With 16.46 million households online in the UK alone, according to Government statistics, the digital channel is already a mainstream media. So it is no surprise that the value of online advertising grew by 17.3% to 3.3bn in the 12 months to February 2009.
But as with every other media, just creating an ad and expecting the sales to flood in doesn’t work. Central to the success of these ads is advertisers’ choice of content. To keep consumers entertained and informed, brands need to make content as personal as possible.
Nick Barnett, UK managing director of targeted advertising business Phorm, says brands should focus on return on investment (ROI) when creating online content.
“It’s extremely important for ad content to tightly define the ideal audiences for campaigns,” he says. “Using defined criteria can help to increase the effectiveness of ads and a suitable ROI. It’s all about reaching the right audience at the right time, with content that tickles their curiosity.”
But are consumers ready for this type of advertising? Last year, Phorm hit the headlines due to concerns over its behavioural targeting software, which sends customers ads based on their browsing habits.
Barnett says: “We will be working hard to address all misconceptions about our system. It’s important that users know that all data is anonymous and we are providing a service that works like a Tesco Clubcard. It uses the data efficiently to provide users with ad content that meets their interests.”
The Internet Advertising Bureau (IAB) – which estimates that behavioural advertising could generate an annual income of 200m for UK online advertisers – has also issued guidelines for personalisation technology. This has been signed by the key industry bodies and states that consumers must be clearly informed their data is being collected for ad serving. It also says that where applicable, consent should be sought and there should be a way for interested people to find out more.
Nick Stringer, head of regulatory affairs at the IAB, says: “It is the job of the industry to correct misgivings and ensure that users see that the content is good, relevant and matched to their tastes. This can be effective with the right content, and hopefully users will make use of its abilities.”
While this new technology may be in its infancy, targeted advertising has been widely used in digital advertising for several years.
Savvy advertisers use the technology to conduct targeted customer relationship management (CRM) with opted-in people and targeted campaigns to attract customers.
Microsoft Advertising uses data from its MSN Passport portfolio – which includes webmail programme Hotmail – to offer users relevant marketing content. Google is now looking at a similar approach.
Microsoft Advertising’s UK sales director Chris Maples says: “The targeted ads service we use means that relevant audiences are matched correctly with marketing suited to them without compromising relationships with MSN. They can opt out or unsubscribe at any time.
“The data we have means we can let advertisers choose demographics or segments to target. Nine times out of ten, we can demonstrate a good ROI for a particular campaign,” he claims.
Social networking is also a growing area in terms of targeting consumers. A fifth of people are looking for ways to find out what an advertiser has to offer via its social networking profile, according to the MySpace and Jam “Ad to Friends” report.
Alex Miller, head of Jam, says: “Users now expect a particular level of interaction from brands; 22% say they are likely to spend more money with an advertiser if they engage or befriend it on a social network.”
George Nimeh, managing director of Iris Digital, agrees: “It’s essential that brands online have conversations with users, not just talk at them.”
Rather than just complement offline marketing activity with the creation of microsites and simple banner ads, agencies are now increasingly talking to clients about making use of data to further their ad potential.
Rosalie Kurton, UK media director at LBi, adds: “There is no single strategy or holy grail online any more. The net has come a long way over a short period of time. Click-through rates are no longer the key to online campaign success; ads are much more demanding and targeted content is key.”
“You can’t just second-guess users, you have to think of everything you want for the campaign precisely and reach out to the right audience first time. You can then use the data for retargeting. It can’t be Big Brother in style though, it has to be relevant and timely,” she cautions.
Targeting is also beginning to take hold in the mobile industry as marketers look to exploit phone capabilities. Apple’s latest ad for its iPhone 3G celebrates this new innovation under the banner “Solving life’s little problems one app at a time”.
Experts point out that mobile marketing is in a prime position to benefit from the trend towards targeted ads because it collects a lot of data, which can then be broken down into tiny pieces for future use, while maintaining user anonymity.
However, the user experience will only be satisfactory if content is of good quality and relevant. Without these, digital marketing cannot operate at its optimum level.
Michael Steckler, UK managing director of AOL’s ad service Platform-A, explains: “Targeted content enables advertisers to reach the right audience. Privacy is essential, but the key is to identify interest, optimise it and ensure that it is relevant.”
Case study: Starwood Hotels and LBi
Keen to boost its online bookings, Starwood Hotels ran a targeted online campaign with agency LBi.
Multiple targeting mechanics were employed, including a focus on “wealthy achievers” and using behavioural targeting to reach the hotel group’s desired audience. The approach saw increases of up to 200% in the click-through rates – three times higher than standard channel buys.
Sequential messaging was used to take customers through a journey leading up to their stay. This included messages such as a late checkout option for hotel bookings followed by free breakfast promotions.
Rosalie Kurton, UK media director at LBi, says: “Looking at different sequential messaging options, depending on the last environment customers were exposed to, an advertiser’s brand can have substantial increases in conversion rates.”
Case study: PruHealth and Platform-A
PruHealth ran an online campaign with Platform-A to drive online applications and increase brand awareness. The network ran test activity to identify the demographic that was most responsive to PruHealth’s messages, then used the findings to roll out the campaign across its UK network, optimised towards the targeted audience.
The creative execution changed each month to avoid consumer apathy and offered users healthy living incentives, such as subsidised gym membership and pharmacy vouchers.
In order to further boost online applications for PruHealth, Platform-A used the network’s pixel-based behavioural targeting technology to recapture interest from those who dropped out of the application process. This allowed PruHealth to retarget traffic as it moved across Platform-A’s network of publisher sites.
Platform-A generated more than 300 million visitor impressions with 28% of new online applications occurring within one hour of exposure to the advertisement, and nearly 80% within 24 hours.
This combination of branding and performance apparently saw 20 times more users recognising PruHealth than before. Prospects that had dropped out of the application process were served a targeted reminder to drive further conversions.
Mark Grant, head of online acquisition at PruHealth, says: “By retargeting traffic, we were able to retain customer interest, increase online applications and significantly boost brand awareness.”