Arguably the best idea I’ve ever had was Centrport. The idea behind CentrPort was to collect data from different customer interaction points and use that data to refine the customer experience across all of those platforms.

My platform was designed to be customer-centric within a company. For example, if you called the call center with pre-sale questions about a product or service, the next time you visit a website in the ad networks we worked with you would see banners (there were no real text links at the time) specifically designed to sell you that product or service.

While I was chairman of the company I found that our customers were more interested in the analytics than the advertising delivery. Our customers were interested in our taking the data from the customer interaction points and performing an analysis that included certain conclusions based on the data. For example, if multiple users visited the product description and product sales page multiple times but didn’t buy anything (convert), we might conclude that there’s something missing on those pages.

If you take the CentrPort platform and extend it across all websites, keeping it customer-centric you have modern day behavioral targeting, which relies on making conclusions based on user behavior.

For example, if someone visits several sites related to baby clothes and a site on setting up a baby shower, we might conclude that the person or someone close to that person is having a baby. We might then serve ads related to babies and baby care.

In behavorial targeting the ads are user centric, meaning that the site the user is visiting has no bearing on the ad they are served — the ad is based on the conclusions made by the analytics done on the site and page visitations of the user. Some behavioral targeting specialists also add user demographic and psychographic information they get voluntarily from the user or from outside databases.

Contextual advertising is page centric, meaning that the ad is served based on the subject of the page the user happens to be on, with no further consideration of that particular user.

Both rely on context, but use a different definition. What it comes down to is which is more important — the user’s interests or the site and page they are visiting?

Well, if you listen to companies like Tacoda that are in this space, it is the page, and behavioral targeting increases sales up to 50%. I’ve since read articles that claim 188% and more.

I think that you need look no further than one of the most popular affiliate programs on the Internet to get your own answer — Chitika. In my post Chitika — What Went Wrong?, I asserted that the reason Chitika had so many clicks but not many sales is that not only do you need to be on the right page, you need someone who is ready to buy the product that Chitika displays in their MiniMall ad. That is why shopping.com merchants are willing to pay for clicks from that site — if you’re there you’re serious about buying, not looking.

So if you’re selling stereos or PCs, my instinct tells me you won’t get much more out of behavioral targeting than you would finding sites where people in a buying mood hang out. On the other hand, you might want to try finding someone who has visited three PC review sites and catch them on the fourth. That’s behavioral targeting. On the third hand you might also identify a PC review site and put the ad there. It will be cheaper.

If you’re Snapple trying to foist coupons onto a certain demographic group, you’ll probably be able to get a more diverse sample by using behavioral targeting to identify them and an ad network with wide reach to chase them with advertising.

There is also some basic behavorial targeting implied in contextual advertising — the fact that the person is on that page reflects an interest in the subject covered on the page.

I’d like to see a network that combines the two — an AdSense-like PPC keyword bidding system that identifies the best page for the ad, and a behavioral database that identifies the best person to serve it to. That way we serve the right user on the right site.

It looks like TACODA is getting there:

TACODA plans to launch an audience-centric ad network where ads will be sold in a Web-based auction. TACODA’s network will enable direct marketing and search advertisers to use behavioral targeting in combination with demographic data to reach defined audience segments of significant size across a vast network of quality publisher sites initially to include numerous sites that are already TACODA AMS customers.

TACODA’s network will launch offering text-based, pay-per-click ad units that will be sold in an open bidding auction process. The ads will be served to users wherever they are on Network sites enabling extremely fast delivery of highly relevant messages.

It looks like you would be buying profiles that get served your ads no matter where they are on the network.

Google and Yahoo are also moving toward employing behavioral targeting. Both offer limited demographic targeting that combines the traditional keyword model with a basic demographic targeting algorithm that chooses sites to serve the ad based on some limited choices you make.

Not bad for a first shot, but it falls short. They are using the keywords to identify the user, effectively saying that being on the page with those keywords is the behavioral targeting — if the user is on the page, they are interested in its subject. Your further “demographic” targeting just eliminates some of the sites with that keyword.

Which targeting is more effective?

Jennifer Slegg at JenSense featured an Outsell survey that asked advertisers which ads were Extremely or Somewhat Effective, here are the results:

Google 46.8%
Yahoo! 40.1%
Other 34.4%
Behavioral Ads 44.2%

Interesting. Behavorial ads are right up there, better than Yahoo and almost as good as Google. I think that since behavioral targeting is in its infancy this number will go up dramatically. I would also bet that Google, YPN and others will obfuscate, combine and converge behavorial and demographic targeting to protect their profits, products and franchises.

So…if you have AdWords or YPN you should study their demographic targeting areas and visit some of the other networks to get some idea of what’s coming and what it can do for you. You might even experiment with some of the newer networks.

Until my dream network comes along, you can do some of your own behavioral and demographic research so you can manually “target” your ads. That’s my next post.

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This entry was posted on Tuesday, April 4th, 2006 at 9:39 pm.
Filed under Pay per click, Internet Marketing.
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