When the Going Gets Tough, The Tough Get Behavioral

As marketers prepare for 2009, here are some trends that will influence online marketing, including behavioral targeting.

Web 2.0 Meets Behavioral

Web 2.0 pundits are predicting that in a tough economy, more companies will turn to social networks for their marketing efforts because it’s cheaper than all other media. From my vantage point, the jury is still out as I’m seeing more of our clients hunker down into classic cost-per-lead (CPL) and cost-per-click (CPC) marketing to assure they get something for their media spends.

In early December, Media6° the advertising company that maps the social graph of the United States and uses this data to provide major brand marketers with scalable customized audiences, moved to full commercial launch based on successful beta tests with over two dozen well-known brands. Media6° has invested two years of research and development into its novel, patent pending technology. In a discovery with important implications for the emerging field of social media, Media6° demonstrated that a consumer who was connected to any firm’s existing customer (a “network neighbor”) responded to advertising from the firm at rates 2 to 30 times higher than consumers targeted using traditional demo or geotargeting techniques. This occurs because linked consumers share high degrees of homophily, the tendency of like-minded people to be attracted to each other, and evidence that similar psychographics engage in group purchase behavior. Media6° technology uses no consumer or publisher data to map the social graph or deliver its targeting solution. The numbers are impressive but will they play out?

And are social network participants even interested in ads? More than one-half of the United States population surveyed uses social networking sites, according to IDC, but ad dollars have not followed. The research company found more than 75 percent of social network site users logged in at least once a week and 57 percent did so daily. IDC also said more than 61 percent of those users spent more than 30 minutes per session on social network sites, and 38 percent remained parked for one hour or more.

Privacy

Controversy involving NebuAd, the company that has been using data gathered at the ISP level without user permission or knowledge, has fueled the fires of privacy concerns. NebuAd’s technology crossed the privacy line by making data anonymous only after it was gathered, as opposed to a behavioral targeting company, which never knows who you are in the first place. The information gathered here was far deeper than a behavioral targeting company would ever go.

Across the Atlantic, Phorm is experiencing a similar backlash for selling users’ browsing history to advertisers without the users’ knowledge.

But they are being lumped in with legitimate, above-board behavioral targeting providers because they fall under the broad umbrella of monitoring Web behavior? Nonetheless, consumers read the headlines, not the details, and seriously question the whole legitimacy and ethics of behavioral marketing.

Believable and readily acceptable definitions best practices are going to be critical going forward for behavioral to keep a strong footing in the coming year. To further refine best practices and privacy definitions for behavioral, the Network Advertising Initiative (NAI) and the Federal Trade Commission are in tussle that will probably continue on long into 2009.

Can We Scale?

Behavioral might be the silver bullet that makes marketing in a down economy far more cost effective, but does it have legs? Do networks and other sources of behavioral marketing offer the rollout potential?

As the ad networks become larger (more sites and consumers to predicatively analyze) and the more sophisticated modeling allows for larger pools of data to be brought into the analysis and interpreted, the scalability will increase. But it may take a while for media planners, who have been fighting the scalability issue for some time, to believe in the trend.

Behavioral marketing, in all of its definitions and guises, will be strong in 2009. A tough economy makes us all scrappy. We are all going to be searching for every way possible to market more cost effectively and with better performance.

Happy holidays and a happy New Year, everyone.