Cybuy Surfs for Impulse Buyers
For a cut of sales, Cybuy, New York, will deliver offers on marketers' behalves using banners, buttons and any other advertising unit that proves to work.
Similar to transaction-enabled ads offered by rich media companies such as Excite@Home and Thinking Media Corp., Cybuy's ads will collect customer information and process orders without taking customers away from the sites where the ads are served - the beef with traditional banners always having been that clicking on them results in being whisked off to another site.
But where rich media transactional banners are simply order-taking tools, Cybuy's ads will have built-in targeting capabilities. And that's also the business proposition's biggest question mark- the way the targeting capability is built in.
Cybuy plans to target Web surfers using a database built by partner Engage Technologies Inc. that has yet to be commercially tested. Dubbed Engage Knowledge, the database comprises anonymous profiles of the surfing behavior of 30 million Internet users, according to Engage, a majority owned subsidiary of CMGI Inc.
The premise behind the database is that privacy-conscious Net users will never be comfortable giving up personally identifying data online. Engage places cookies (tracking technology) in computer hard drives to monitor Web surfers' clicking behavior. It then scores their interests in 800 marketing categories, including autos, consumer electronics and sports on a recency, frequency and duration (RFD) basis.
The idea is that as someone gets closer to buying say, a car, for example, they'll visit auto-related sites more frequently and the visits will last longer, resulting in a higher score in that category. Once they buy the car, their behavior will change and their auto-related scores in the Engage Knowledge database will drop accordingly.
Critics of the database say that without personally identifying data, it's impossible to know, for example, whether or not that Porsche buff is a 16-year-old kid.
"There's still a lot unproven about [Engage's profiling system]," concedes Sandra Robinson, president of Cybuy.
Still, if Engage's anonymous profiling works as advertised, Cybuy will be able to target niche audience members wherever they surf and, as a result, avoid paying a premium to find them in highly targeted content areas.
Early tests-the results of which Engage hopes to make public before year's end - are showing that click-throughs from profile-based targeting are the same as click-thoughs from content-related targeting, according to Betsy Zikakis, vice president of marketing, Engage Technologies, Andover, MA.
"If you can target sports enthusiasts on run of site the same as you can on sports pages, and you can pay a lot less for that inventory, needless to say your ROI goes up," said Zikakis. "As a marketer, it is so much easier to say 'I'd like my target audience please' rather than try to guess what sites they're looking at, and guess what areas they're looking at."
As a result, sites enabled with Engage profiles can conceivably charge more for run-of-site advertising because of their supposed ability to reach people according to their interests wherever they are.
For its part, Cybuy is banking that it will mean the ability to offer clients' products to consumers right at the point they're most likely to buy.
"We can find where its raining, find the customer who wants your umbrella, and sell your umbrella to them much more cost efficiently," said Cybuy's Robinson.
Since Cybuy is unknown to consumers, it plans to gain recognition by attaching its name to some of the country's best-known brands.
"To begin with, we need to associate our brand with classic sites," said Robinson. Much of the advertising will be served on the AdSmart Network which represents some 300 Engage profile-enabled online brands. Some of the more well-known sites in the AdSmart Network are E*Trade, National Geographic and Playboy Enterprises.
Believing its sweet spot lies in impulse sales, Cybuy is negotiating with a variety of unnamed retailers who are also well known and whose goods sell for in the $10 to $100 range
"We're talking to brand retailers who have strong name recognition in the marketplace," said Robinson declining to reveal names.
A wholly owned subsidiary of the U.K. bank NatWest Group, Cybuy plans to pass orders off to clients and use existing supply chains to fulfill orders where possible, but will supply customer-service and fulfillment services for those who need it. Cybuy also plans to create an in-house ad agency so it can change creative as needed.