Diminishing Returns

  |  December 1, 2010   |  Comments

Five factors impacting behavioral ROI.

Seeking to improve conversion and strengthen the relevancy of messaging, marketers are increasing their reliance on behavioral targeting programs. Targeting solutions offer additional options to personalize a user experience - but can carry with it a complex management and operations responsibility. From data overload to privacy management, marketers need to ensure their behavioral programs are delivering more than just segment-specific content, they need to be delivering measurable ROI.

Newly-launched targeting programs tend to deliver immediate, measureable results - especially for those organizations that had no previous method to target content. Over time, without stringent oversight, the return on behavior programs may start to diminish.

Several factors may account for diminishing ROI:

Protection of personal privacy: The amount of time associated with managing the protection of personal privacy is growing exponentially as the ability to deliver targeted messaging grows. As new vendors provide richer insight into user behavior, such as deep packet data from ISPs, more time, effort, and strategic planning is needed to ensure that robust privacy policies are not only well established and managed, but communicated effectively to end users. There is increasing reliance on user-specific profiling to customize data - and increased awareness and concern of user rights groups, governmental organization, and even data providers as to the sensitivity of the data being collected.

Data overload: With more testing, more sites, and more partners comes an influx of data. What starts off as a great benefit, more insights into user profiles and behaviors, can quickly escalate into an uncontrollable stream of data that renders it indecipherable. Organizations are having to invest heavily in marketing data management teams just to cleanse and analyze this faucet of information. However, many organizations are struggling to make the shift from mere collection to transformation of campaigns based on robust insights.

Vendor alignment: New vendors and technologies are lowering the barriers to entry into behavioral targeting, both in terms of cost and complexity. But for each new vendor you add to your arsenal of targeting tools, there is a corresponding level of vendor management and coordination. Ensuring segments are in sync, aligning definitions, coordinating data collection, and reporting is a must - and each vendor has a different approach and must be managed individually.

User experience optimization: With new content management system (CMS) and testing tools offering the ability for non-technical users to quickly deliver multiple versions of pages and A/B tests, demand for testing alternate versions of both content and creative is high. Delivering on-demand creative and unique content that can provide enough differentiation to perform an effective test can strain the bandwidth of even the largest in-house creative departments. Working with external vendors can lengthen the cycle time and add additional production costs.

Offer depth and diversity: Large retailers with diverse inventories and service providers with highly configurable options, like cruise lines, have robust options to enable highly targeted messages, offers, and product suggestions. However, businesses that have a limited array of solutions may not have enough content or offers to make the investment in extensive targeting pay off.

At its core, behavioral targeting offers a more relevant user experience, offering an opportunity to improve the conversation rate. However, sophisticated marketers will look beyond conversion as their core success metric and instead look at a more holistic measure of total ROI. Your behavioral program may be increasing conversion, but if the cost to improve conversions lowers your margin to undesirable levels, it may be time to reconsider the approach.

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ABOUT THE AUTHOR

Andrea Fishman

Andrea Fishman, VP of strategy and a partner at BGT Partners, leads BGT's Chicago office and has extensive experience in marketing and management consulting. She and her team drive value to BGT's clients through the development of behavioral marketing programs, web analytics, measurement programs, industry benchmarking, competitive assessments, and the design of integrated marketing programs.

Andrea has been with BGT since 2003 and is credited with strengthening partnerships with such clients as ADT, Sony, ADP, and Avaya. Prior to joining BGT, she served as global vice president at divine, inc. She's also held strategic positions within marchFIRST, The Lewin Group, and the office of U.S. Sen. Edward Kennedy.

A graduate of Brandeis University, Fishman was awarded the Wasserman Scholarship for academic achievement and was named a 2010 Stevie Awards Finalist as Best Executive in a Service Business. She is a frequent judge for the eHealthcare Leadership Awards and is involved with the Special Olympics and Chicago Cares, a community service organization.

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