Companies use new technology to target the right advertisements to the right consumers
Hollie Shaw
Sun
TORONTO — Are you male or female? Married or single? In the market for a barbecue, or a shiatsu massage? If you are online, marketers can find out.
A predictive technology known as behavioural targeting is “growing like wildfire” in Canada after lagging 12 to 18 months behind the more entrenched U.S. market, says Hunter Madsen, marketing director at Yahoo Canada Co.
And that means consumers’ mouse clicks are revealing an increasing wealth of information to online advertisers eager for their attention.
“Purchase interest, at the bottom line, is of the most interest to marketers,” said Madsen, who studied at Harvard as a social scientist before moving into marketing and technology.
He described behavioural targeting to an audience at an Association of Canadian Advertisers conference recently as “matching ads with consumers whose recent behaviours indicate they might be interested in hearing from you, [the advertiser].”
Internet giants including Yahoo Inc., and Microsoft Corp., have long perused the movement of consumers on their own sites. But more recently, they have extended that reach into vast consumer networks by collecting data and placing targeted ads for outside marketers on thousands of third-party websites.
Marketers are hoping the inferences that behavioural targeting draws — a web surfer’s gender, age, financial status and location — will provide a clearer window into gauging consumers’ desires. Using simple web cookie technology, users’ online movements help Yahoo to create profiles of who those consumers are, based on time of day and topics browsed in search engines. This profile is finessed as a constellation of cooperative websites share information with each other. Ads are then targeted at consumers based on that profile.
Yahoo currently analyses these “predictive patterns” for consumer purchase cycles in more than 450 product categories and also tries to determine if the subjects are “engagers” or more serious “shoppers,” Madsen said.
Teams aided by computers classify every different search, looking at page views and time spent on the pages, ads clicked, search queries and search links. “We stand back and observe where [people] are going in the network,” Madsen said.
If a web user visits a site based on a search for autos, he said, a cookie from that auto site will carry over on to the user’s next web hit, (for example, a news site), and then serve up an auto ad. When that user checks her e-mail account, auto ads also appear.
The intensity of searching behaviour helps distinguish shoppers from engagers, or more casual browsers, he said. “If you click on [a destination] enough, you might want to live there. If it is sporadic, you might want to travel.”
Through this technology, advertisers hope to generate a greater “click-through” rate on the ads, resulting — hopefully — in higher sales.
That is attractive to marketers because the click-through rates for standard banner ads on major websites such as Yahoo, Microsoft and AOL, have always been poor and continue to slide, falling to 0.27 per cent from 0.75 per cent in 2006, according to the online ad monitoring company Eyeblaster.
Behavioural targeting is an increasingly popular tool for marketers because “it works,” Madsen said, citing a study by Jupiter Research LLC.
The study found that advertisers who had used behavioural targeting in the previous 12 months said they were 28 per cent more satisfied overall with their returns from targeted ads than those who did not use the technology.
During a period in which 1.6 million Yahoo users looked up auto insurance, targeted ads resulted in a 73-per-cent lift in the click-through rate and a conversion rate from online browser to buyer four times higher than normal.
Behavioural targeting is becoming more popular as more Canadians look to the Internet to browse, research and buy goods and services. By 2005, an estimated 16.8 million adult Canadians, or 68 per cent of the population, used the Internet for nonbusiness reasons such as e-mail, information searches or booking flights, according to the Canadian Internet Use Survey from Statistics Canada.
Seven million Canadians that year — or 41 per cent of all Internet users in Canada — ordered goods and services online.
Online revenue continues to climb. Web researcher eMarketer forecasts that Canadian consumers will spend $20.9 billion online on goods and services in 2008, a 33-per-cent increase over the 2007 estimate.
But behavioural targeting is facing criticism over privacy issues, particularly as consumers’ awareness of the practice grows. A 2007 study from the University of California at Berkeley said 85 per cent of those polled thought sites should not be allowed to track their web surfing in order to target ads at them.
Last year, Facebook drew widespread user revolt for its Beacon program, which revealed its members’ online purchases to their Facebook friends.
After an outcry, the company changed Beacon so the user would have to give permission to the social network before Facebook published any information. Most companies, like Yahoo, are more subtle in their approach, and defenders of the practice say targeting is good for consumers because the ads they see are more relevant to them.