Behavioral Marketing

A man recently offered his personal profile for sale on ebay for a minimum of $100. There were no bidders. Yet yesterday AOL bought Tacoda – one of the two big behavioral targeting networks – the price I am told worked out at $2.25 per user profile in their database. I went yesterday to the first conference dedicated to Behavioral Marketing.

There is a nice definition in the Blue Lithium literature – Behavioral Marketing “involves identifying user interest by observing their behavior online – what sites and what pages they visit, what links they click on, how they respond to certain ads and so forth.”

On one portal, most of the visitors to the car buying section come to them from the religion pages. So if you advertised your car on the above mentioned religion pages you would likely reach a potential buyer earlier in the purchase funnel.

Clearly behavioral is a hot and growing category. One speaker told us that though the click-through rate is 33% lower for a behavioral than a contextual ad placement (contextual is where you put an ad for windshield wipers on the weather page when its raining), the ultimate conversion rate is 40% higher. This would be measured in the auto category by the user locating a dealer or requesting a quote.

Advertisers who use behavioral targeting are twice as happy with their banner campaigns as those who don’t, we are told. Yet advertisers 10% of their online budget seems to be as high as they are going for behavioral. What we see is that it works better for patient advertisers – they need to go a little way out of the normal direct marketing, immediate conversion, mindset.

But there is a long way to go before BT can achieve real scale. Its knowledge depends largely on those cookies that are stored by your browser. So every time you clear the cookies they have to start again. And multiple users of a browser of course create a jumbled profile. And anyway a profile becomes out of date very quickly. A buyer may be searching for a car for a couple of weeks – but after that she has probably bought one and a car ad aimed at her when she visit ivillage will be wasted.

There are attempts to link the data collected online with behavior offline and to use similar sets of metrics – but it isn’t coming easy. There is a long way to go, even for the high-end advertisers, in integrating their online efforts at any level with their traditional campaigns. Only 50% of advertisers on the last Superbowl had bought the relevant online keywords so that they would be easily found in searches by viewers who wanted to follow up.

More in a later post on what I saw as the biggest missing piece from this forum.