Yahoo has reached a new deal with Wal-Mart, under which the Yahoo’s sales force will sell display advertising inventory on Wal-Mart’s Web site. Yahoo will also work with Wal-Mart to leverage insights gained from consumer shopping behavior to better target advertising to consumers.
This deal represents the latest win for behavioral targeting — the practice of delivering ads to consumers based on their past behavior.
Reportedly, Wal-Mart will soon unveil a new Web site design that is more friendly to graphical advertising. By trying to “turn Walmart.com into a better marketing site,” the retail giant is showing just how “forward thinking” it is, said Todd Teresi, SVP of the Yahoo publisher channel.
For example, when a shopper puts a digital camera into a shopping cart and then takes it out, Walmart.com will be able to deliver an ad for a digital camera the next time that shopper returns to the site. If a shopper performs a search for digital cameras, an ad for digital cameras will be presented with the results.
“This is a huge deal for both Yahoo and Wal-Mart,” said Anil Batra, director of analytics and strategy at ZeroDash1, a Web analytics and search company. “This will define how e-commerce will move forward. [Behavioral targeting] is nothing new, but [now] it’s being done by two big players.”
In addition, Batra continued, the move reflects Wal-Mart’s desire to be competitive in the e-commerce field with Amazon, which has also been working on building its own behavioral targeting platform.
Behavioral targeting is still an emerging strategy, according to a spokesperson at the Search Engine Marketing Professional Organization (SEMPO).
In a recent state of the market survey by SEMPO, 40% of respondents surveyed said they are not currently employing behavioral targeting. However, four out of five said that they would be willing to increase their online advertising budget in order to add behavioral targeting to their pay-per-click campaigns.
The growing popularity of the strategy has drawn scrutiny from the Federal Trade Commission, which recently proposed self-regulatory guidelines for Web sites engaged in behavioral targeting that seek to address consumer privacy concerns.
Yahoo also recently began the national rollout of a program that enables retailers to deliver personalized newspaper circulars directly to consumers across the Yahoo Network. Yahoo began testing the program in the fourth quarter with two large retailers that it declined to name.
“Retailers are often looking to bring some life back to circulars later in the week,” said Steven Feuling, category development officer at Yahoo. By combining behavioral targeting with the ability to build creative on the fly, the circulation program can lengthen the life of a circular and deliver the right offer at the time that a consumer is displaying interest, he continued.
The circulars will be delivered as part of regular Yahoo ad units. As consumers click further into the process, they will eventually have an opportunity to click on a circular.
These are just the latest moves by Yahoo to bolster its standing as an advertising platform, after prolonged talks about Microsoft for some sort of partnership have broken down. It has also recently signed strategic deals with advertising consortium WPP Group and interactive agency Havas Digital. (See news briefs, p2.)
Other companies are also making moves into behavioral targeting. For example, Qponix, a new joint venture of e-commerce design firm Fry Inc. and Meijer, a Michigan-based supermarket chain, is trying to bring behavioral targeting to coupons. It has developed a widget platform that enables grocery stores to offer customers a recipe-finding widget; for example, one that lets consumers use coupons to find relevant recipes. Users can also find other items that are sale and create a shopping list.
Meijer has been testing the program under the name Meijer Mealbox since last year and is seeing coupon redemption rates around 20%, according to Corbin de Rubertis, president of Qponix. The chain of 182 stores plans to introduce other widgets this year.
Typically, “coupon redemption rates are miserable,” de Rubertis said, adding that in excess of 250 billion coupons are printed every year and redemption rates hover around 1%. What makes Qponix different is that it is targeting consumers at “the key moment when they are trying to decide what to eat,” he continues.
The Web-based platform also provides retailers and manufacturers important insight into the behavior of consumers as they plan their grocery shopping and make grocery purchases.
“This kind of smart ad or widget, that is delivering the right product at the right time, is the future of [online marketing],” Batra said. However, “there are so many companies popping up right now, it is difficult to know which ones have the [best] capabilities.”