Targeting Behavior? Think Purchase Cycle

Recent research from the Pew Internet & American Life Project finds today’s Web users are more inclined to go online simply to kill time, with no intended destination or purpose. Thirty percent of surfers go online on any given day without a specific task in mind. According to the study, this is a significant increase from 21 percent in November 2004.


Thanks to increasing broadband adoption, a group of online “meanderthals” has emerged as the new digital couch potatoes. Instead of flicking through the hundreds of TV satellite channels in search of entertainment, the general public now meanders through some 65 million Web sites, surfing aimlessly and mindlessly.

What does this mean for marketers who want to target consumers based on behavioral patterns? If behavioral targeting is based on the technology that tracks and segments consumers’ online surfing actions and clickstreams, how does this growing meaderthal population affect adoption of this sophisticated targeting technology?

Clear Purchase Stages and Cycles

Those who preach the gospel of behavioral targeting have probably been asked who should consider behavioral targeting, and what brand type are most suitable for behavioral targeting.

The answer’s simple: in the forever pursuit of smarter, more effective communication tactics and tools, every client should at least consider behavioral targeting. It’s perhaps most relevant, however, for high purchase-involvement products and products with distinct purchase cycles.

Not all brands and products are created equal. Some products require more purchase involvement due to price, longevity, replacement rate, and other factors. Others fall into the low-involvement category. Purchases may be the result of impulse buying as well as price incentives.

Generally speaking, a high-involvement product follows a clear decision-making process (awareness, information search, alternative evaluation, purchase decision, and post-purchase behavior) with distinct, differentiable behaviors associated with each stage. Once identified, marketers can than target these phases with specific messaging tailored for each stage to increase relevance.

Think about autos, mortgage loans, insurance, consumer electronics, even travel-related purchases; there are clear behavior differentiations, depending on where consumers are in the purchase funnel. It’s precisely within these stages that behavioral targeting can be more effective, as the associated actions are unique and clearly identifiable.

Not surprisingly, these client categories have been the most active in adopting behavioral targeting.

RFM and the Relative Likelihood of Behavior

RFM refers to recency, frequency, and monetary value of purchases. Using data collected on how much time has elapsed since the recent purchase; total number of purchases within a pre-established time window; and the average purchase amount, RFM is a modeling tool used by many direct marketers to determine a customer’s value.

Although the consumer relationship is dependent on the product itself, these three variables are intricately connected. From a marketing perspective, RFM can help assess the relative likelihood of customers engaging in purchase behavior.

Auto insurance companies can never truly predict who will purchase a policy, for example (there’s never a sales guarantee until the transaction actually occurs). But they can determine the relative likelihood of such purchase by studying the RFM value of other purchases related to auto insurance (e.g., the relative likelihood of new car owners being in-market for auto insurance is high).

Marketers can use captured RFM data to create customized messaging and to tailor offers to maximize behavioral targeting’s potentials.

What Does This Mean for Online Media?

A recent eMarketer study points out automotive brands have a keen interest in behavioral targeting because consumer car purchases have clear stages and clear actions in each stage. By following these stage-based activities, brands can assess the consumer readiness to purchase and perhaps deliver appropriate offers and promotions to effectively convert sales.

Behavioral targeting isn’t the silver bullet for everyone, and it may not yield identical results for all brands and products. In the end, it’s an advanced tactical tool still obliged to reside within the confines of marketing principles, such as purchase stage and cycles.

Some clients are more appropriate than others when it comes to targeting behaviors as their products require specific behaviors associated with purchase-cycle and buying-process stages. Brands that can benefit the most are those with distinct, targetable stages.

Marketers must look at consumer behavior in its totality, from both a product-purchase perspective and the brand relationship with the customer. Behavioral targeting can help marketers move away from single-purchase-focus campaigns toward a lifetime value, which is where communication can truly help brands build and create value.

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