After years spent taking aim, online publishers have finally started to hit the longstanding goal of interactive media: high-precision target marketing. Just in the last year, a number of major publishers have either deployed or started studying audience management systems—from companies like Accipiter, Revenue Science, and Tacoda—that track users' online behavior at a site in order to target and follow them with ads and promotions that are highly relevant to their interests. Of course, better targeting reaps higher CPMs for publishers, but the early adopters of these behavioral tracking systems are discovering several ways in which the next evolution of ad technology gooses the bottom line.
A sophisticated behavioral tracking system is a far cry from simply selling an airline ad space in your travel section. At WSJ.com, which uses Revenue Science, a user might hit the site's travel section five times a month, causing the sales team to define and cookie that reader as someone in the market for travel. The system then follows that user around the site during any visit and serves them a travel ad campaign, effectively increasing the available ad inventory for that category.
Randy Kilgore, VP of advertising at WSJ.com, says that not only can he get a premium CPM for that kind of precision targeting, but that it also broadens his site's appeal because now he can show that he not only has an audience of stock market mavens but also travel or car fans. "One of our main objectives was to give consumer advertisers a better opportunity on our site," says Kilgore. About 9% of ad sales at WSJ.com involve behavioral targeting.
"If content is the only way you have of segmenting advertising, your inventory is limited to that content and the page views on that content," says Jeff Webber, SVP and publisher of USAToday.com. "Behavioral targeting expands the publisher's inventory and from what we can tell it is also effective for marketers."
USAToday.com defined approximately eight behavioral segments of its audience—such as business readers, early tech adopters, etc.—that it could package to advertisers so that the ad inventory for the category would follow those segments around the site rather than simply serve them the relevant ads while they were in their favorite content pages. This technology lets an advertiser make better use of sequential ads as well, because it helps ensure that the marketer has a user for five or six consecutive page views rather than the one or two she might spend in one content area. According to Webber, three months into the system launch about 20% of ad buys at USAToday.com use behavioral targeting, which is an impressive rate of growth for a new ad product.
Many publishers' ad clients don't share the final results of these campaigns with them, but most clients are renewing enthusiastically. In fact, it appears that some advertisers and clients don't want publishers to know exactly how effective behavioral targeting can be because it could inflate prices.
The largest publisher with the most experience with this sort of audience segmentation is Belo Interactive, which has 34 Web sites serving TV and newspaper properties and was one of the first to deploy the Tacoda system. In one campaign for a car dealer, ads were targeted to visitors of the site's auto section during the past month, no matter where they traveled on the site. The response rate on the ad campaign was 7.7%, multiples higher than even good banner and rich media response rates. Better still, the measurable value of that targeted segment was astonishing, because the online ad run alone doubled the number of credit applications to the dealer and was responsible for 44% of all calls into the dealership, even though promotions were running on eight other offline ad platforms.
These are the kinds of metrics that advertisers are coming to expect and that online media is finally able to provide in a way few others can. Even without these results, says Linda Fiske, VP of audience development and management, at Belo Interactive, audience management systems are going to become de rigueur.
And, while this kind of audience management is not an online holy grail, it goes a long way towards distinguishing this medium from others and telling advertisers exactly what they want and need to hear in an era when media fragmentation threatens to make ad buying haphazard and inefficient. The whole idea behind behavioral approaches is that they target people much more precisely than ham-handed demographics or checkboxes on a registration form. At the same time, marrying ad servers to these profiles may be one of the best defenses against the dreaded MADD (Media Attention Deficit Disorder) because it bolts a marketer's message to a user no matter how capricious her clicking habits. In a fragmented mediasphere of shrinking niche audiences, ads have to get smarter, learn to follow consumers, and stop sitting next to relevant content waiting for user to show up…or not.