Thursday
The Science of Targeting
What exactly is "behavior," and what's driving the growth of behavioral marketing?
Revenue Science, Inc. is among a group of service providers -- including Claria and TACODA Systems -- that offer publishers the technology to deliver behavioral targeting to their advertisers. iMediaConnection talked with Revenue Sciences' Bill Gossman, CEO; Omar Tawakol, SVP marketing; and Nick Johnson, SVP of business development.
iMediaConnection: Describe how your company defines behavioral marketing.
Tawakol: We use the term "behavioral targeting." The basic goal of advertising has remained unchanged over the years, and that's to communicate your message to the right audience. Behavioral targeting is the truest way for marketers to understand the interests of consumers and to target them based on those interests. It's all about relevancy. Search marketing works because it is relevant. When someone enters a search term, that's a behavior. We apply the same thinking throughout the whole advertising funnel, leveraging people's behaviors to sort them into audiences and ultimately deliver more relevant advertising.
iMediaConnection: What exactly are you referring to when you use the term "behavior?"
Tawakol: What consumers explicitly say when they register, what they actually do online -- where they click and how often, and how they do it, for example. If they're logging on at work at a Fortune 500 company or from home via dial-up. All three of these factors are part of the behaviors that are looked at to configure an audience.
iMediaConnection: So, say I'm a company that sells a consumer packaged food product. How would I use behavioral marketing?
Tawakol: That's a good question. In the past, a CPG advertiser targeting women would probably go to the lifestyle section of a site as a way to target women. In reality, however, probably 45 percent of the people reading that section are men. Now the same advertiser could look specifically for, say, new Internet moms by tracking the activities of someone doing product searches for baby materials, accessing information about baby care and so on.
Gossman: By IDing actions, marketers can get their messages to a broader base of like-minded people.
iMediaConnection: Could you provide me an example of a marketer that has used behavioral targeting and what type of results they received?
Tawakol: Computer Associates was interested in finding technology decision makers. We were able to determine that these people were more likely to read technology content on Wall Street Journal's site than the average reader. So Computer Associates bought access to these people, served its ads only to them, and cut back tremendously on waste.
iMediaConnection: How do you convince a marketer that ordinarily defines its target by demographics that this might be a better way to go or a supplemental tactic?
Tawakol: Our publishing clients use us for both. It's about building up reach to the right people rather than filtering down. Demographics gives you one group of people, and then behavioral targeting provides more clues, resulting in more value. Take the airlines. They want to reach people who travel a lot. One way to reach these people is by targeting by age and income. But a greater indicator that someone tends to travel a lot is if they read a lot about travel.
iMediaConnection: Way back when, at the beginning of online advertising, the promise was of more precise targeting using cookies, customer profiling, etc. The industry had to move away from this because of privacy fears. How is today's behavioral marketing different than those beginning efforts?
Tawakol: It's different on many fronts. You mentioned privacy. What's being done now is looking deeply within one publisher at a time, not watching activity across the Net. Plus, it's all anonymous. It's not tied to any personal information. Me knowing your name isn't relevant. Knowing your interests is. Behavioral targeting started when advertising was crashing, when reach was too small and price was too high.
Gossman: Another factor: $2.2 billion was spent in Q4 2003 (according to the IAB) for online advertising. There's a resurgence and that has everything to do with keyword search. Google and Overture have successfully regenerated the market. Behavioral targeting and keyword search are complements. Search is one form of behavioral marketing. It captures intent, representing a small sliver of what people do on the Internet. Behavioral targeting compliments keyword search because then you can interface with consumers at every level of the purchasing funnel. It's a valuable tool to a market that's growing rapidly. With keyword search, you have individuals looking for a group of marketers; with behavioral targeting, you have marketers looking for an audience with a specific composition.
iMediaConnection: A large part of behavioral targeting is determining what site data are useable. How do you distinguish actionable data from information that isn't as valuable?
