Behavioral Targeting Gains Ground in Europe

2008 was an important year for the European behavioral targeting space, according to a new report by Forrester research, titled “Return to the Behavioral Bandwagon.”

Despite the fact that behavioral targeting tools have been accessible for a number of years, report author Nate Elliot suggests that a combination of increased visibility and availability, alongside greater adoption from publishers, has caused a significant surge in advertiser uptake.

Citing figures from Jupiter Research’s Advertiser Executive Survey series, Elliot suggests that 26 percent of European advertisers made use of behavioral targeting tools in 2008, compared with just 10 percent in 2007. In addition, 58 percent of advertisers surveyed in June 2008 said they were interested in using behavioral targeting in the next year, the report says.

Ian Thomson, Head of Business Architecture at U.K.-based digital agency i-level, estimates that his agency’s use of behavioral targeting tools actually increased fivefold from 2007 to 2008. “The reasons for this are varied, but mostly to open up access to more targeted media at a far lower cost than could be bought via channel buys. This improves ROI for our direct response clients by reducing CPM rates, and by increasing response rates by reaching a far more relevant and engaged consumer.” he told ClickZ News.

However, it appears some agencies have yet to experiment with behavioral methods at all. Despite offering display ad solutions, U.K. agency Steak, for example, currently makes no use of the targeting method, according to a spokesperson.

Firms such as AOL-owned Tacoda and AudienceScience (formerly Revenue Science) have been offering behaviorally targeted ads since 2006 in the U.K., but the past year has seen increased exposure surrounding the practice, largely as a result of controversy surrounding ISP-level targeting technology from Phorm and NebuAd.

In addition, economic factors have forced both advertisers and publishers to squeeze extra value from their inventory. “With interactive marketers more focused than ever on improving their campaigns’ return on investment, the use of behavioral targeting will only continue to grow,” predicts Elliot.

IAB Europe President Alain Heureux agreed the practice is an increasingly important trend, but was cautious about over-emphasizing its current position in the online ad landscape.

“Only over the past year have advertisers really started to experiment with behavioral targeting. The technologies are now in place, and it has a good foot in the door. It will play an important role in the future of digital marketing, but it hasn’t yet reached a tipping point,” he said.

According to Elliot, increased uptake of behavioral capabilities by publishers and networks has driven the practice, by providing the scale and reach that advertisers crave. He cites statistics from behavioral networks such as Specific Media and Tacoda, which claim to reach 80 percent and 77 percent of U.K. users respectively.

As far as Thomson is concerned, from an agency perspective, behavioral solutions can only help publishers and media owners better monetize their assets. “It is clearly in the interest of media owners to better commoditize their whole inventory base and provide our clients the highest ROI they can possibly achieve. Behavioral targeting will help them do this, and we will therefore continue to invest in those media owners that develop and optimize the best technology that drives results for our clients,” he said.

Despite the privacy concerns that have beleaguered behavioral targeting at the ISP-level, both Elliot and Thomson believe it can offer benefits to consumers as well as advertisers, as long as users are aware of what their data is being used for, and are provided with notice and control over its collection.

Phorm itself held a “town hall” style event in London last night to further address public concerns surrounding its technology, at which CEO Kent Ertugrul suggested his firm provides users with “greater choice.”

In addition, European regulators have recently expressed concerns about online data collection more widely, and have argued that online firms must better inform consumers of how and why their information is being used, in order to avoid further regulation.