Forrester Expects Growth in Behavioral Ad Targeting

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Widespread adoption of online behavioral ad targeting is imminent and will cause search engine marketing agencies to expand their offerings, sparking the rebirth of the online marketing suite, according to a new report from Forrester Research.


The company's report, "The Reality of Behavioral Ad Targeting," defines online behavioral ad targeting as aligning ads with users whose online behavior implies interest in a particular product or service. Advertisers apply behavioral targeting when they buy media on sites that attract users who have shown target behaviors, even if the site is not contextually relevant to their ad.


For example, a user who has frequented Kelley Blue Book, General Motors' FastLane blog and cars.com's used-car finder may see an ad for a new Toyota Highlander the next time he logs onto The Financial Times site.


Forrester, Cambridge, MA, surveyed 259 marketers in fourth-quarter 2005 to learn whether recent buzz about online behavioral ad targeting was more than just hype.


"We learned that marketers prefer to target by context and behavior over demographics and that they are actively using both advanced targeting methods," said Shar VanBoskirk, Forrester analyst and author of the report.


Reasons for this include that search marketing has been successful and has proved that targeting ads by behavior works, the report said. Also, online media prices are rising, and as more marketing dollars shift online, competition for the same media space increases, driving up online CPMs. Behavioral targeting is attractive because it identifies which less-expensive, lower-tier media reaches behaviorally attractive customers, the report said.


Technology also has improved, allowing detailed behavioral profiles based on cross-site data like browsing activity, registration information, ad response and blog postings.


Though behavioral targeting can increase the effectiveness of online advertising, the report said, it is not a panacea. Marketers need to layer behavioral targeting on top of demographic and contextual targeting efforts.


Publishers who want to define and sell the behavioral profiles of their site users should determine first whether behavioral targeting makes sense for their site, sell access to specific customer segments or join a network to expand their efforts.


Finally, the report found that the rise of behavioral targeting further marks the ascendancy of data-driven advertising approaches and the convergence of online keyword search, contextual and display ad buys. As data becomes more central to online media decisions, expect that SEM agencies will offer behavioral and contextual services and that the online marketing suite will be reborn.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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