Tawakol: You're getting at the heart of what we do. We determine relevance -- relevance to a person rather than a place. That's complicated for someone in a publishing environment to do, so we provide the technology that simplifies the process. It's about composition. That's a metric used offline a lot, for magazines for example, that we've translated online. We work with our publishers to show what behaviors get the highest composition. We have compiled best practices on how to design high composition segments and how to use third party survey capabilities to benchmark the composition of segments. For example, we may know that a reader of a car classified section is more likely to be in-market for a car, but a survey would validate that the composition of such a segment is several hundred percent better than the composition of ROS.
iMediaConnection: What are many publishers and/or marketers not doing correctly in terms of behavioral targeting?
Tawakol: This is a new skill set for publishers, so we're involved with leveraging the experience we have with partners, sharing best practices and creating standardization. That's one of the biggest challenges -- delivering consistency. We expect a publisher to have a learning curve. By fully aligning our pay with the publisher's success we are incented to accelerate that learning process.
Gossman: In fact, that's one of our primary tasks, to work with the agency side to make them aware of the capabilities provided and help create a demand for publishers.
iMediaConnection: Is the use of behavioral targeting growing?
Gossman: It may be self-serving of me to say it but, yes, it's growing.
Johnson: Behavioral targeting was ahead of its time, but we're now delivering a technology and service that make it actionable. In watching what happens, we see an interesting ripple effect. As new publishers sign on, we see more demand from advertisers.
iMediaConnection: So who is driving the growth of this? Publishers or agencies and clients asking for it?
Johnson: In every RFP that is written, there's a request for an audience, advertisers say, "We want this type of buyer." Agencies are begging for an audience and publishers have learned to respond with things like categories and keywords. Now they also have behavioral targeting. As more advertisers realize this is a better, more direct way, we see them driving demand.
That being said, publishers have lots of inventory that is undervalued using the "place" model. That's why there's such a thing as run-of-site. This model makes some of that inventory high-value, so the demand is being pushed from both sides.
iMediaConnection: Is there something beyond behavioral marketing? Does online advertising have another level?
Tawakol: If you tie this all together, both advertisers and publishers want to maximize their yield. Publishers are now selling by place, audience, calendar -- whatever can make them the most money. At some point the publisher is going to want a solution that maximizes the yield of every impression regardless of how the campaign was sold. The advertiser, on the other hand, wants the highest ROI. They may buy a bundle which includes place, demographics, and behavior but it all has to work together to drive the best ROI.
Revenue Science, Inc. is among a group of service providers -- including Claria and TACODA Systems -- that offer publishers the technology to deliver behavioral targeting to their advertisers. iMediaConnection talked with Revenue Sciences' Bill Gossman, CEO; Omar Tawakol, SVP marketing; and Nick Johnson, SVP of business development.
iMediaConnection: Describe how your company defines behavioral marketing.
Tawakol: We use the term "behavioral targeting." The basic goal of advertising has remained unchanged over the years, and that's to communicate your message to the right audience. Behavioral targeting is the truest way for marketers to understand the interests of consumers and to target them based on those interests. It's all about relevancy. Search marketing works because it is relevant. When someone enters a search term, that's a behavior. We apply the same thinking throughout the whole advertising funnel, leveraging people's behaviors to sort them into audiences and ultimately deliver more relevant advertising.
iMediaConnection: What exactly are you referring to when you use the term "behavior?"
Tawakol: What consumers explicitly say when they register, what they actually do online -- where they click and how often, and how they do it, for example. If they're logging on at work at a Fortune 500 company or from home via dial-up. All three of these factors are part of the behaviors that are looked at to configure an audience.
iMediaConnection: So, say I'm a company that sells a consumer packaged food product. How would I use behavioral marketing?
Tawakol: That's a good question. In the past, a CPG advertiser targeting women would probably go to the lifestyle section of a site as a way to target women. In reality, however, probably 45 percent of the people reading that section are men. Now the same advertiser could look specifically for, say, new Internet moms by tracking the activities of someone doing product searches for baby materials, accessing information about baby care and so on.
Gossman: By IDing actions, marketers can get their messages to a broader base of like-minded people.
iMediaConnection: Could you provide me an example of a marketer that has used behavioral targeting and what type of results they received?
Tawakol: Computer Associates was interested in finding technology decision makers. We were able to determine that these people were more likely to read technology content on Wall Street Journal's site than the average reader. So Computer Associates bought access to these people, served its ads only to them, and cut back tremendously on waste.
iMediaConnection: How do you convince a marketer that ordinarily defines its target by demographics that this might be a better way to go or a supplemental tactic?
