Using Behavioral Targeting to Survive and Thrive in a Weakened Economy

The economic outlook for this year is decidedly underwhelming. Financial analyst firm Global Insight puts the U.S. economy in the danger zone, as GDP growth in the first half of 2008 (1.8 percent) is expected to be at its weakest since the last recession following the September 11 attacks. The culprit is thought to be housing, but effects of that market dip are widespread. Consumer spending growth is also predicted to decelerate from 2.8 percent in 2007 to 1.7 percent in 2008, and capital spending is expected to increase a lackluster 2.6 percent.

A cloudy outlook to be sure. Even if you’re not having financial difficulties now, you should be wary of and ready for a possible environmental shift. If you’re entering a cautious spending period, you must ensure efficient spending in all aspects of your business. Marketing budgets are often the first to get the axe, so when pressure’s on, behavioral targeting can be a wise choice to make sure no marketing dollar is wasted.

Economic pain points vary from industry to industry, but in general the Internet is a more efficient channel for media dollars, particularly for niche audiences. It’s certainly more measurable. With online media, marketers have the opportunity to start small, testing creative, ad placement, messaging, and more to see what works before making a larger investment. Further, even though online won’t always translate offline, many key lessons can be applied to offline media buys to make sure you’re spending wisely there, too. On the flip side, you can speed up the refinement of behavioral marketing results by sharing and incorporating any information gleaned from history, market research, or studies that can better define your audience behaviors. This may help to focus efforts on those segments that are closer to the buying decision.

The Internet offers many new ways to reach the traditional audience. Broadcast media is frequently found online these days, for example. Viewers watch or download for later viewing many primetime television shows, so you can still get ads in front of more Web-savvy members of the same audience via a less costly medium. Using behavioral targeting may allow you to extend spend to reach premium audiences without paying premium prices. Contextual buys can get pricey, especially on heavy traffic sites, but you don’t always have to pay for to advertise golf clubs. When cost is a primary factor you can find many golfers looking for a new nine iron when they’re browsing lower-cost sites or within their search stream.

Many behavioral targeting ad networks now offer full transparency in their site lists, so you can see exactly what you’re getting. As another bonus, since online media is often deployed in a test mode, online publishers have become accustomed to relaxed, shorter-term out clauses that fit the dynamic business environment. This provides flexibility to change and more choice in an unstable time.

If you must cut the marketing budget, it’s important to determine what you can afford to give up. Most marketers don’t want to be faced with cutting ROI (define) proven search programs, but search isolated from other online marketing efforts is less efficient. Also, if everyone turns to search, the bid auction can quickly become expensive.

One idea is to blend behavioral targeting with natural and paid search. Let natural search bring in people searching your brand terms, use paid search to gather category and product shoppers, then put budget toward retargeting to support conversion and retention efforts. This is just one approach to consider if you’re asked to stretch dollars and maintain results. Of course, this isn’t a one-size-fits-all solution. As always, results depend on campaign goals, competitive environment, the strength of your brand and site, and a host of other factors.

It’s all about efficiency. While a behavioral approach certainly offers advantages when budget is constrained, certain fundamentals must be applied to manage risk in any marketing program. As a first step, review your site against program goals. Is it ready to support your objectives? Make sure you’re dealing with knowledgeable partners, agencies, ad networks, and other publishers, so you can leverage what they know to improve performance. Make sure the creative is exceptional and you have enough on hand to rotate and learn. It’s the sum effect of attention to these individual elements that will produce the best results. Tight economic times or not, smart marketing wins out.

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