Behavioral Marketing: A Look Ahead to 2008

Looking back over this year, we saw some major revelations and revolutions in the world of behavioral targeting. The privacy debate, new targeting options, lots of new players, and a spate of merger and acquisition activity have really changed the space this year. As we head into 2008, I wonder what those changes really mean to the industry as a whole. I recently chatted with Joe Apprendi, CEO of ad network Collective Media, about the future of behavioral targeting and where his company fits into the picture.

Robin Neifield: What do you see on the horizon for behavioral targeting in 2008?

Joe Apprendi: More and more ad networks. Many people believe that there will be consolidation, M & A activity, a lot of new entrants because of recent announcements, but I expect we’ll start seeing publishers moving to vertical ad networks, like Lifetime’s new media move with Martha Stewart Living. I also think we’ll continue to see a lot of acquisitions. We’ve seen the first wave, but now I wonder if we will start to see other large companies like NBC, News Corp., Disney, or Gannett enter the field. There is so much value and synergy between a diversified company and ad networks — not just to increase effectiveness of unsold inventory but also to increase their market share of overall ad spend.

The ad economy is generally slowing. But while traditional ad spending will get hit, I don’t believe it will be like in 2001 and 2002 where online was first to get cut because it didn’t have Fortune 1000 supporters. Now everyone gets the power of online ads. I think [the] slow ad economy will accelerate a shift, but traditional diversified media companies need to figure out how to grow market share through acquisitions of ad networks.

RN: How much of that growth will be behaviorally driven?

JA: In general, behavioral is the fastest growing sector of online marketing. In fact, it was neck and neck with contextual targeting this year. But I expect it will have the lion’s share of budget in coming years.

RN: There has been quite a focus recently on consumer privacy concerns. Has it impacted the kinds of conversations you are having with your customers?

JA: A recent, specific example that’s coming up in the behavioral targeting category is the Facebook/Beacon issue. Facebook is different. They had their own online audience and were leveraging personal data that users themselves had provided but that they didn’t know was being used for targeting purposes. For us, it’s all about nonpersonal data and nontargeted data, although we may overlay simple gender, age, or page consumption data. An interesting, and I think a hot, topic in ’08 will be the advertiser’s opportunity to leverage their behavioral targeting data. With Facebook’s solution, for example, you are buying very targeted media based on that particular site or profile of user — that’s leveragable behavioral targeting data. As an agency, you can start storing and using that targeting data to reach users through distribution partners like an ad network. I think this is going to be a huge trend. There will be a lot of conversation and negotiations on not just what you are buying but how you can leverage that data. Retargeting data will probably become a subset of behavioral targeting. I hope advertisers and ad networks can come to common ground on how to leverage this.

RN: It’s so clearly critical to your business to get premium sites into your network. How do you get those sites to sign up?

JA: Our conversations are the same with advertisers and publishers. We focus on high-quality sites that brands can trust. That’s valuable for both sides of the equation. Publishers want high-quality advertisers and advertisers want high-quality sites. When you talk to the publishers we do business with, that have so much brand equity with audience and content, they don’t see their unsold inventory as a commodity. Just because it’s unsold, that doesn’t mean that it’s not high quality. Our sites represent a great addition to complement what the publisher’s sales team is already doing. We can provide great yield, great analytics, but never compromise their brand.

RN: What do you think we will see in messaging technology? Mobile? Video? Other targeting options?

JA: First thing you are going to see is more search. Right now, search is purely contextually based on particular search categories. When you’re not limited to just that contextual data, you can start integrating it with behavioral targeting more successfully. Because of that, search is going to start leveraging behavioral targeting at a faster rate in 2008. There will be an interesting opportunity to start advertising within widgets. It is easy to apply the same methodologies to them as you do with online display ads. The problem with video today is that there isn’t a lot of available in-stream video, especially for video you trust. Marketers are asking for quality video and are not yet jumping on the user-generated video bandwagon. Lastly, I think that in-stream video owners overlaying advertising might complicate things. Again, it’s an issue of if the advertiser feels comfortable running ads in consumer-generated video space. However, as advertisers get more comfortable with video, we will see more and more. With regards to mobile, we’re not focused on it right now, but I think that it’s a huge market and will benefit from behavioral targeting when it’s ready. It will come along, but I don’t think that people will talk about behavioral targeting and mobile in 2008.

RN: What do you, as a network, want from your marketing clients to ensure success on both sides?

JA: The biggest thing we need from them is willingness to leverage our experience. We also feel like it’s a two-way street. If a client is open and gives us great insight into what’s worked for them in the past, their objectives, their targeted CPA, etcetera, that is all very helpful for us in developing their programs. We want to understand their needs first and to exceed their objectives, but if we don’t understand those things, then we can’t be a good resource for them. I strongly believe in information sharing. We are a strategic media partner, not just one of 100 ad networks. We want to be the go-to network for marketers looking for a data provider.

RN: Thanks so much for your time, do you have anything else to add?

JA: The big thing next year is going to be a lot more ad networks knocking on your door. Just when you thought you didn’t have another ad network to talk to, another ad network will appear.