Thursday, June 15, 2006

The Science Behind Online Advertising

Advertisers and Publishers must make "judgements" when confronted with the following mathematical problem...

"In order to maximize efficiency, and drive the best result -- which particular ad creative should be displayed at the right moment, to maximize my return on investment?"

The advertisers and publishers must also remember that ad size, marketing message, and time of day - as well as history and behavior of the web surfer -- are also critical attributes that go into the equation.

There are many elements and factors required to determing the best ad to display online. At its easiest, it is dizzying to try to factor every variable into this decision. But advertisers and publishers can breath easier today because these decisions can be boiled down to determining the most effective variable(s) to choose. Behavioral Targeting should be at the top of the list.

Recently a former co-worker of mine, Eric Eller, was interviewed by Mediapost for an article focused on Behavioral Targeting (BT). Eric is the Product Manager for BT at the largest online network,, and I think agree -- once you've read the following -- he is really a well thought-out, smart guy.

Below he discusses 3 different ways to target behaviorally:

Eller notes, "We've found in our practice there are three modes of behavioral targeting that lend themselves to scale. Retargeting, which we've found really beneficial especially to direct response, is one. [Then there's] post-keyword search, where keyword based query patterns are used to target more appropriate follow-up display ads. And, most recently, audience based targeting, in which we cluster types of consumers together by identifying similarities in online search, web surfing and buying patterns."

Just to reiterate, the three he focuses on are:
1. Retargeting
2. Post Search
3. Audience Based Targeting

Eller goes on to explain, "Retargeting is based on the understanding that users who visit an advertiser's Web site, but don't stay long enough to fill out a registration form or make a purchase, are, or should be, great future prospects. Identifying these users for retargeting and then subsequently serving ads to them across other sites has a demonstrable effect on bringing them back. One test we did on retargeted ads versus non-targeted ads showed a nearly 200 percent increase in click-through and 167 percent increase in conversion."

"We generally look to both retargeting and post-keyword search for more direct
response campaigns. For more branding-oriented campaigns, [there's] customer-based targeting, which allows advertisers to target by online behavioral patterns, grouped together by similarities to other groups of online visitors. For instance, we can identify people who've been intensely researching cars online over a certain time period. One test study we did involved a campaign for Volkswagen of America, which was launching a Jetta A4 model. We compared results obtained doing traditional demographic targeting of likely Volkswagen customers versus targeting of car buyers by previous online shopping behavior. The behaviorally targeted campaign scored 27 percent higher in information requests and a third higher in conversion rates."

This article is about the use of data. It's about the most efficient use of information: the use of cookie data.

Eric has described 3 ways to look at BT. He also is creating ways that leverage the use of data to benefit, consumers, publishers, and advertisers. The strategy called "Behavorial Targeting" -- is big and getting bigger.

When you're surfing online, see if you notice more relevant banners as the web continues to mature.

If Eric Eller has anything to do with it, I bet you will.


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