Behavioural targeting: be more efficient

Programmatic advertising is smoothing the way to better targeting but user privacy and multiple device tracking pose major hurdles for the industry.

Above: Behavioural targeting has been critical to Waitrose’s digital strategy and has boosted online sales

“Behavioural targeting not only gives consumers more relevant advertising, it makes the process of reaching the right consumers more efficient for buyers,” says Steve Chester, director of data and industry programmes at the Internet Advertising Bureau (IAB).

Advertisers no longer have to buy a broad audience group knowing that only a small proportion will be relevant, whether across display, mobile, video or email. Instead, they can access specific audiences that they know will be interested in them. Brands can also target people based on what they are doing online, by emailing them a relevant offer for example, one of the original forms of marketing automation.

At Waitrose, behavioural targeting has been critical to its digital strategy and has played a significant role in improving online performance.

The grocery retailer has been working to improve customer acquisition and retention online by offering prospective customers a staggered incentive across their first five shops. Last year it added first-party data – the information it has on consumers –Behavioural targeting has been critical to Waitrose’s digital strategy and has boosted online sales to the campaign for the first time to help target users more intelligently.

“It was the analysis of our first-party customer data that helped define the objective and direction of the campaign, which was to drive weekly shopping behaviour in the critical early shopping stages,” says Caroline Kinsman, manager of online marketing at Waitrose.com.

Programmatic gives advertisers the scale and reach they need to unlock the true potential of mobile

Working with Infectious Media, Waitrose connected this customer information to existing data collected from real-time bidding (RTB) activity, including location, browsing history and how frequently and recently people visited the site. It also looked at the day and time that people went to the site, as well as more general information.

For the prospecting portion of the campaign, the retailer targeted shoppers who visited Waitrose.com but did not convert, as well as those who had no online shopping history, with a specific message. Users who converted were segmented by the number of times they shopped online and targeted with relevant messages to drive their next purchase.

Waitrose also used first-party data to help retain customers and increase the average order value. Kinsman says the retailer will increase the level of targeting as it gains more data.

Similarly, Meliá Hotels International is driving bookings in the UK using insight from first-party data to deliver a campaign through social media ad platform Facebook Exchange and display impressions. The company worked with ad-tech business Rocket Fuel to build ‘act-alike’ models based on the actions of customers who had previously booked a room with Meliá, which it combined with first-party data from the hotel group’s websites.

As a result, the cost per order target was beaten by 36.2 per cent and average conversions per day were 37.5 per cent better than expected, which Meliá’s e-marketing manager for Europe, Matthias Koch, says enabled “the goal for bookings to be met within the first four days of the campaign”.

Research from the IAB and YouGov estimates that online behavioural advertising accounted for 12 per cent of all ad spend in 2011, and although the industry body no longer singles out targeting in this way, Chester believes it is only likely to increase as the appetite for programmatic trading continues to rise. The IAB is due to publish its assessment of the size of the programmatic market in June.

In France, betting firm Bwin increased awareness of the X Poker Tour by 38 per cent by creating a customised audience model based on activity on the poker section of Bwin’s website.

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After mixed success with banner ads, Concern Worldwide had a 4,000% jump in income after using a modelling tool

The campaign ran across 150 premium French media sites. Before each ad was delivered, the user was analysed in real-time to see if their profile matched the target.

To evaluate the effectiveness of the campaign it worked with targeting specialist nugg.ad to measure awareness of the X Poker Tour among users who were exposed to the targeted campaign and compared it to consumers who fell in the target group but had not seen the campaign.

Meanwhile, marketing automation is also taking off. Last year, Airline Monarch used a series of rules to automatically target people via email, based on what they had done online.

The campaign included a mix of pre-flight emails and messages based on users’ behaviour online, automatically generating creative based on people’s departure date. This included car hire, travel money and seat booking reminders and resulted in a 22 per cent click-through rate.

The advantage of email marketing is that messages are sent on a permission basis, says Chester. “You wouldn’t get an unsolicited email in the same way you’d get a display ad.” While programmatic buying for display ads is becoming more mainstream in the UK, the market for programmatic video is in its infancy, although it is growing rapidly.

Chester says: “It’s a misnomer that programmatic is for direct response campaigns only. There is a chunk of brand awareness activity as well and it is growing because programmatic is a method of accessing inventory efficiently. As a result, we expect to see a substantial increase in the amount of video inventory that is bought programmatically.”

The UK is the most advanced programmatic video market in Europe both in terms of revenue and maturity. By 2017, it is predicted that 38.9 per cent of online video revenue will be traded programmatically, up from 9 per cent in 2012, according to research by video ad platform SpotXchange.

Delivering video campaigns programmatically also allows for more relevant targeting, as online florist Serenata Flowers found when it began optimising, targeting and executing video campaigns through digital marketer MediaMath.

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Waitrose combines first-party data to behavioural to offer customer incentives

The company wanted to leverage the targeting methods used for display campaigns to maximise the impact of its video campaigns.

Founder of Serenata Flowers Peter Ahl says: “We were anxious to have access to enhanced targeting capabilities and gain a stronger understanding of the impact of our video strategies on our audience segments as well as our bottom line.”

The business has been able to allocate display and video spend better and increase customer revenue. Within a month of the video campaign going live, conversions for repeat customers were three times higher compared to display impressions.

