Saturday, September 09, 2006

Behavioral Targeting 101

What is Behavioral Targeting
Behavioral Targeting (BT) is the ability to target users based on their behavior on the internet. Most commonly it used to target online ads but the technique can be very well used to target products and content.

Behavioral (Ad) Targeting promises to precisely target the audience that matter most. Hit the users with the right message, a message that they care about. It is all about audience.

So How Behavioral Targeting work?
Users are segmented based on the content they view or actions they take on a site(s) and then are targeted with a message (ad) relevant to that segment.


There are two ways behavioral targeting has been deployed
1. On-Site Targeting
2. Network Targeting

On-Site Targeting:
The user are segmented based on content views or actions on one site and then are targeted on the site itself.
For example: Users who view 5 or more pages related to auto and view online interest rates page they can be classified as "In Market Auto Buyer"**. Once classified these users can be then targeted with messages from those advertisers who want to reach "In Market Auto Buyers".


Network Targeting:
The user are segmented based on content views or actions on one site (usually advertisers) and then are targeted where ever they go on sites participating in the behavioral ad network.
For Example: A user views pages 5 or more related to Alaska tours on a travel site, this and then leaves the site without buying. This user is segmented as "Alaska Tour Buyer"**. A very valuable segment for the travel site. This travel site can then tap into the network and share their segment (based on cookie - more on this later) with others in the network and then target them with relevant message to bring them back to the site and convert the sale.

**(How users are segment and what they are called is totally dependent on how marketer wants to define their segment. There is no industry standard, however every now and then I have seen push for creating industry standard way of creating these segment. In my opinion it is too hard to create standards for creating segment as it totally depends on each individual business).

Cool. This is great so should I go ahead and plunge into Behavioral Targeting?
Wait, before you jump into it.
Here are the problem with BT:
1. Most of the publisher sell their inventory based on pre-defined main categories. To integrate BT into their main categories is a challenger for the sales people. The only way big publisher integrate BT into the mix is by selling ROS (Run of site) inventory. Problem is that ROS does not have enough reach.

2. Big publishers do not have any incentive to participate in the network. Again they sell out everything without making the selling process too complicated so why get into this.

3. Because of 2 above most of the networks (covered below) do not have enough reach. Lack of reach makes the opportunity cost too high for advertisers. Why would waste your time and extra money to reach 5 customers. You have a better chance of reaching them without it. I am not saying BT networks should not be used. My point is that tap into a network which has a wider reach.

So who are the major players in this field and have biggest network

There are several players in this field. Since I don't have information on their network, I am not covering them here. I will update this I get more information.

Some of the players I know are

1. Tacoda Systems
2. Revenue Science
3. MSN (just announced their BT Product)
4. I think Yahoo is building one
5. Google is not going to stay behind

I strongly believe that smaller players will vanish (go under or sold) since they wouldn't be able to compete with the reach from likes of MSN, Google and Yahoo.
The real success of the BT is in the "NETWORK".

Feel free to comment on this or contact me if you need any specific information.

Next: I will tell you how you can do On-Site targeting without spending money with one of the BT companies.

5 comments:

  1. Hello,
    I agree with what you've written based on the definitions you've supplied. My challenge is with the definition of BT. I wrote in Robbin Steif's blog that I was uncomfortable with the industry's definition of behavioral analytics. That discomfort also holds for "behavioral targeting". You write that BT is based on content views or actions (emphasis mine), and my challenge stems from the thinking that how someone acts is equal to their behavior. Two people performing the same act can have radically different reasons for performing that act. Behaviors are a "Manner of acting or controlling yourself" (according to WordWeb). It's that "manner" part that keeps on getting in my way.
    I also agree that everybody seems to be making their own definitions. Is there a BAA similar to the WAA? - Joseph

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  2. Joseph,
    I agree with you on the definition of behaviors. However, the "manner" is very hard to quantify and measure. I do think that there are parameters other than content views and actions that define the "behavior". I will probably touch on some of them in my next article.

    - Anil

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  3. Anonymous2:39 PM

    To comment on Joseph's comment,

    "Two people performing the same act can have radically different reasons for performing that act "

    I see behavioural targeting is a modern day form of Skinner's behaviourist experiments, you're interacting with a black box (customer) and trying to assess responses (reaction to messages) etc. in order to assign casality and intentions so that we might benefit from it in some way.

    What we must do is construct the "experiments" (i.e. collections of responses over a site or network) with the customers in slowly more sophisticated ways in order to gain a greater understanding of what customers respond to and why

    Of course data from other areas, such as demographic segments, user surveys etc. would prove useful (if you can marry the data up) in drawing conclusions.

    And, just to finish this really random post, I dont believe behavioural targeting is unique to the web, its simply the web makes it easier to collect the data.

    Many companies will have "behavioural" segments they work off, the simplest being RFM models, but more complex with combine different data sources with more complex ways of building segments. (using data mining and statistical algorithms)

    Most large companies have being trying to marry transactional/survey/focus group/partner data for years but have often been limited by either an organisations vision or the complexity/ease of use and interpretation of the tools they have. Whether behavioural targeting on the web works will largely depend on those two factors, along with how sophisticated our data collection can be, IMO - hokum

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  4. The definition is fine, but I would add that the targeted message can also be delivered by email.

    Since you wrote the post it has become common to follow-up browsing behaviour with auto-triggered emails, e.g. shopping basket abandons, customers who browsed a category but didn't buy.

    Email marketers certainly call this BT also!

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  5. Dave, you are correct. Here are two blog posts that I wrote on the same subject

    http://webanalysis.blogspot.com/2008/10/relevancy-matters-in-email-marketing.html
    http://webanalysis.blogspot.com/search/label/cart%20abondonment

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I would like to hear your comments and questions.