The term ''behavioural targeting'' is making the rounds of the on-line advertising industry, and the technology behind it could dramatically change both the Web surfing experience and the way businesses advertise on-line.
The concept of behavioural targeting is simple. Internet technology companies such as Tacoda Systems Inc. and Revenue Science Inc. team up with Web publishers to anonymously track how consumers behave while surfing, including the pages they frequent and the type of content they read. That information is merged with data such as postal or zip codes, age and gender -- which Internet users volunteer -- and used to help advertisers deliver "targeted ads" to consumers wherever they are on a site.
The advantage of the system for marketers is that targeted ads produce higher response rates than those delivered at random, according to Dave Morgan, chief executive officer of Tacoda. "Ads targeted to people always outperform ads targeted to pages on-line. This is true both for advertisers trying to deliver brand messages, and those trying to drive response or sales."
Since behavioural technology means less clutter and fewer irrelevant ads on-line, consumers benefit as well, advocates say.
"Behavioural marketing delivers ads that are personally relevant," Mr. Morgan says. "I hope consumers will realize that targeted ads on publisher sites are designed to enhance their experience."
So far, consumer reactions to behavioural targeting have been mixed. A recent survey by on-line ad network Burst! Media LLC indicated one-in-five respondents would be willing to have their information tracked if it led to more relevant advertising.
"That's pretty amazing," says Burst's Chuck Moran, "since respondents were not prompted by visual cues and had to envisage for themselves what their Web surfing experience would be like."
More than 56 per cent of users polled by Burst!, however, said they would not approve of behavioural data being collected for advertising purposes. That number may come as a surprise to advertisers and publishers who have already tested the technology. Campaigns run to date have boasted high response rates, indicating a generally positive reaction on the part of consumers.
In a Snapple Beverage Corp. campaign launched earlier this year on women's Internet network iVillage, for instance, ads for its Snapple-a-Day meal replacement drink were delivered through behavioural targeting to people who had previously visited the diet and fitness section of the site, but who were reading other sections of iVillage at the time the targeted ad was served up. These ads were found to be more effective than those simply placed permanently within iVillage's diet and fitness section. According to data on the campaign from research firm Dynamic Logic Inc., 76 per cent of consumers who received targeted ads displayed an awareness of them, against 66 per cent among non-targeted consumers. Thirty-six per cent of targeted readers reported a favourable impression of the brand upon viewing the ad, against 21 per cent in the non-targeted group; and intent-to-purchase based on the ad was 37 per cent for targeted readers against 29 per cent among non-targeted consumers.
Despite encouraging results such as these, few advertisers are using behavioural targeting at this point. Internet research firm Jupiter Research reports just 10 per cent of advertisers used the technology last year and 16 per cent planned to employ it in 2004.
"This year is a test year," says Nate Elliott, an associate analyst with Jupiter, noting that the concept of behavioural targeting has been around for years but the technology as it relates to advertising is "nascent."
Adoption is sluggish among publishers, as well. In the United States, major websites such as BusinessWeek On-line, About.com, FoodNetwork.com and MarketWatch.com have embraced the technology, but Canadian publishers are only beginning to take interest.
Jeff Lancaster, director of tech business development with 24/7 Canada Inc., says the Internet firm is in talks with several clients about introducing its behavioural product, Insight ACT, into their sites. "Publishers are looking at it as a potential new sales tool that will allow them to go out and capture more market share and budget in the on-line ad world," he says.
Canada's most popular source for weather information on-line is also planning to get on board, likely working with its current ad server, American ad management firm Accipiter Solutions Inc. Taylor Emerson, vice-president and general manager of interactive services with The Weather Network, calls behavioural targeting the "hot Internet advertising child of the last couple of months. Everyone is looking at it," he says.
"As more sites sign up and advertisers test [the technology]," Jupiter's Mr. Elliott adds, "advertisers and publishers will reach a comfort level. There won't be so many questions and issues along the way."
