Behavioral's Challenge: Agency Persuasion

  |  January 19, 2005   |  Comments

If vendors can offer incentives to enough agencies to try behavioral targeting, the new will become the norm.

The interactive industry has embarked on what many believe to be its tipping point. Though most online business segments are expected to expand, many are treating behavioral targeting as the wild card search was two years ago.

To say behavioral targeting will change the online landscape as much as search did is a bit bold, but claiming it will change the way online media are bought and sold definitely isn't. After all, behavioral targeting stands as the only online media element besides search that targets. And advertisers are obsessed with targeting consumer intent.

So why haven't most media agencies included behavioral targeting in their overall online marketing mix?

It's no mystery that in business, sellers create the market. Ultimately, the buyers sustain that market. In behavioral targeting's case, this means although technology vendors and publishers created an alternative offer to content-associated relevance, it's up to media agencies to embrace it and bring that business model to life.

One of the most critical hindrances behavioral targeting faces today is agency adoption (or a lack thereof). This can be attributed to agencies' skepticism regarding behavioral targeting's value proposition and performance.

Just Another Way for Publishers to Make Money?

"Is this another publisher attempt to sell us run-of-site inventory at a premium price?"

Technology aside, that's the bottom-line question agencies ask when it comes to behavioral targeting. Market dynamics changed advertiser and publisher needs. As publishers continue to find ways to monetize site inventory, behavioral targeting currently seems awfully favorable to their continual quest to maximize revenues.

Agencies are paid to be innovation and creativity evangelists, but we're also compensated for being skeptical. Skepticism doesn't mean cynicism; it simply means before we make the best recommendation to improve our clients' business, we ensure these new opportunities are sound and valid.

Behavioral vendors and publishers must be patient and honest when presenting the offer. No one wants to buy a Porsche only to learn afterwards it's got a Honda engine. Be active when persuading the agencies. Supply them with case studies and research pieces. Get them involved. There's nothing more convincing than first-hand experience. Let them try it. If the technology and methodology really work, performance will validate the value proposition.

This raises another question: How do publishers get agencies to try behavioral targeting?

Consider a CPM/CPA Hybrid Incentive

It shouldn't be news to any of us that the word "accountability" has achieved near-biblical stature in the media world. We use it in client pitches, and we do our best to fulfill this responsibility on a daily basis. After all, one of the primary reasons online media has recently outgrown (percentage-wise) their offline counterparts is because we can map tangible sales data back to creative exposure and demonstrate trackable return on investment (ROI).

This means media agencies are increasingly focused on performance and results. Believe it or not, this presents a great opportunity for behavioral vendors and publishers to convince agencies of this technology's capabilities.

If behavioral targeting truly reaches its target audience and delivers what it promises (higher relevancy without super-premium CPM), the best way to attract buyers is to share performance responsibility and create a hybrid CPM (define)/cost-per-action (CPA) pricing model. The CPM portion would be priced as any site-specific rates for run of site (ROS) (typically, the cheapest inventory). The CPA portion would be priced as a conversion-based (e.g., a sale, lead, click, etc.) bounty. This means instead of selling behaviorally targeted impressions at a $10 CPM, start with the $6 ROS CPM and attach a $4 CPA bounty when the predefined conversion occurs.

As media become increasingly result-driven, it's crucial publishers also assume the responsibility of improving performance with agencies. CPM/CPA hybrid pricing would encourage agencies to include behavioral targeting in the overall media mix and accelerate industry adoption.

What Does This Mean for Online Media?

When "De Revolutionibus Orbium Coelestium" ("On the Revolutions of the Celestial Sphere") by Nicolaus Copernicus was first published in 1543, Copernicus' solar-centric view sharply contradicted the dominant Earth-centric thinking of the time. Only after continual preaching by Giordano Bruno, Galileo Galilei, and many others was it eventually accepted as the truth, several generations after publication.

Like Copernicus' theory, acceptance of behavioral targeting will take time (hopefully, not that long!). Behavioral targeting presents a new and different view of online media. Its audience-centric paradigm deconstructs the placement-association (editorial adjacency) perspective. New adoption requires time and patience for the industry as whole to embrace.

If vendors can convince (or offer enough incentives to) enough agencies to try behavioral targeting, a natural tipping point will eventually occur. Soon after, the new will become the norm. Perhaps in the near future, media planners will no longer have to specify behaviorally targeted impressions when buying media. It will simply be "impressions."

Let's ensure this day comes in 2005.

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Andy Chen

Based in London, Andy Chen is vice president of digital solutions for Viacom Brand Solutions(VBS) International. Prior to Viacom, Andy was the media strategy director at Carat International/Isobar, which handles global media and digital strategies for Philips, Renault, Adidas, and various other multinational clients.

A true advocate for global integration and strategy, Andy has lived and worked in Copenhagen and Stockholm, where he was a management consultant for the Swedish Advertising Association. He received his BA from University of California, Berkeley; and a MBA in international marketing and global management from Stockholm University, School of Business. Named one of the "20 Rising Media Stars to Watch in 2004" by "Media Magazine," Andy is a frequent international conference speaker on digital and interactive media. He published his first collaborative book, "The Changing Communication Paradigm," in November 2005.

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