Chatting With Behavioral Targeting's Darlings, Part 2

Last month, we caught up with Marla R. Schimke, VP of marketing at Revenue Science, about recent developments in behavioral targeting. Here, we talk with Hugh McGoran, Tacoda’s VP, Eastern advertising sales.

Anna Papadopoulos: What major developments do you see in the digital space, specifically behavioral targeting?

Hugh McGoran: Certainly consolidation in the marketplace is a big development. I can’t imagine this will slow down as the portals and other large media companies look for ways to increase and diversify their portfolios. With so many marketing platforms vying for the same dollars, it makes sense for large media companies to look for ways to keep revenues and services under one roof. Likewise for advertisers: one-stop shopping for behavioral, contextual, network, and mobile makes media planning and buying easier.

AP: What are the top categories that are embracing behavioral targeting? Why do you think this is the case?

HM: We’ve seen big increases this year in automotive and CPG [consumer packaged goods]. The big automakers have moved from using BT as a small extension of their media plans to a major, standalone component and are now including BT in their upfronts. Other industries, like financial services and telecom, have been using BT successfully for some time, and like last year we expect to see a big Q4 for retailers.

AP: Is spending in BT going up or down? Why do you think this is the case?

HM: All the indicators I’ve seen show continued upward movement. Because it works.

AP: What would you say to a marketer who is thinking about behavioral targeting but hasn’t taken the plunge?

HM: I would counsel them to treat behavioral not much differently than they do their contextual buying now. Since much of behavioral targeting is based on content usage and visitation, it is in large part an extension of those activities. So a media plan may now look something like this: search, portal, three or four endemic contextual sites, and three or four behavioral segments. Retargeting can then be layered on top as well. Marketers already know how to reach a trendy homemaker through contextual placements, but the opportunity to keep the conversation going as she moves on through the rest of her Web life is a huge opportunity. No matter what she is doing online, she is still a trendy homemaker and still receptive to those messages.

AP: How are you handling behavioral targeting in the emerging media space (video, blogs, etc.)?

HM: Blogs, social networks, and other UGC [user-generated content] show great potential for BT and marketers, but brands have struggled with how best to work in this space. Some of the bolder marketers have done a good job of integrating themselves through widgets and content development, but marketing messages must be tempered in this environment. Behavioral lets a marketer discover what else these people are doing online and reach them in other environments.

AP: If you can change one thing about the way behavioral targeting is handled or viewed, what would it be?

HM: Behavioral targeting wants to scale. This means working with a network, a portal, or both. This doesn’t mean you can’t use site-specific BT to extend reach and retain some contextual relevance, but that is a separate tactic and comes at the expense of scale in most cases. What I want to see continue is the use of and the cleaning up of networks. I can’t speak for all networks, but we have spent a lot of our energies on inviting those sites that make sense for our advertisers. This takes away risk for advertisers. There may be some marketers still licking their wounds from bad experiences they’ve had in the past with networks that didn’t play by the proper rules. I would suggest that if an advertiser hasn’t used a network even in the past six months, they would be smart to give them a second look. Many networks like Tacoda have now solved this by partnering only with reputable sites. This takes the risk out of buying a network and enables marketers to realize the full value of using behavioral targeting.

AP: What do you predict for BT in the next 12 months?

HM: A shift towards brand and awareness advertising. We’ve already seen this during 2007 and it has been a focus for Tacoda. There are plenty of pure-performance networks out there that survive on ubiquity: I serve enough ads, I will get enough clicks, and this will generate enough leads or purchases. But using sophisticated targeting can give you a great opportunity to raise awareness for your product or service and get you in front of the right people, perhaps people who will never click on an ad. I think we all need to look at the last ad we clicked on and made a purchase from to see the limitations of this model. Brand dollars are going to rush to the Web in coming months and years and we need to show them that we can move the needle prior to point of purchase. That we can change minds and influence behavior.

AP: What role will your company play in this?

HM: Tacoda has been a leader here. While we put our optimization abilities up against any network, our focus has been to assemble a collection of premium sites and distinct behavioral profiles that will serve brand advertisers. Many agencies hear the “B” word and immediately equate it with an excuse for advertising that doesn’t perform well. Tacoda is helping to redefine what it means to perform. A lot of this has been about educating traditional marketers who may be new to the Web or have spent the last few years only using search or optimizing to clicks.

One example is the request from an advertiser looking for a business decision maker. We can easily find this person and target them to receive a compelling message. But when I hear that the success metric is going to be click-to-conversion, I have a hard time reconciling these dueling objectives. We can reach this person, but we can’t make them become a clicker. In fact, our data shows that if you optimize towards clicks, you will almost certainly optimize away from who you are really looking to reach.