Behavioural targeting could be a goldmine for online marketers, however issues of privacy are providing significant hurdles. By Catherine Turner
The little understood and, some would say, misconstrued online trend of behavioural targeting has gathered momentum as advertisers and media owners wake up to its benefits.
And it is easy to see why. The technique – the equivalent of delivering a personalised TV ad, with an exclusive offer, to an individual customer at exactly the right time – has witnessed impressive results. One campaign for Warner Breaks, for example, led to a 100% increase in click-through rate and a conversion rate increasing from 3% to 19% – equivalent to a 600% improvement.
Last year saw the formation of an alliance enabling large publishers to share behavioural information on their users, facilitated by Revenue Science. There was also the launch of Wunderloop Connect, a self-service ad exchange for behavioural-based online advertising.
Many are predicting that, this year, behavioural targeting will become something advertisers and publishers want to embrace automatically, or expect as part of their ad-serving technology.
The data privacy issue
As use of the technique becomes more widespread, will consumers become concerned about such targeted advertising, even though they will receive more relevant content? Data privacy has now become a major issue, fuelled in part by the recent HM Revenue & Customs fiasco which saw 25 million personal data records of Child Benefit claimants disappear into thin air. And in the US, the Federal Trade Committee (FTC) approval of the $3.1bn (£1.6bn) Google/Doubleclick merger with no conditions, raised the hackles of privacy groups, even though it released self- regulatory privacy principles for the industry.
European anti-trust authorities are set to rule on the Google/DoubleClick deal later this year. They believe the tie-up would give the combined entity access to too much, and too personal data. This is despite assurances from Google that it does not collect dossiers on individuals, but uses the words of each search simply to offer more useful, targeted ads.
Meanwhile, Brussels mandarins are considering statutory controls for online marketing – in particular behavioural targeting, which they fear could breach privacy rights. At a January hearing, Google’s global privacy counsel Peter Fleischer accused the parliamentarians of seeking to “take a privacy case and shoehorn it into a competition law review”.
But, according to Cornelia Kutterer, from the European consumers association BEUC, which is partly funded via the EU, many ordinary cybersurfers overestimate the level of privacy they enjoy online. “Businesses don’t indicate clearly enough their policy on the protection of personal data,” she says, adding that internet services are not “free”, because consumers “must leave behind their personal details”.
In the UK, the Interactive Advertising Bureau (IAB) is considering forming a behavioural targeting body, as well as an educational programme, so that consumers could understand the merits of online targeting.
Personalisation is an inherent part of many of the search engines’ offerings, with Google first introducing the concept in 2004, allowing users to specify their interests to gain a more customised set of results. Yahoo! followed suit with Yahoo! 360°, a customised search service and social networking site.
With Google search becoming personalised across the board for all logged-in users, there remains some controversy regarding user privacy, says Netrank managing director Lucy Allen. “This is mainly due to the ever growing search engine empires, which now encompass marketing agencies that could potentially use search data to aid their own behaviourally targeted campaigns.”
The right definition
Marketers must beware the differences between “true” behavioural targeting and targeting via customer preference, says Yahoo! head of planning Phil McCawley, who is also calling for more education and information around the technique. “We need to define what exactly behavioural targeting is. There are a lot of different solutions on the market claiming to be behavioural targeting, but in essence that is not what they provide,” he says.
He adds that people looking for products such as mortgages display trackable online behaviour, allowing relevant advertising messages to be displayed to a specific user. Once such behaviour stops being displayed, so do messages in those categories. At present, Yahoo! tracks 114 different categories. But, as Right Media director of international marketing Roger Williams argues: “The real challenge of behavioural targeting is having a large enough body of data to work with and a large enough pool of supply to find users in.”
That is changing with companies using different tools – such as a single universal cookie across a huge, linked eco-system – making it much easier and quicker for a network to carry out effective and scaleable campaigns.
According to eMarketer, behavioural targeting is expected to increase tenfold over the next five years. Can you afford to ignore its potential?
Catherine Turner is trends editor at Marketing Week