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TARGETINGTARGETINGBEHAVIORALBEHAVIORALTHE STATE OF ONLINE MARKETING:THE STATE OF ONLINE MARKETING:
AND OTHER KEY TRENDSAND OTHER KEY TRENDS
2
Advertisers are spending more and more online as a result of increased Internet penetration and media usage.
Online Penetration in Western Europe, 2004 to 2010
Source: Jupiter Research, June 2005
THE STATE OF ONLINE MARKETING
0%
10%
20%
30%
40%
50%
60%
70%
2004 2005 2006 2007 2008 2009 2010
Total Online Advertising Revenues in Western Europe, 2003 to 2009
Source: Jupiter Research, August 2004
€ 0.0
€ 0.5
€ 1.0
€ 1.5
€ 2.0
€ 2.5
€ 3.0
€ 3.5
€ 4.0
€ 4.5
€ 5.0
2003 2004 2005 2006 2007 2008 2009
3
Online spending will continue to increase, due to new opportunities provided by such emerging marketing tactics as behavioral targeting.
Top-Performing Online Tactics as a % of Respondents
Source: MarketingSherpa, 2005
Email house list
Paid search
Behavioral targeting
Affiliates
Rich media ads
US Behavioral Targeting Ad Spending
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2003 2004 2005
In M
illio
ns
Source: eMarketer, 2004
THE STATE OF ONLINE MARKETING
4
WHAT IS BEHAVIORAL TARGETING?
Behavioral targeting reaches users whose previous actions indicate that they are interested in a given product or service.
Adware Solutions Site-Side Solutions Network Solutions
Targets ads via software that users
download onto their computers.
Enables publishers to target audiences within
their site based on surfing behavior.
Targets specific audience behaviors across a network
of websites.
NEWS
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Adware solutions are highly targeted and have significant reach, but are prone to privacy issues and a high churn rate.
ADWARE SOLUTIONS
Behavioral Targeting via Downloadable Software
Consumers agree to receive
advertising in order to download free
software.
Adware programs track user activities
and deliver pop-up ads based
on behavior.
Advertising Professionals’ Opinion Regarding the Use of Adware
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Strongly Opposed
Somewhat Opposed
Somewhat Supportive
Strongly Supportive
Source: AAF, November 2004
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Site-side solutions are highly targeted and increase the value ofpublishers’ run-of-site inventory, but provide limited reach for advertisers.
SITE-SIDE SOLUTIONS
Lift in Brand Metrics – Behavioral vs. Content Targeting on iVillage
0%
10%
20%
30%
40%
50%
60%
70%
80%
Brand Awareness
Behavioral Targeting
Content Targeting
Purchase Intent
Brand Favorability
Source: Dynamic Logic
Behavioral Targeting within a Single Website
Inventory within the travel section of a news website
can often book quickly.
Behavioral targeting reaches
this “travel” audience across
the publisher’s site.
7
Capitalizing on Behavior on Third-Party Websites
Pixels on publisher sites are used to create behavioral
segments based on site activity.
Advertiser campaigns are served across
websites to their desired segment.
Capitalizing on Behavior on the Advertiser’s Website
Pixels on advertiser’s site anonymously
identify activity, e.g., researched flights.
Ads sent to those users after they exit the site and visit sites within
the network.
Network solutions overcome the challenges of alternative providers intheir ability to deliver a highly targeted audience with sizeable reach.
NETWORK SOLUTIONS
Network Behavioral Targeting vs. Single Site Content Sponsorship
Source: 24/7 Real Media
Single Site Content Sponsorship
CPM CTR
Network Behavioral Targeting
Lift in CVRLift in CTR
3,130%225%Advertiser C
2,232%94%Advertiser B
167%192%Advertiser A
Percent Lift – Behavioral vs. Run of Network
Source: Advertising.com
8
Behavioral targeting delivers unprecedented relevancy, response and ROI for online advertisers and publishers.
WHY THE RISE IN BEHAVIORAL TARGETING?
Source: eMarketer, September 2004
Why Behavioral Targeting is Hot
Increased spending by traditional advertisers who rely heavily on targeting
Increase in online spending leadsto sold-out inventory on some sites
Success of contextual and search has marketers demanding more relevant advertising
9
Increased spending results in valuable “content” selling out. Behavioral targeting reaches users across content based on observed interests.
WHY THE RISE IN BEHAVIORAL TARGETING?
Percent Sold Inventory, 2003 – 2005
Source: AdRelevance, house ads versus non-house ads
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q2’2003 Q1’2004 Q1’2005
US Online Advertising Spending, 2003 – 2008 (in billions)
$0
$5
$10
$15
$20
$25
2003 2004 2005 2006 2007 2008
Source: eMarketer, May 2005
10
Marketers have benefited from the relevancy of contextual and search. Behavioral targeting is an extension of this “in the moment” marketing.
WHY THE RISE IN BEHAVIORAL TARGETING?
