Be On Your Best Behavior

Published by on December 28, 2005

The ads around which Google has built its Web empire–and that Yahoo! and Microsoft yearn to match–have thus far revolved mostly around searches. But searching is only one of many popular Web-based activities.

More and more, content portals and publishers are realizing that they can spoon-feed us ads based on our other online behaviors–not just search queries–and get advertisers to pay a premium for the privilege of reaching such specific categories of people.

So behavior-based ad targeting is becoming the hot button for Internet media–a trend, along with its developing technologies, that promises to accelerate into the new year.

But turning seemingly random clues about the things we do online–comparison shopping, planning trips, getting dates, buying tickets and reading news, for example–is no easy task. The systems used to mine all that data are still in their infancy.

“The trick with behavioral-targeted ads is not just having a lot of data,” says Omar Tawakol, senior vice president of Revenue Science, a behavioral-targeting firm. “The vast majority of that data is not going to tell you the right thing, and knowing the difference between the gold and the false positive is huge.”

Dishing out targeted ads based on behavior may be in its early stages, but 2005 showed an awakening among content providers and advertisers. About 15% of medium- and large-sized advertisers tried a behavior-based campaign this year, up from 5% the year before, according to Harry Wang, an analyst with Parks Associates. He added that in the coming year, many more companies will start to experiment with such behavior-based models.

Revenue Science, which helps content publishers track information about readers and place ad inventory based on that information, has just received $24 million in venture capital funding., a competitor, announced that revenue was up 80% in the first quarter on behavioral products alone. And Yahoo! Vice President

Greg Coleman Greg Coleman proclaimed behavioral targeting to be, “The new, new thing at Yahoo!” at an advertising conference on Dec 1.

“What that really means is new sales,” says Yahoo! Chief Data Officer Usama Fayyad. “It is one of the fastest growing areas, and year-over-year revenue from it is significantly higher. The market has awakened, and it’s going to be our new big business, because advertisers are willing to pay a huge premium to reach individuals in unexpected places.”

“Click-through” rates on some types of behaviorally targeted ads can be 200% higher than normal ads, according to internal focus group studies cited by Fayyad.

“Yahoo! is signaling that they want to differentiate their advertising ability from Google’s ,” says Parks Associates’ Wang. “The portal company that innovates and demonstrates value-added search results to the advertisers will win the big contracts and the leadership position, but that’s only if behavioral targeting becomes the dominant ad format.”

This is something Yahoo! has seized upon, and the company could be establishing an early lead in this novel advertising category. “Google and Microsoft are not actively going out there and merchandising behavioral-targeted technology, but Yahoo! is,” says Tawakol.

Though Yahoo! has been using behavioral-tracking methods for the past five years, the list of trackable behaviors has grown to include news, finance and auto sites, history of ads clicked, shopping, maps, local content and movie and music content. If you’re a logged-in Yahoo! user, some of your registration data might be used to target you–but not your name, age or address.

Some of this data is kept for as long as 45 days, says Fayyad, but anything older than that isn’t useful.

“We think of it like you’re walking around at the mall, and you step into Nordstrom’s ,” says Fayyad. “A person who works there can walk up to you and ask you what you are interested in, and that’s not an intrusion. We think it is OK to observe all the data in the public-commerce area.”

Yahoo! draws the line at mail, medical data and any information pertaining to children. “That’s just nobody’s business,” says Fayyad.

But e-mail behavior can be targeted anonymously. One of the few clear ways Google tracks behavior is through keywords in G-mail messages. Ads pertaining to the content of mail messages are placed on the right-hand side of the page, but Google says human eyes don’t read the messages.

The idea that a Web company can store behavior profiles for each user always brings up privacy concerns, but Yahoo! and most other Web portals promote policies explaining that specific information on individuals won’t be turned over to advertisers.

Some 70% of Web users say they want to see privacy-enabling technology prevent the misuse of personal data, according to a December 2005 study from the Ponemon Institute, a privacy-management research group. Yet more than 50% of Web users say they’d prefer a banner ad targeted to their interests than a generic one.

In theory, a germane ad sounds more palatable than an annoying popup urging you to find your old classmates. But as in all advertising, timing is everything.

While a consumer may not mind being shown an ad for a trailer of a movie they’ve just read about, they’ll likely ignore the ad–and waste the advertiser’s dollars–if it pops up out of context, such as when that person is busy working. “This system has to be relevant for three parties,” says Revenue Science’s Tawakol. “It must work for the consumer, the advertiser and the publisher. And if it doesn’t, it will help them lose money instead of make it.”

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