Is Behavioral Marketing a One-Hit Wonder?

  |  September 8, 2004   |  Comments

Is behavioral marketing big on buzz, but short on substance?

Last week, ClickZ News reported that while behavioral marketing usage is up 60 percent, only about 16 percent of advertisers used it as a campaign tactic in 2004. This doesn't surprise me. But the assessment that despite all this growth, behavioral marketing will never become a dominant player, does.

If this is the case, does it mean behavioral marketing will share the fate of many of my favorite bands, such as "Low" and "Galaxie 500," or movies, such as "Stranger Than Paradise" and "Trust"? All enjoyed lots of critical acclaim, without much to show for it in the end. In this case, will behavioral marketing generate lots of buzz, but very few behaviorally-targeted impressions?

My hope is this won't happen. I've been wrong about things, but I think the odds of getting this right are higher than those of me quitting my job and joining a band and going on tour. My optimism about behavioral marketing stems from the fact I see it following a similar path as the rich media industry, combined with the potential the Big Three (Yahoo, AOL and MSN) have in this space.

Higher ROI and Brand Lift

If memory serves, I recall case study after case study talking about how rich media ads outperform GIF ad units. It would seem archaic if the only type of ads served today were GIFs, but according to ClickZ, rich media ads accounted for only 2 percent of all ad impressions back in the second quarter of 2001. Yet multiple case studies pointed to results proving rich media ads helped increase not only ROI, but brand lift as well.

Rich media played a minimal role back then due to higher production costs and increased CPM charges. Today, similar studies about behavioral marketing's power are emerging. Research published by both Revenue Science and Tacoda Systems, conducted in conjunction with advertisers and research companies, point to campaign results boasting both brand lift and higher direct response results. Behavioral targeting's slow start is no slower than what we saw with rich media vendors like PointRoll and EyeBlaster a few years back.

The Big Three

Let's be honest. While many of us (especially on the agency side) have a love/hate relationship with the Big Three, the industry wouldn't be where it is today without them. In all honesty, the percentage of rich media ads served would probably still hover around 5 or 10 percent if they weren't in the picture. If nothing else, the Big Three's massive reach provided advertisers and agencies with the justification they needed to produce rich media ads, despite higher costs.

The agreements they have in place with EyeBlaster and PointRoll probably helped, too. I know of many advertisers who only got around to implementing rich media ads once Yahoo, AOL and MSN stopped charging incremental ad-serving fees. I know I wouldn't have wanted to use rich media ads if they didn't accept them. While Yahoo is the only one of the three actively involved with behavioral targeting, it's only a matter of time before MSN and AOL get into the game. Once that happens, behavioral targeting will enjoy the mass reach and scalability it needs to become a major player.

Of course, I could be wrong about all of this; it may be behavioral marketing is nothing more than a minor player with no hope of becoming a huge star (like search). My hope is that its impact will be similar to that of rich media, and not of the bands that in my CD collection, such as Ted Leo or The Delgados, that get all the buzz, but very few record sales.

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ABOUT THE AUTHOR

Chang Yu As associate director of new media at TM Interactive, Chang Yu specializes in developing online media strategies for a variety of clients to help meet their interactive goals. Some clients he's worked with include Subaru of America, Nationwide Insurance and Exxon Mobil.

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