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.