Targeted ads aim for greater accuracy

The use of information about individuals’ online behaviour is being used to inform the way digital ads are targeted in a way that far outclasses the use of broad social categories.

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Growth in behavioural targeting has been so fast that it is now estimated to account for as much as half of the £380m spent on online display in the UK in the first half of 2010. The technology enables advertisers to go beyond targeting customers by media brand and content type, and to work out what they are “in market” for, based on their recent web browsing, search terms and clicks on email offers.

Beyond this, brands are now acquiring the technology to retarget people who have shown an interest in their wares online but have not converted. At a later time, on another site, an advertiser, typically an online retailer, can ensure the prospect has the goods re-presented to them in an advert in the hope that it will prompt them to complete the purchase.

Such technology has not been without privacy implications. Indeed, the piloting of one ill-fated system, Phorm, has prompted the European Commission to ask the Home Office to re-examine British law to align privacy rules with EU law, which offers redress to any citizen who fears their personal data has been intercepted illegally. While the move is mainly a rethink of the police’s ability to snoop on people, there is a possibility that it could have long-term ramifications for digital marketing.

To allay any public concerns, the Internet Advertising Bureau (IAB) has a website (youronlinechoices.com) that informs people about behavioural targeting, allowing them to opt out. It is also working on an icon system that will force members to label behaviourally targeted and retargeted ads so consumers can click to find out more and opt out if they wish.

Spread betting company Sporting Index uses digital software to target its website to visitors
Spread betting company Sporting Index uses digital software to target its website to visitors

The IAB’s research does not indicate any deep concerns among the general public about such marketing. Attitudes to targeting become more positive when people are given the facts. IAB research shows three in four web users are unaware of behavioural targeting and, when prompted, only one in four feel it is ’appealing’ (compared with 40% who find it ’unappealing’). But when it is explained that no personal data is held and people can opt out, three in four say they are ’comfortable’ with the technology.

Indeed, Mike Bevans, head of advertiser and publisher solutions at Yahoo!, points out that educating the public can actually help publishers deliver even more accurately targeted leads.

“The key is to have a privacy policy that is very open about behavioural targeting and allows people to opt out,” he says. “The other side of this, of course, is you can tell people how you target them and show which categories they are in. They can then choose to refine these so they get more relevant adverts. They know they’re going to receive adverts anyway, so there’s no harm in them receiving more apt offers. We’ve had a lot of success with people tailoring the adverts they would rather see through our privacy policy pages.”

Retargeting display

The latest advances in behavioural targeting are focused on retargeting people when they are away from a site. Just as someone might be served a relevant offer when on a brand’s site judging by behaviour they have exhibited in the past, they can also then be targeted off-site with an advert that entices them to come back.

Hotels are aiming to personalise marketing by targeting guests individual preferences
Hotels are aiming to personalise marketing by targeting guests individual preferences

One of the leading exponents in this field is travel website Expedia, which uses pay-per-click software firm Criteo’s retargeting system to reach out to web browsers with offers about travel and trips they know that person has been researching. As Yannick Barriol, marketing manager for Expedia, explains, the technique is proving very successful in bringing people back to the site. In fact, the company’s figures suggest that the click-through rate on a retargeted advert is ten times higher than that of a general run-of-site advert. Barriol puts much of this down to the site using its own data.

“The problem we’d found with third parties’ behavioural targeting is that it was often vague,” he says. “People were put into categories that were too broad and had no real time limit on them.

“You might know someone likes weekend city breaks, but that doesn’t really help you. Instead we use a system where we take the information people give us to retarget them if they don’t convert.

“If someone’s looking for Barcelona city breaks, for example, we know from their search criteria when they’re looking to go. That means that in the weeks after they visit us, we can retarget them with Barcelona flight and hotel deals. Later, we may also try offering hotels separately in case they’ve bought flights. Nearer the time of their travel, we may offer a deal on hiring a car in Barcelona, in case they need one but haven’t booked it yet.”

Closed loop

One of the latest developments is to combine behavioural targeting with subsequent retargeting. By first advertising to people likely to be interested in a brand’s products and services, a brand can subsequently retarget those targeted customers who came to the site but did not convert. Entrepreneurial coaching and mentoring company the Entrepreneurs’ Business Academy (EBA), which is co-owned by James Caan of Dragons’ Den and managing director Bev James, has used the technique.

Bev James and James Caan's Entrepreneurs' Business Academy employs retargeting techniques
Bev James and James Caan’s Entrepreneurs’ Business Academy employs retargeting techniques

She explains that because EBA’s opening offer to consumers is a little unusual (pay for a taster session and then apply for mentoring through the year), people are not generally aware of – or searching for – such a service. This means the company has to work hard with its agency, Return on Digital, to find the interest groups that can be attracted and then retargeted to the home page. And it means the original search strategy has been replaced by display.

