Behavioral Targeting Delivers The Goods
Thursday, March 25, 2010 Behavioral advertising is working according to a survey from the Network Advertising Initiative (NAI). That’s no news flash on its own but the degree of success is. The survey, conducted with 12 advertising networks, shows that conversion rates for the targeted ads are 6.8%, compared to 2.8% for the nontargeted. That means that consumers who click on ads targeted specifically to them are more than twice as likely to buy the advertised product. Publishers, too, are seeing the benefits of behaviorally targeted ads. The average cost per thousand clicks of a behaviorally targeted ad in 2009 was $4.12, up 108% from a run of the network ad sold in the same year. The study by the NAI, an association of advertising networks, data exchanges and marketing analytics services, shows that behavioral ads are a small but fast-growing part of their business. For nine of the advertising networks surveyed, the ads brought in 18% of their collective $3.3 billion in revenue last year. The survey supports the ad industry's case for behavioral targeting before Federal regulators and policymakers introduce Internet privacy regulation. Policy discussion around advertising and privacy has thus far lacked enough data on the value of behavioral ads to publishers, ad networks and consumers, says Howard Beals, a commissioner of the NAI study and former director of the Federal Trade Commission's Bureau of Consumer Protection. The FTC is expected to err on the side of consumer protection and may prohibit behavioral targeting not voluntarily chosen by consumers.
“The study demonstrates the increasing significance of behavioral advertising to the economic model supporting free online content and services for consumers," says Charles Curran, executive director of the NAI. | |
Post a commentComments (8) | |
Eric Porres: Let\'s be clear of what\'s reported from the NAI as significant vs. directional. This is from the NAI release:
\"Data from a smaller subset of the survey respondents suggested that users who clicked on a behaviorally-targeted ad were more than twice as likely to complete a transaction or sale with that site than those who clicked a standard run-of-service ad (6.8% vs. 2.8%).\"
\"Suggested\" in statistical terms means that there wasn\'t enough reliable information to put a firmer stamp on the results. The way the results were reported here as well comingle \'transaction\' and \'buy.\' A transaction can be as simple as a sign-up or some action other than purchase.
Net net = BT can be a powerful play in an arsenal of marketing tactics, but we need to be careful not to read too much into the tea leaves without looking at the whole batch of data to draw (or hold back) conclusions as reported here.
Eric Porres
CMO, Lotame Solutions, Inc.
http://www.lotame.com
March 26, 2010, 05:58 PM
Jason: Wait, let\'s re-read that sentence: \"The study by the NAI, an association of advertising networks, data exchanges and marketing analytics services...\". Oh, so the people who have the most to gain are the ones funding and releasing the study. I get it now...
March 26, 2010, 05:58 PM
Jason: Wait, let's re-read that sentence: "The study by the NAI, an association of advertising networks, data exchanges and marketing analytics services...". Oh, so the people who have the most to gain are the ones funding and releasing the study. I get it now...
March 26, 2010, 12:41 PM
Celia: dave, when you couple the ridiculously low click thru rates (which were not shared in this piece) with even a 6.8% conversion rate, you are likely getting an overall failure rate of 98-99%. Sure, 10% success is strong. That\'s not even close to what you are getting here. Check the math.
March 26, 2010, 10:33 AM
James Oppenhiem, Peer39: Great post! Nice to see that cookie-based behavioral targeting has been shown to be an effective and efficient method of ad targeting. However, recent activity from the FCC has indicated that many online users are uncomfortable with targeting solutions that use their behavioral data. There are alternative targeting options, like semantics, that generate great results by targeting ads to the meaning and sentiment of web content. Semantic targeting does not utilize user data or cookies, and is only concerned with optimizing the harmony between the message of content and the adjacent ad.
March 26, 2010, 08:53 AM
dave nelson: Celia, there are very few marketing channels where success rates are higher than 10%, and you can bet those are expensive. It's all about how much it costs to acquire a customer and then how much they are worth.
March 26, 2010, 08:02 AM
MS: Who were the 12 networks participating in this study?
March 26, 2010, 08:02 AM
Celia: Ok...but, how many people are clicking on the ad? When you combine that with even a 6.8% conversion rate, you still are in the high 90% failure rate. Sorry, that I can\\\'t get excited by that. This reminds me of the days when marketers were still trying to clutch to direct mail as an effective channel. Well, I guess happiness is a low base.