Behavioral Marketing in Context

Am I the only person confused by what’s going on in our space? I don’t think I’m alone in saying online advertising, as we know it, has once again become the Wild West. Witness the Google IPO, where its valuations are higher than some Fortune 500 companies. Though search engine marketing (SEM) is certainly the current darling of online advertising, there has been a lot of enthusiasm for that other comeback kid, behavioral marketing.

Or is it contextual marketing? More often than not, when people in our industry mention the word “behavioral,” “contextual” is almost certain to follow.

Often people use these two terms interchangeably, as if they meant the same thing. One minute, a vendor tells you her company is a behavioral marketing company. Next moment, she’s into contextual marketing. Just as I wouldn’t dare say my Nissan Sentra is the same as a BMW 7 Series, I’d hope people wouldn’t lump together behavioral and contextual marketing.

So what’s the difference between behavioral and contextual marketing anyway?

Contextual Marketing

In the simplest terms, contextual marketing is when marketers target users based on the content of the ads that appear on a Web page. If you’re thinking you already do that in one way or another, such as through airline ads targeted on a travel site or car ads on an automotive resource site, congratulations! You’re a contextual marketer (kind of).

If you buy ads through Google’s AdSense or Overture’s ContentMatch, you’re indeed buying contextual ad placements. They place text ads on contextually relevant Web pages. Other vendors, such as Vibrant Media and Kanoodle, target users through verticals to deliver better results. Whether it’s text or graphical ads, the ability to deliver a relevant message based on content can be defined as contextual marketing.

Behavioral Marketing

So what’s behavioral marketing? The simple definition is marketers targeting consumers based on their Web site behavior, rather than purely by the content of the pages they visit. Behavioral marketers target consumers by serving ads to segments or categories created from data compiled from clickstream data and IP information.

An example of this would be automotive ads served to someone who’s deemed to be in the market for a vehicle based on his Web behavior. Unfortunately, as mentioned last week by my colleague Andy Chen, standardization and reach are potential issues behavioral marketing still has to deal with. With so many prominent players trying to establish their presence and dominance in this marketplace, these issues will hopefully be solved very soon.

Those with the loudest voices in this marketplace include Tacoda Systems, Revenue Science, and 24/7 Real Media. Tacoda Systems and 24/7 have created behavioral networks with greater reach.

Some companies, such as Claria, take the whole contextual marketing thing one step further. Though ads are initially served up to match the contextual relevance of pages users are looking at, all the data collected are subsequently used to create different segmentations. The targeting, then, will ultimately be more behavioral than contextual.

Will we always have to differentiate between contextual and behavioral marketing? Probably not. Contextual marketing is only the first step toward understanding user behavior. This helps establish that sought-after, one-to-one relationship online marketers have always talked about.

Ultimately, as behavioral marketing companies, publishers, and adware companies become more sophisticated in their segmentation and targeting, our ability to target contextually and behaviorally will go hand in hand to deliver the highest conversion or return on investment.

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