Users' Willingness to Click on Ads that are More Relevant to Their Interests
Source: Ponemon Institute, Revenue Science, Chapell & Associates, September 2004
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Absolutely yes
Most likely yes
Unsure Most likely no
Absolutely no
% o
f Res
pond
ents
US Search Marketing Spending, by Segment, 2003-2008 (in millions)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2003 2004 2005 2006 2007 2008
Contextual listings
Paid placement
Source: Forrester Research, October 2003
11
Goal: Drive consumers to configure a new Volkswagen A4and request information from a local dealer.
CASE EXAMPLE: VOLKSWAGEN
Demographic Targeting
Targeted to consumers who researched cars online in the past six months
Targeted to users who visited the VW website but did not configure a vehicle
Behavioral Targeting
Source: Advertising.com Source: Advertising.com
Impressions 9.7M
Configurations 10,449
Information Requests 7,970
Conversion Rate for Configurations 42%
Conversion Rate for Info Requests 32%
Impressions 100M
Configurations 8,495
Information Requests 3,609
Conversion Rate for Configurations 10%
Conversion Rate for Info Requests 4%
1,077 configurations and 822 requests
per million impressions
85 configurations and 36 requests
per million impressions
12
Goal: Leverage behavioral targeting to convert consumers who visited the Lane Bryant website but did not complete a sale.
CASE EXAMPLE:
Source: Advertising.com
Cost per Sale
Target CPS Actual CPS
Cos
t pe
r sa
le Source: Advertising.com
Revenue Goal Delivered Revenue
Onl
ine
sale
s re
venu
e Beat cost-per-sale goal by 85%
Beat revenue goal by 408%
Delivered Revenue
13
Goal: Convert consumers who researched VoIP services, but did not immediately purchase.
CASE EXAMPLE:
Source: Advertising.com Source: Advertising.com
0200
600
1,000
1,400
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Con
vers
ions
Week
Conversion Rates – With and Without Behavioral Targeting
Without Behavioral With BehavioralCon
vers
ion
Rat
e
Conversion rate more
than doubled
Weekly Conversions – Before and After Behavioral Targeting
Behavioral targeting
implemented
14
WHY THE RISE IN BEHAVIORAL TARGETING?
Behavioral targeting enables marketers to reach in-marketconsumers and increases the value of publisher inventory.
Increased spending by traditional advertisers
Increase spending = sold-out inventory
Success of contextual and search advertising
Experience/comfort with audience segmentation offline will lead to increased behavioral dollars online
Ability to create behavioral segments across content increases the value of run-of-site inventory
Behavioral targeting provides the level of relevancy – and response – delivered by the ever-popular search marketing
15
Source: eMarketer, September 2004
For continued growth, providers must address the underlyingchallenges and issues associated with behavioral targeting.
BEHAVIORAL TARGETING CHALLENGES
Challenges of Behavioral Targeting
Consumer privacy concerns
The debate over data ownership
Lack of industry standardization
16
With the rise of network solutions, the issue of data ownership hasbecome a challenge for website publishers and their behavioral partners.
BEHAVIORAL TARGETING CHALLENGES
Overcoming Data Ownership Issues
Networks and publishers must establish a clear policy with regards to:
What data will be shared How the data will be used Ultimate ownership of the data
The Consumer Data Trail
NETWORKNETWORK
WEBSITE
17
Publishers, technology providers and advertisers define each behavioralsegment/audience differently and lack universal success metrics.
BEHAVIORAL TARGETING CHALLENGES
Overcoming Standardization Issues
While awaiting industry standardization,advertisers must define on their own:
The audience they want to reach and how behavioral targets are defined
The definition of success, e.g., conversions, audience composition, brand lift, against which all providers are measured
Standardization
There are currently no industry standards with regards to
how behavioral targeting is defined and measured.
Publishers
?
TechnologyProviders
?
Advertisers
?
18
THE FUTURE OF BEHAVIORAL TARGETING
As targeting, tracking and reporting technologies advance, behavioral solutions will expand across objectives and channels.
The rise of network solutions
Multi-channel behavioral targeting
Increased accountability
With advertisers demanding increased reach, network solutions will continue to grow
Advertisers are looking past basic reach metrics to determine campaign impact on actual revenue
Behavioral solutions are expanding beyond the Web to include search- and email-driven platforms
19
THE FUTURE OF ONLINE MARKETING
Wireless advertising will also grow, as a result of increased use of mobile devices by European consumers.
European Mobile Marketing Spending, 2004 to 2010 (in millions)
Source: Jupiter Research, April 2005
European Wireless Penetration, 2004 to 2010
Source: Jupiter Research, April 2005
71%
72%
73%
74%
75%
76%
77%
78%
79%
80%
2004 2005 2006 2007 2008 2009 2010€ 0
€ 100
€ 200
€ 300
€ 400
€ 500
€ 600
€ 700
€ 800
2004 2005 2006 2007 2008 2009 2010
20
Advertisers will continue to shift media dollars to the Internet as consumers increase their online usage and marketing technologies advance.
THE STATE OF ONLINE MARKETING
Questions? For additional information,
please contact Advertising.com’s Danish office:
Århusgade 88, 4.2100 Copenhagen
Phone: + 45 36 91 38 00Email: [email protected]