Behavioral Targeting in the International Realm, Part 1

If you’re anything like me, you’ve started to amass inquiries on planning online media internally. You also may be wondering how behavioral targeting is unfolding globally. Therefore, the next two columns will explore the international realm as it applies to behavioral targeting from the two targeting leaders: Tacoda Systems and Revenue Science. Interestingly, both have disparate views on the subject.

We start with Dave Morgan, CEO of Tacoda, who founded the company in April, 2001 to develop innovative technologies for target marketing.

Q: What has Tacoda’s position been in the international space?

A: We’ve been watching the international space since our inception in 2001, but until this point have been taking a ‘wait and see’ approach. We have been afraid to lose our focus while the behavioral targeting market is still in a very formative stage and haven’t yet felt that there are any non-US markets out there yet that offer an opportunity big enough to risk distracting ourselves from building a really big business in the largest online ad market in the world. It’s not that we don’t feel comfortable working outside the US. My last company, Real Media, the online ad network and ad serving company, had offices in 14 countries across Europe, Asia, Africa and South America. Once the time is right and we see more maturity in the international markets, we will start taking steps to expand outside of the US.

Q: How do you determine if there’s an international need?

A: We’ve been talking to folks in markets outside the US for years. The best way to understand the needs in these markets comes from listening to the major players in the market, the major online media, the advertising companies, and the service providers. Of course, it is also critical to consider that intelligence in the context of the individual market dynamics, landscape, and history.

Q: Have you had any international partners?

A: We have been working in Canada since 2003 when we started working with Torstar, the largest newspaper company in the country.

Q: What were the results from this partnership and is it still in place?

A: We have had a great partnership and it’s still in place.

Q: How do you go about expanding internationally? Is the demand coming from the publishers? If yes, do you know why?

A: There is a lot of demand, but we are not yet convinced that there is sufficient maturity in the US market yet to really understand how this sector is likely to develop in smaller and less developed online ad markets. We don’t want to go into other markets until we are sure that we will be able to serve our core domestic market first.

Q: Have you begun expanding to non-English entities? If yes, what have your results been?

A: No.

Q: How is behavioral targeting different internationally compared to the US?

A: There are much more established privacy laws. In my last company, we practiced limited behavioral targeting in Europe in the late 1990’s and worked hard to insure compliance with the EU privacy laws.

Q: What are the major developments that you foresee in the next 12 months internationally?

A: I think that we will see behavioral targeting be a significant component in the online advertising mix in a number of non-US markets.

Q: What will Tacoda’s role be in this?

A: We are still formulating our strategy.

Q: What will your competitors’ role be?

A: As here, I am sure that our competitors will be the portals. TACODA’s business model is all about empowering independent, premium content providers to provide better and more effective advertising as the portals at portal-like scale; that is what our behavioral ad network does.

Q: What are the major challenges that are faced internationally?

A: It is harder to experiment in markets outside the US. You can’t take half-baked products overseas and you better have your service fully baked before you take it somewhere where you are an outsider. Most non-US markets, with the exception of maybe South Korea and Brazil, are not as tolerant with the ‘trial and error’ approach to product development that we are used to here.

The other major challenge is that you can’t really open up most non-US markets without investing a significant amount of senior executives time to traveling and meeting with the major players and participants in the markets. The media and ad business is much more relationship driven outside the US than it is here. For example, it is very hard to do business in Japan or Korea without being on a plane visiting your operations at least once a quarter. That kind of investment can be too much sometimes for start-ups. It’s too easy to get swept up in the excitement and mystique of foreign markets and lose site of your core market here.

Q: Any other comparisons?

A: Every national market is different from the US, and each one is different from the other.

Q: What has consumer reaction been?

A: It’s too early to tell, I think.

Q: Has remarketing been a part of the international scope or has it been exclusively publisher side only?

A: Both techniques are being used in a number of non-US markets, though I think that publisher-side targeting is the primary technique being used today.

Next: In Part 2, Revenue Science weighs in.