The Behavioral Targeting Year in Review, Part 2

The vast growth we saw in behavioral targeting offerings and advertising networks last year didn’t come without obstacles. There are significant, growing impediments for advertisers and marketers planning effective behavioral programs. All you publishers and networks out there, how will you help us cope?

Duplication

Behavioral networks continue to overlap, partnering with the same sites to increase their available impressions. This means advertisers using multiple networks can waste impressions and generate an undesirable amount of audience duplication. How can networks reduce duplication and coexist to offer extended reach?

• One resolution would be disclosure of affiliated sites. If networks offered site listings (beyond a site opt-out list), they reduce duplication by enabling advertisers to better select networks that complement each other.
• Exclusive site lists and specialized segments or verticals would help advertisers and agencies capitalize on unique audience strengths in specific networks. Networks offering stronger segments or sectors of categorically related sites would offer advertisers more control over their media plans and enhance their buys’ reach.

Although networks allow buyers to target on many different levels (including channel/audience), few tout exclusivity agreements or strengths within affinity groups. There are pros and cons to this deeper segmentation.

One advantage of an increased focus or segment strength is better differentiation points among the networks for advertisers of healthcare, automotive, diet/fitness, fashion, wedding/bridal, and travel. But it could also make things more difficult and more expensive for advertisers.

Exclusive relationships could increase competition, with numerous networks fighting for the “best of the best” sites. This could create premium pricing and would dilute the economies of scale we currently enjoy.

It also runs counter to the genesis of the behavioral approach. Trying to gain better control of the buys by audience or content segmentation may go too far down the road of predicting which channels or segments are best for your plan. Behavioral targeting is about actual behavior, not predictive channel targeting.

Reporting

Another related duplication casualty is inaccurate capture of true cause and effect in ad spend. Current industry standard analytics assign conversion credit to the last view or click. Networks that may drive significant traffic and action on an advertiser’s site may not appear that way on paper if they’re not the last touch point. Industry standard reporting (a best practice) should begin to shift, tracking the purchasing or conversion path by illustrating the user’s behavior trail (rather than the last touch point). This need for an industry-wide shift is increasingly evident. The burden is shared by ad serving and analytics providers, agencies, clients, and media partners. It’s an urgent need.

Language Barriers

Several networks use different names for the same types of behavioral targeting. It takes time and expertise to read through the fine print to fully understand the language and define what’s actually being offered. It needn’t be that difficult. The Interactive Advertising Bureau (IAB) should establish industry language standards that networks would adopt to help prevent renaming the same targeting technologies. Networks could then focus on true innovation instead of repackaging to differentiate themselves.

Where Are We Headed in 2007?

Duplication, tracking/reporting, and language barriers are hurdles we still must overcome in 2007. Yet these obstacle won’t affect growing demand for behavioral targeting. As a new year begins, new advertisers are probably running trial campaigns right now. Chances are the results will warrant another new behavioral convert, and growing demand through the year will culminate in a frenzied Q4 push for scarce inventory. Will new players emerge to meet the need? Will better players emerge to service the behavioral targeting veterans who know to ask for more?

JupiterResearch estimates one in four online advertisers will use behavioral targeting in 2007. EMarketer estimates the market will spend $1.5 billion on behaviorally targeted online advertising in 2007 and perhaps exceed $2 billion in 2008.

The inevitable shakeout of the best players that offer the best customer service and produce results for their clients from their networks will help define a crowded field. True innovation in targeting, optimization, pricing, reporting, and response mechanisms will separate the commodity players from those who are fine-tuned. There’s room for both, and plenty of business to go around.