The Lean, Mean Targeting Machine

In 1991, James Womack, Daniel Jones, and Daniel Roos cowrote and published a book, The Machine That Changed The World. It was a study of Toyota’s manufacturing efficiency and an exposé of its so-called “lean production,” which brought U.S. auto giants GM and Ford to their knees.

Back during my business school days, Toyota’s story was a popular case study for operational and supply chain management curricula. Along with just-in-time (JIT) management and the concept of keiretsu (define), the lean business system was one of the best Japanese corporate legacies. It not only hyped and demonstrated Japan’s business prowess in the ’80s, it also marked one of the first major blows to the American auto titans pompous self-centeredness at the time.

I revisited the lean production model recently and attempted to apply its principles to online media. Surprisingly, they actually have uncanny applications to our industry. Who would’ve thought this management model would be relevant to digital media? But it is. Especially in the context of behavioral targeting, which offers a seemingly utopian marketing platform to connect brands and their audiences.

Value vs. Waste

The essence of lean production is simple. According to its principles, all companies do two things: they create value for customers, and they create muda, or waste, which is anything that doesn’t directly result in something the customer values. Companies must continually improve customer value while avoiding (or minimizing) waste.

Behavioral targeting can also eliminate waste and increase value for customers, both consumers and advertisers. Ads are delivered based on relevance to users (by profiling their online behaviors). So rather than simply adhere to the traditional planning rule of 3X frequency, marketers can create highly targeted messages for individuals to minimize the all-too-common waste in impressions. In this case, lean is applied not just to product and operations, but to communications as well.

The Real Optimization

We all know the classic reach and frequency planning guidelines are somewhat outdated and insufficient to reach today’s consumers. Advertisers don’t want to reach all people online, they want to reach the right people. The quality of the target is much more important than the volume.

Despite all the medium’s technological advances (e.g., search and targeting capabilities), there are still only a few choices for driving efficiency in online media. So-called “media efficiency” is still archaically limited to price negotiation, added value, share of voice (exclusivity), reach and frequency, and a few other derivatives of textbook optimizations.

Until behavioral targeting reemerged from the dot-com slumber, that is.

In many respects, behavioral targeting already enjoys innate optimization because an efficiency foundation is built in. Advertisers needn’t focus so much on achieving the frequency for effect. The behavioral profile matching and elevated ad relevance are already strong enough to generate user interaction.

Optimization also occurs on the seller side, which demonstrates another key concept of lean production: reducing interface cost (impressions) to avoid waste. Behavioral targeting helps publishers monetize inventory by qualifying and quantifying their audiences. This ultimately liquidates inventory with added value to advertisers, since its targeted reach is higher than normal run-of-site (ROS) or run-of-network (RON) impressions but is less costly than editorial-adjacent premiums.

What Does This Means For Online Media?

Who has the best solution or technology isn’t the real question in behavioral targeting. It’s how to integrate different sets of behavioral data into one standardized platform so marketers can decipher connections and correlations. We should focus on how to integrate search behavior (e.g., AlmondNet, which tracks users search behaviors) with navigational behaviors (e.g., TACODA, Revenue Science, and others), and synthesize the result with back-end data (site-side analytics and ad-serving capability) to create a standardized platform for online targeting. Only then can we begin to think about offline integration to create behavioral targeting ultimate platform.

Toyota’s lean principles ultimately reshaped the auto industry’s production landscape. Whether behavioral targeting will achieve this milestone for online media remains to be seen, but its media lean efficiency and values are certainly not to be ignored by media planners.

At the end of the day, online media is a business. Like any other businesses that experiences accelerated growth, it’s subject to commoditization and hypercompetition. For a medium known for its interactivity and accountability, online is strictly measured and tracked for return on investment (ROI), which means it’s on the verge of lean consumption in terms of refining its cost and performance efficiency.

Behavioral targeting can certainly contribute to the feeding of this lean, mean targeting machine we call online.

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