad revenues will rise by 6.7% in 2008 and online revenues will jum  69% by 2010 to $61bn (£29.5bn), with revenues in Europe rising from £10bn in 2007 to almost £20bn by 2010.

The growth is expected to come from the Olympic Games in China, the US presidential election and the Euro 2008 football finals in Austria and Switzerland. But whatever the driving force, online will benefit. And, with brand owners looking to the internet as an integral part of marcoms, observers say 2008 will see a greater focus on online planning with traditional marketing strategy playing a greater role.

Sky director of online and partnership marketing Scott Gallacher says online planning has moved from being a sideshow to a revenue driver. “There are so many disparate parts – search, affiliate, display, the website – and they impact on each other and need to be managed as a whole, no longer viewed as an IT function. IT has been handed heavy business goals but that’s not what IT is about. We need to step away from the language of click throughs back to the language of business,” he adds 

Steve Davies, managing partner at Experian Integrated Marketing, says: “Even the biggest clients have viewed the online planning function from a different perspective, not applying the same principles as offline – online planning has evolved from Web development and analytics. They have been happy to co-exist but more clients and agencies are looking to marry the two and apply the same principles to both functions. 

He says more marketers and their agencies are waking up to the fact that advertisers need to marry data from offline channels, such as customer relationship management and direct marketing, with online data. 

Dave Katz, head of trading at interactive media agency Media Contacts, agrees: “Online planning has been more akin to traders buying shares and juggling them around to get the best return. Price is important, but better and more strategic planning will achieve a better return on investment. Yet in an environment where rate cards areslashed to get business, it can be difficult to plan and optimise effectively.”

Gain momentum
One key development that can boost optimisation and achieve greater return on investment, and which observers say will gain momentum over the next year is behavioural targeting. A series of acquisitions took place in the area in 2007, with AOL buying Tacoda, Yahoo! snapping up Blue Lithium and Google taking over DoubleClick. More recent developments include social networks Bebo, Facebook and MySpace rolling out new strategies around behavioural targeting. And advertisers are keen to get on board – little wonder if they are able to advertise to consumers who really want to see specific ads and who will be influenced by them. 

Davies says: “Search engines and service providers are driving change as their businesses are built around advertising, but more clients are using behavioural targeting. It’s no longer a niche, it’s mainstream. But it must be approached with the same rigour as offline strategy.” 

Katz agrees more clients are using behavioural targeting and says telecoms and entertainment companies have been quick to adopt it, including Sky, which he says is among the forerunners in the arena. 

Sky’s Gallacher says it is important to be one step ahead: “What makes me successful this year, won’t do the same for me next year. Early adoption is not ‘a nice to have’. Technical advantage mean competitive advantage. If advertisers are not using behavioural targeting in two years they will be seen as an oddity.” He adds that advertisers can no longer buy ads across blind networks. Instead they must execute more effective planning strategies, and behavioural targeting can help.

There is, however, a fly in the ointment – privacy. Consumers are wary of the online data advertisers hold about them. They consider it “spooky” that faceless corporations gather data on them in order to advertise to them and sell  more stuff. Users’ reaction to Facebook’s Beacon platform, built around behavioural targeting, is a clear sign of the negativity surrounding what advertisers know, even about those people who are willing to divulge so much online. Ethical issues are gathering momentum. 

Both Davies and Katz argue that the data from cookies and Web analytics used in most behavioural targeting strategies are actually rather vague, targeting groups of users around certain behavioural patterns and not individuals. Davies says: “There are benefits for consumers because they’re served only ads that are relevant.” 

Big Brother techniques
They say advertisers must prove the benefits of better targeting and allay concerns about invasion of privacy and “Big Brother” techniques. “The customer is not ready for individual targeting and nor are advertisers,” adds Katz. “But segmenting in the way we do offline around trends, groups and behaviours means more benefit for consumers. The purpose of advertising should be to enlighten people about what is available. The negativity must and can be countered if consumers understand the benefit.” 

Gallacher agrees: “It is about balance, educating consumers to understand the benefit – receiving cookies to get Amazon recommendations is fair. But there is a danger that what happened with e-mail could be repeated with behavioural targeting, where we went mad and there was consumer a backlash.”