Behavioral Targeting Breaks Through

When I first downloaded and read eMarketer’s “Online Ad Targeting: Engaging the Audience,” I thought, “This is too good to be true.”

This new report starts with a bold projection about increased behavioral targeting spend in the U.S. and lifts out happy quotes about how targeting consumers as people is more effective than treating everyone the same way.

Though the report isn’t exclusively about behavioral targeting, it spends a good bit of time on the subject, recognizing the benefits for consumers, advertisers, and publishers, as well as putting it in the context of other types of online ad targeting.

If you’ve been reading this column for a while, you might wonder where eMarketer’s analysts have focused their attention up until now. It’s possible their method of aggregating, analyzing, and reporting simply took time. Whatever the cause, it was worth the wait.

Behavioral Targeting: A $2 Billion Industry

There are a few things I can point out that are available in the public version of the report. First, the spending projection.

It shows ad spend against behavioral targeting tactics breaking the $2 billion mark by 2008. Drivers are listed as better return on impressions for advertisers, increased yield on inventory for publishers, and higher relevance of ads for consumers.

Although the reasons cited for this projection are non-controversial and the picture is supported by helpful data from a variety of independent sources, it’s really difficult to say whether the spend prediction is accurate.

The 2008 figure seems incredible considering the market’s nascency, but when you consider the jump from 2003 to 2004 was 127 percent and from 2004 to 2005 was 43 percent, it’s not difficult to imagine a steady projection of 25-40 percent per year for the next few years.

What About the Inhibitors?

There are several known factors that could slow behavioral targeting growth or even reverse it. For advertisers, it means loosening control of the editorial context in which ads may appear. This might slow growth because mainstream brand advertisers are notoriously skittish about this type of thing, and not entirely without reason.

For publishers, it means additional costs and the big decision of whether to build the capability in-house, outsource it, or join a network. For consumers, it means having behavior watched in some way, no matter how impersonal and automated it may be.

Add to that the uncertainty created in the market by events such as New York State Attorney General Eliot Spitzer’s recent lawsuit against a company that offered spyware-targeted, pop-up-delivered advertising as “behavioral targeting.”

Caveat Lector

In addition to the behavioral targeting spending prediction’s being difficult to verify, there are other parts of the report you should be wary of. First, the eye-tracking study released by TACODA earlier this year has a very small sample size. The observations and assessments are interesting, but mainly because of the innovative way they confirm what many already believe to be true.

Second, ad hoc polls taken at industry conferences aren’t a great way to make business decisions, such as how to invest advertising budgets. They offer an interesting way to benchmark the mindset of one part of the market, but I wouldn’t take it much further than that.

Those things said, the report is full of well-sourced, good data and interesting facts.

Is It Right?

“Online Ad Targeting” is required reading for anyone in the digital media planning and buying space. It goes beyond the obvious point that mass-targeted advertising is a wasted model in the current media landscape and offers a survey of the alternatives. It provides useful comparisons of the key online targeting options available now and looks closer at what’s driving behavioral targeting in particular. It reminds us to put consumer relevance before ad targeting.

In these ways, it can’t be wrong.

Whether or not the $2 billion by 2008 projection is correct is less important to me. It’s such a big number, it could be wrong by a lot and still look reasonably accurate. I encourage you to have a read and let me know what you think.

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