Behavioral Advertising: Wave of the Future? - Benefits and Risks of Behavioral Marketing
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Studies are starting to bear out the theoretical advantages of behavioral marketing. A study conducted in October of last year by Advertising.com showed a much higher conversion rate than contextual advertising. This means that behaviorally targeted ads save businesses and advertisers serious money by allowing them to be less wasteful in the money they spend.
Not surprisingly, Jupiter Research showed a significant increase in the number of advertisers using behavioral marketing in 2004 over 2003. Nevertheless, the research firm predicted that behavioral targeting will "never be a dominant force in online advertising." That's no surprise either, since there are a number of obstacles to behavioral marketing really catching on with both advertisers and consumers.
Let's start with consumer behavior and attitudes. I've already discussed that to some extent in the previous section. A little over a year ago, Jupiter Research reported that 39 percent of web surfers remove cookies from their computers at least once a month. That report sent a shock wave through the advertising industry, because many executives held the long-standing belief that users didn't even notice cookies, or at least ignored them.
Studies conducted since then show somewhat less extreme rejection. WebTrends reported that consumers reject about 12 percent of cookies, and the Interactive Advertising Bureau (IAB) reported similar figures at the beginning of June this year. The cookies in IAB's report were specifically third-party cookies -- those set by ad servers and analytics companies to track websites that users visit and ads they view. The study the IAB commissioned examined actual consumer behavior, rather than simply asking consumers whether they accepted or rejected cookies.
Another obstacle to behavioral targeting is that it currently works to target the computer rather than the specific user. Let's look again at our earlier example of an outdoorsman and a theater fan planning to visit South Florida. If they're roommates or a married couple who share a computer, ads intended for the outdoorsman might be shown to the theatergoer instead -- or vice versa. This kind of living situation is actually pretty common, and that kind of "misfiring" for behavioral targeting is certainly less than optimal.
Next: The Future of Behavioral Marketing >>
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