“Like a lot of marketers, we thought paid search was the best way to go, but it was costing us something like £250 to get somebody to sign up for a £90 introductory session, which obviously isn’t sustainable,” says James.

“If you’re offering something people aren’t always aware of and searching for, search might not be the best channel; it’s more the audience you want to reach and convert to the idea. Fortunately, our agency is now using the behavioural aspect of Google to put adverts in front of the right audience and then, if they come to our site but don’t buy, we advertise to them again a few days later through Google Retargeting. It’s like a closed-loop system and we’re very happy with it. Our cost per acquisition is now £40.”

Behavioural targeting’s coming of age means it can move beyond advising brands about which prospects can be reached on which site, or which email offers will appeal to which audience. Companies are starting to experiment with recognising revisiting customers, or making educated guesses about prospects who have clicked on display, and reshaping their website to fit with their likely frame of mind. This type of predictive behavioural targeting is used by sports spread betting company Sporting Index, which is using technology from digital software company Cognitive Match to align visitors with the content they are most likely to be looking for, with the addition of content that may persuade them to try something new, as commercial director Mark Maydon outlines.

“A person coming back to the site can be in a very different frame of mind judging by the day, time of day and what sporting activity is happening,” he says. “Someone who comes on the site an hour before kick-off on a Saturday is likely to be interested in football, while that same person coming back mid-morning on a Monday might well be in the market for the day’s horse racing.

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“People are individuals and so we never assume they always want the same thing when they come back to us. So it’s a good way for us to shape a page on the fly for each person revisiting us to give people what they’re likely to be coming back for, as well as open them up to new associated markets.”

This move from email and display into actually shaping what a person sees when they visit a brand’s page is being supplemented by brands looking to delve into social media and collate a target audience from what people publish about themselves, who they ’like’ or ’follow’ and how well-received their comments are. 3M recently doubled the sales of its range of car cleaning products through engaging with social media ’influencers’ online who spread the word about the products. This social media activity coincided with a 3M car cleaning competition that received three times as many entries as in previous years.

Extending the reach of behavioural targeting beyond conventional marketing channels and seeking to open up one-to-one discussions with people whose behaviour bears the hallmarks of an ’influencer’ is a clear future route down which behavioural targeting is now heading.

viewpoints

Lawrence Merritt, commercial director, Photobox

For several years, we’ve been very active in retargeting people who are registered on our site who have visited but not transacted. We normally send an apt email offer within four to five days to get them back on the site and it’s worked well. We’ve even seen open rates get up to about 50%, which is phenomenal when compared with a generic marketing email.
We also use retargeting, through Criteo, to put our customers into four or five segments, such as people who browsed but didn’t register, or registered but didn’t buy, or looked at so-and-so but didn’t transact. We get response rates that are well above generic advertising campaigns.

Behavioural targeting has allowed us to drop the run-of-site advertising we used to buy on a cost-per-thousand (CPM) basis.

Instead, we use Google’s behavioural targeting network because it is transparent and you pay on a cost-per-click model. The problem with other networks is you’re never really sure where your money has gone, or which sites you’ve been on. Google allows you to tick the interests and groups you want to reach and then tells you what you’ve been paying for each click.

It’s phenomenal for allowing us to hit a long tail of sites we’d never have known about and we wouldn’t have known if an exchange was opening up without the great reports you get from Google.

We think Facebook is a great place for behavioural targeting, not just because we can set the interests, demographics and geography we want, but because the system can actually end up teaching us things.

We’ve done a lot of testing to see if our assumptions about our market were right, and they weren’t always. We set our advertising to reach people interested in photography or who changed their relationship status to ’married’ or ’engaged’, which are strong buying signals for us. In the end, we found the best response was grandparents, particularly in the South East – they just naturally wanted to get photobooks of their grandchildren.

Tom Thrussel, head of customer relationship management, Maybourne Hotel Group

Behavioural targeting and retargeting is something a lot of brands do to appeal to their core audience and push up conversions. But there is another side to it, particularly if you are running a brand that prides itself on providing the best customer service by knowing its customers well. Our hotels pride themselves on knowing and greeting customers individually by having a record of what their interests are and what cuisine and room requirements they have.

So, just as it would be unacceptable for our staff to greet a valued customer in the lobby as a stranger, we could not allow our marketing to be too general and not carry that personal relationship offline into online.

So we hold data on what people have expressed an interest in at our hotels and use that to email them relevant offers. For example, we launched a sommelier fine dining experience, which we emailed to clients we know enjoy fine wine and dining.

Keeping this kind of relationship also means we can use our lists to identify who may be in the market to upgrade. We know who we can reach out to with an offer to upgrade to a larger room or perhaps a suite.

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