Tawakol: Our publishing clients use us for both. It's about building up reach to the right people rather than filtering down. Demographics gives you one group of people, and then behavioral targeting provides more clues, resulting in more value. Take the airlines. They want to reach people who travel a lot. One way to reach these people is by targeting by age and income. But a greater indicator that someone tends to travel a lot is if they read a lot about travel.
iMediaConnection: Way back when, at the beginning of online advertising, the promise was of more precise targeting using cookies, customer profiling, etc. The industry had to move away from this because of privacy fears. How is today's behavioral marketing different than those beginning efforts?
Tawakol: It's different on many fronts. You mentioned privacy. What's being done now is looking deeply within one publisher at a time, not watching activity across the Net. Plus, it's all anonymous. It's not tied to any personal information. Me knowing your name isn't relevant. Knowing your interests is. Behavioral targeting started when advertising was crashing, when reach was too small and price was too high.
Gossman: Another factor: $2.2 billion was spent in Q4 2003 (according to the IAB) for online advertising. There's a resurgence and that has everything to do with keyword search. Google and Overture have successfully regenerated the market. Behavioral targeting and keyword search are complements. Search is one form of behavioral marketing. It captures intent, representing a small sliver of what people do on the Internet. Behavioral targeting compliments keyword search because then you can interface with consumers at every level of the purchasing funnel. It's a valuable tool to a market that's growing rapidly. With keyword search, you have individuals looking for a group of marketers; with behavioral targeting, you have marketers looking for an audience with a specific composition.
iMediaConnection: A large part of behavioral targeting is determining what site data are useable. How do you distinguish actionable data from information that isn't as valuable?
Tawakol: You're getting at the heart of what we do. We determine relevance -- relevance to a person rather than a place. That's complicated for someone in a publishing environment to do, so we provide the technology that simplifies the process. It's about composition. That's a metric used offline a lot, for magazines for example, that we've translated online. We work with our publishers to show what behaviors get the highest composition. We have compiled best practices on how to design high composition segments and how to use third party survey capabilities to benchmark the composition of segments. For example, we may know that a reader of a car classified section is more likely to be in-market for a car, but a survey would validate that the composition of such a segment is several hundred percent better than the composition of ROS.
iMediaConnection: What are many publishers and/or marketers not doing correctly in terms of behavioral targeting?
Tawakol: This is a new skill set for publishers, so we're involved with leveraging the experience we have with partners, sharing best practices and creating standardization. That's one of the biggest challenges -- delivering consistency. We expect a publisher to have a learning curve. By fully aligning our pay with the publisher's success we are incented to accelerate that learning process.
Gossman: In fact, that's one of our primary tasks, to work with the agency side to make them aware of the capabilities provided and help create a demand for publishers.
iMediaConnection: Is the use of behavioral targeting growing?
Gossman: It may be self-serving of me to say it but, yes, it's growing.
Johnson: Behavioral targeting was ahead of its time, but we're now delivering a technology and service that make it actionable. In watching what happens, we see an interesting ripple effect. As new publishers sign on, we see more demand from advertisers.
iMediaConnection: So who is driving the growth of this? Publishers or agencies and clients asking for it?
Johnson: In every RFP that is written, there's a request for an audience, advertisers say, "We want this type of buyer." Agencies are begging for an audience and publishers have learned to respond with things like categories and keywords. Now they also have behavioral targeting. As more advertisers realize this is a better, more direct way, we see them driving demand.
That being said, publishers have lots of inventory that is undervalued using the "place" model. That's why there's such a thing as run-of-site. This model makes some of that inventory high-value, so the demand is being pushed from both sides.
iMediaConnection: Is there something beyond behavioral marketing? Does online advertising have another level?
Tawakol: If you tie this all together, both advertisers and publishers want to maximize their yield. Publishers are now selling by place, audience, calendar -- whatever can make them the most money. At some point the publisher is going to want a solution that maximizes the yield of every impression regardless of how the campaign was sold. The advertiser, on the other hand, wants the highest ROI. They may buy a bundle which includes place, demographics, and behavior but it all has to work together to drive the best ROI.
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