The Three Dimensions of Behavioral Targeting

Not sure if you’ve heard. There’s a new kid on the block. He goes by the name of Behavioral Targeting.

The kid ain’t new, actually, but his recent return to the online world has attracted much press and attention. Word on the street is behavioral targeting can ensure advertisers reach the target audience with the right message and, consequently, increase their brand awareness and return on investment (ROI) performance. I’ve also heard the kid can help publishers provide an extremely targeted audience to advertisers, better inventory management, and increased revenue.

Everyone’s talking about behavioral targeting. We all know who offers it; the list goes from prominent players such as Tacoda, Revenue Science, and 24/7 Real Media to rising stars such as Accipiter, Poindexter, and various others.

Exactly what is behavioral targeting good for? What are its online implications and its applications to agencies and marketers? Sure, behavioral targeting provides marketers with unique branding opportunities to reach a targeted audience. But we’re neglecting many other potential applications it has to offer.

To better understand its full scope, I explored all the potentials and came up with three primary behavioral targeting dimensions.

The CRM Dimension: Customer Retention

CRM is often the easily forgotten application in behavioral targeting discussions.

We all know an intuitive, considerate customer experience leads to better conversions. It’s a fundamental tenet not only online but also for marketing in general. Marketers must “think” for the customers and synthesize their personal identifiable information (PII), collected with their clickstream data, to achieve a deeper understanding of customer predispositions.

With behavioral targeting, marketers can better grasp customers’ needs and interests. Consequently, they provide recommendations and offers that map back to those needs to improve the experience before they ask you how.

To borrow from “The Godfather” (one of my favorite movies for business inspirations), CRM is simply about thinking for customers and creating offers they cannot refuse. Behavioral targeting can effectively deliver this. Marketers just tend to forget this application from time to time.

The Branding Dimension: Brandwashing

“Brandwashing” is my dysphemism for branding. Don’t get me wrong, I mean this in a positive way. Similar to its ominous counterpart, brainwashing, brandwashing is conditioning consumers’ perception of a brand and the consequent increase of its awareness, recall, and equity over time.

As more brands turn to the Internet as a viable advertising vehicle, the channel will only become more congested. This trend is already validated by ever-decreasing CTRs for almost all standard banners, year after year, as consumers are bombarded with ad units and messaging. If the current challenge is to break through the clutter to get in front of the target audience, behavioral targeting has the ability to ensure timely delivery of the right messaging, in the right context, to the right people.

In a recent discussion with interactive colleagues at WPNI/Newsweek, I learned Shell and Exxon have included online as a major component in their respective marketing mixes. One might wonder why petroleum giants are doing online advertising. I have a few guesses and will confidently say branding is one of their objectives. If branding is about achieving strategic ubiquity online, then behavioral targeting can certainly be a solution.

The DR Dimension: Customer Acquisition

Direct response (DR) has gained tremendous attention in the online renaissance. Online trackability and performance accountability have become somewhat synonymous with DR in many ways, along with all the promises this medium can deliver. Regardless of client or industry, customer acquisition is always a critical objective. Not surprisingly, behavioral targeting has an intuitive application in this area. It allows marketers to continuously target potential customers with tangible, real-time results.

Behavioral targeting can be an instrumental tool for DR initiatives. It helps marketers to effectively reach consumers in a natural fashion. By this, I mean naturally following the consumer’s interests, patterns, and behaviors to speak with the audience who wants to be spoken to.

If consumers are typing in search words online and actively looking for information relevant to your company, you should rightfully monitor this behavior and track its frequency and recency to improve marketing ROI. Vendors such as Revenue Science offer a search-based tool that enables advertisers to select words that are relevant to an advertiser’s target audience, track the visitors who recently visited pages that contain these interest-based terms, and group them into audience segments for targeted acquisitions.

What Does This Mean for Online?

Behavioral targeting can be applied to multiple marketing dimensions. Its systematic tracking and monitoring of consumer behaviors can even be extended to business operations and communication planning. If we apply behavioral targeting to the four phases of the consumer buying process (need recognition, information search, evaluation/comparison, and purchase decision), we clearly see a strategic fit for every stage.

Marketers must clearly define objectives for using behavioral targeting before blindly jumping on the hype wagon.

At the heart of behavioral targeting is a learning-based investigation of consumer behaviors. It helps marketers understand consumers’ purchase patterns over time, mapping out a customer’s activities based not only on a single purchase but also on an annual or even lifetime basis. As marketers increasingly appreciate the importance of customer lifetime value, they’ll understand behavioral targeting can be a foundation for creating a continuous analytical study of consumer trends and patterns.

We all know the kid has plenty of potential, but he has a lot of growing up to do as well. As good marketers we must consider all of behavioral targeting’s dimensions to realize its full aptitude. Yet we must also foster a growth environment and use it to elevate the marketing industry as a whole.