 One of the latest marketing buzzwords to hit the conference rooms of Asia is behavioral targeting. In fact, recent seminars on digital marketing, mobile marketing, marketing effectiveness and web 2.0 have all featured speakers who have proclaimed behavioral targeting as one of the greatest marketing innovations for some time. The impact of behavioral targeting on marketing expenditures is expected to be significant. According to eMarketer, US spending for behaviorally targeted online advertising will increase by more than US$ 3.5 billion
between now and the end of 2012, and it offers many potential benefits: · For advertisers, effective behavioral targeting leads to ad campaigns that are more likely to sway their audience. · For publishers, it can mean making more money from undersold or unsold ad inventory. · For the public, it means the ad-supported Internet might become more relevant. Clearly, behavioral targeting is a force to be reckoned with. But, what is it, exactly? I have heard many definitions of behavioral targeting (not all of which have been correct, by the way), but the one I like best is that it’s the targeting of marketing and advertising messages based on the past behavior of an individual member of the prospective audience. This is in contrast to the definition of contextual targeting which is targeting marketing and advertising messages based on the environment or content that surrounds the message when it is viewed by that same individual. In short, behavioral targeting is driven by what an individual does and contextual targeting is driven by what an individual sees. Amazon.com uses both techniques when making recommendations to shoppers as to other products they might like to buy. For example, last week I was buying software for a new Mac, and when I added Office 2008 for Mac to my Shopping Cart, I saw two different types of offers. The first was ‘Other customers who bought this product also bought VMware Fusion’ – a great example of behavioral targeting since this message only appears to customers who have just bought a Microsoft software product for a Mac. The other was a link from MacLover entitled ‘Greatest Mac Software Hits’ which was a list of his or her ten favorite Mac applications – a clear example of contextual targeting since it’s relevant to all Mac software searches. So, is this new? Perhaps to some, but to a direct marketer, behavioral targeting is a fresh term for a modeling technique that has long been at the core of the most effective campaigns. This is our good friend, RFM, which helps us predict the next likely behavior of a customer based on three factors: the Recency, Frequency and Monetary value of his or her past purchases. Again, Amazon.com is a great example of RFM in action. Prior to my Mac software purchase, I had searched ‘Academy Awards DVDs’ as well as ‘DVD players’ so I saw a series of recommendations which appeared in the following order: · VMware Fusion & Apple Aperture 2.0 (based on ‘most recent’ data)· Old Country for Old Men & There Will be Blood (based on ‘most frequent’ data)· SONY DVD player (based on ‘highest monetary value’ data) What does RFM teach us? Our experience with RFM has taught us three key lessons that we can apply to the new world of behavioral targeting. · Impact Is Immediate: The RFM model is called RFM (and not FMR, MRF etc) for a reason - Recency is the most powerful factor in determining purchase propensity, followed by Frequency and Monetary value. As a result, it’s critical for us to build dynamic, reactive systems to serve the right messages to our customers at the right time.· Context Still Counts: Just because we’ve moved into the behavioral arena doesn’t mean we should forget that context matters. Once behavior has signaled that the time is right to contact the customer, it’s context that will give us relevance in our message.· Privacy Practices Are Paramount: The greatest threat to the future of behavioral targeting is the increasing push-back we’re seeing from customers regarding what data is being collected about them and how their data is being used. If customers refuse to allow us to get to know them better, the effectiveness of our marketing will be seriously impaired. Thus behavioral targeting is far more than just a clever buzzword. It is, in fact, an evolution of a marketing tool that has long been part of the foundation of the most effective marketing campaigns. If you’re not already on this bandwagon, it’s high time you got there! (By Lisa Watson) Lisa Watson is the managing director of Ibis Intelligence Services, chairman of the Direct Marketing Association of Singapore and co-chair of the Marketing & Communications Committee of AmCham Singapore. She also sits on the Advisory Board of the International Council of the US DMA and is a frequent speaker at industry events as well as a contributor to trade publications around the world. |
