The race is on to understand the customer. We have the technology to tailor web content based on the interests of visitors. We are able to drop ads into web pages based on the type of content surrounding the ads. We are able to track individual people as they move from site to site.
And now, media buyers have a new set of opportunities that can help them improve the effectiveness of their ad buys – individual audience profiles.
Recently Engage, the sponsor of this column, introduced AudienceNet, a new approach to delivering web advertising that uses anonymous profile data about the interests of individuals, to target online ad buys.
By tagging individuals as they move from site to site across the web, Engage has been able to collect some 35 million profiles of user behavior. This data has been converted into a set of profiles that allow a media buyer to choose from over 800 profile categories.
The benefit, of course, is that advertising can be displayed to people who have demonstrated an interest in a particular area even when the content of the site they are viewing has nothing to do with that interest area.
But is it really a benefit?
It can be argued that it’s best to display ads in context in order to catch people whose mindset is focused on the topic of the ads. On the other hand, many ads rely on the shock value of being different from the content to attract attention.
So, will Engage’s AudienceNet produce measurable improvement in the effectiveness of ad buys?
We’re moving down the road to more precise targeting of web audiences, so we don’t really know yet how much of an improvement this new technology will provide. Engage says a preliminary study shows a 28 percent improvement in click-throughs. We’ll have to wait for the completed study to know the final results.
There is really more here than meets the eye because every additional piece of profile data gives us greater insight into the segments of our audience. Profile data also helps us better target each individual. Even if the click-through rate is “just” 28 percent better, there is a wealth of information to add to the data mix for analysis.
While click-throughs are the way to initially measure how well an ad campaign is working, there are several other metrics that make up the lifetime value of the customer.
One of these is whether click-throughs turn into sales. The cost of acquiring a new customer is high enough that customer loyalty and future purchases play a big part in determining whether or not the initial click-through was worth the cost.
One of the things I like about the Engage methodology is its use of recency, frequency, and duration, which takes into account how recently a site was visited, how frequently, and for how long. This is a takeoff on the well-established RFM analysis technique used by traditional direct marketers to prioritize clusters of activity.
There are a variety of marketing research techniques used to analyze clusters of people based on interests, activity, or other characteristics. For example, the Latin Squares methodology used in marketing research to compare clusters of people can be applied to targeted ad buys and other profile characteristics.
You might want to take three of the special profile categories that cover the personal side of life – entertainment, food and wine, and hobbies and leisure – and compare them to four different offers. By creating a series of ad buys that bring viewers to four different web pages, you can learn which offers appeal best to each interest profile.
When these people come to your web site, you want to store in your profile database, which audience profile attracted them to your site and which offer they were initially shown. Later, compare that data to their purchase data to see which combinations actually produced the best sales.
While buying online ads by individual profiles make a lot of sense, the question is whether it’ll make a lot of dollars for advertisers. We’ll each have to run our own tests to learn how making ad buys using audience profiles improves all of the metrics, from click-through to purchase.
Fortunately, Engage is now giving us this opportunity to refine our knowledge about the web audience.