Mobile also provides opportunities for programmatic buying, and within that behavioural targeting, because it offers unique data sets, such as location-based targeting, that cannot be accessed on other devices.

“This year will be a really big year for programmatic mobile,” says IAB’s Chester. “At the moment, about two-thirds of ad spend on mobile is for paid search and about 35 per cent is display.”

However, this increased level of profiling and targeting is raising privacy concerns among consumers. In order to educate people about how behavioural targeting works, the IAB launched the Your Online Choices guide and icon, which was backed by an online ad campaign last year. It will be rolling out the initiative to mobile in 2014 in the hope of giving people more control and thus alleviating fears.

Another challenge for advertisers is tracking users across multiple devices; the same user could access a website via a laptop, mobile and tablet but they are classed as three different people.

“The industry is working on ways to understand consumer journeys across all devices in order to target them with relevant advertising at the right time. There are interesting ideas coming through but user privacy must remain at the forefront of people’s minds,” says Chester.

Case study: Concern Worldwide

Charity Concern Worldwide generated a 600 per cent return on ad spend after using consumer behaviour data to target ads more effectively following the destruction in the Philippines by Typhoon Haiyan in 2013.

It used an audience modelling tool and ad serving platform for the campaign, which beat its cost per acquisition goal by 83 per cent.

Digital marketing manager Adrian O’Flynn says: “We had mixed success with banner ads. I thought the modelling tool made a lot of sense, so we put the code on our website last May for three months to enable ad technology firm Quantcast to get the information it needed to run a model for us.”

The charity ran an initial campaign in September and October, which O’Flynn admits “wasn’t a home run”, but just after the second leg began in November, Typhoon Haiyan hit the Philippines.

Concern was able to respond within 24 hours with a dedicated emergency campaign, which enabled it to reach consumers when news coverage of the disaster was at its peak.

Concern used real-time data and modelling to immediately adapt to the change in media consumption and construct a typical supporter profile. It was able to target thousands of potential donors with relevant ads at the right time and place.

“We saw a 4,000 per cent jump in income straight away,” he says. “It was through the roof for a week and remained strong.”

Q&A

Caroline Kinsman
Manager of online marketing Waitrose.com

Marketing Week (MW): How important is it to use first-party data to make your behavioural advertising campaigns targeted?

Caroline Kinsman (CK): It is a requisite that we give our first-party data to our software provider so that customers can be targeted with a message relevant to their Waitrose shopping experience.

MW: How do you determine which channels consumers will respond to best?

CK: We approach our digital marketing from a customer perspective, outlining the stages they may go through prior to making a purchase. We hope to match the consumer’s state of mind with the channel that best delivers our message on a contextual/behavioural level. The outcome is that we utilise a variety of digital marketing channels, recognising that each one plays a different role in conversion. Rather than establishing which channel consumers respond to best, we aim to build the best combination of channels and messages that will drive higher response rates and sales.

MW: What have you learnt from this campaign that you will use in future?

CK: The primary lesson was that targeting different customer segments with specific messaging that is consistent across multiple channels and in sync with the customer’s shopping experience, increases new customer retention.

We continue to dig deeper to learn more, such as understanding which phase of the early shopping stages our retargeting has the greatest uplift on, enabling us to be more cost effective with our budget and also improve the customer experience.

Sponsored viewpoint

silverpop-logo-2014-460

Ellen Valentine
Product evangelist – marketing, Silverpop

I like to think of behavioural marketing as ‘engagement marketing’. It means meeting consumers on their turf, knowing what they are interested in, what they are going to look at online and being much closer to the customer. It means getting away from a ‘batch and blast’ one-size-fits-all communication.

For a lot of marketers that is a big shift. They need to implement things like web tracking so they can start to pick up intelligence on consumers: where they are, what they are looking at online, what they are visiting and are interested in.

Businesses can build out rules for their email marketing. So if someone is visiting a particular page online, looking at something on their smartphone or walking into a store, brands can say here is how we will communicate with them and the content of the email.

For online retailers, this might involve looking at what people are browsing before they put things in their shopping basket, and a big focus is abandoned baskets. For a not- for-profit it might be looking at visitors to a donation page who have not given money.

People may have multiple browsers open and are switching between an iPad, laptop and phone, and they may shut down the browser they had been looking at. Reminding those shoppers they have a basket to come back to is something brands can include in their rules.

There might be three or four streams of communication after the basket has been abandoned and even on the fourth or fifth email, retailers can get positive results.

A lot of marketers are great at creative implementation – figuring out how things should look and what they should say but the pendulum is swinging. With behavioural marketing, they need to be a logical thinker too.

If a marketing team has only great creative people, they need to think about getting in more ‘systems thinkers’ who are good at building these kinds of workflows.

Testing is more important than ever in email marketing. Subject lines, content, images – little things can make a huge difference. Marketers have so much on their plates that the pressure is sometimes to just get the message out. But it’s important to test so the results can swing in their favour.

Email subject lines should be simple and short: remember that more people are reading emails on the go on their smartphones. It’s easy to forget that fact, even if they are doing responsive or multi-format design. Short subject lines and pre-headers are extremely important on tablets and smartphones in a world where people are switching between multiple devices.

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