Hot on the consumer’s trail: Behavioral marketing provides sizzling results

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It’s a good time to be in the ultra-personal, targeted ad business: Sexy, sultry behavioral marketing has AOL, Time-Warner, Yahoo, Google, and Microsoft all digging deep in Nomex-lined pockets to ensure they have a zaftig-share of behavioral technology and talent tucked away safely in-house.

Yahoo announced this week they are buying sixth-largest U.S. ad network BlueLithium. Yahoo CEO Jerry Yang said in a press release Tuesday that BlueLithium’s talent and technology is going to be “an integral part of our drive to build the industry’s leading advertising and publishing network.”

According to comScore’s Media Metrix Ad Focus Rankings for July 2007, Yahoo is already the #3 ad network, while AOL owns #1 eye-ball delivery channel Advertising.com as well as Tacoda (as of yesterday). Within the past few months Publicis bought Digitas, Google has offered $3 billion for DoubleClick, and Microsoft spent $6 billion on aQuantive. Is it time to buy some #2 ValueClick stock? Better have a big appetite for the risk generated by a new round of shareholder suits and an ongoing FTC investigation.

So what do these firms and their clients know about marketing that you don’t, or should?

Behavioral marketing works very well, at least until people become immune to it, there’s a backlash against how creepy it can be, something new and better comes along, or all three.

For those who haven’t been paying attention to the relationship between all those ads competing for your attention and where you’ve been surfing lately, behavioral marketing zeroes in on where you’ve been, and what you want, including what you may not have told anyone else about your needs and relationships; that is, no one but the Internet. If you’ve named it on a search bar or found it online, they can track you down wherever you go, continuing to show you what these companies noticed you’re interested in.

A 2004 study by Advertising.com, #1 in terms of unique user visits on comScore’s latest list, showed what Robyn Greenspan of the ClickZ Network called “a definitive link between behaviorally targeted online ads and click-through (CTR) and conversion rates.”

According to Greenspan, Advertising.com “identified users that did not complete advertisers’ registration forms or make purchases. These behavioral observations allowed Advertising.com to serve customized ads to these users as they visited other sites across the network.”

You certainly can’t argue with conversion rates improvements like 2,232 and 3,130 percent. How does a 94 or 225 percent lift in click-through rates sound, or a dramatic reduction in cost per thousand (CPM) impressions?

According to AOL CEO and Chairman Randy Falco’s press release regarding the successful acquisition of Tacoda, “Behavioral targeting is a fast-growing part of the advertising business, as marketers increasingly look to get efficient and measurable results from their advertising dollars.”

Results that mean companies who spent only a few million on behavioral marketing last year will spend almost $4 billion annually on it by 2011, according to eMarketer.

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1 Comment

  1. Market Research Guy says

    That’s a bit creepy, that they can track us to that level. Then again, not surprising.

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