The issues of behavioral targeting go beyond the usual concerns about privacy and consumer tracking. At the core of the approach to presenting advertising to people based on their online habits comes the practice of behavioral targeting.

The Federal Trade Commission held a two-day town hall meeting on the practice in November 2007. As a result of that meeting, the FTC proposed principles on behavioral targeting; whether or not advertising networks follow them has been left up to those businesses.

Before anyone rushes too fast to push the behavioral targeting envelope, a situation between Valueclick and Tacoda needs to be resolved. ValuecClick filed suit in Los Angeles against Tacoda in July 2008 over accusations of infringement on two patents.

MediaPost said the patents were both invented by Gather.com founder Thomas Gerace. ValueClick acquired Gerace’s former company, BeFree, in 2002.

AOL acquired Tacoda in 2007, and MediaPost said ValueClick warned AOL in March 2007 about their belief Tacoda infringed ValueClick’s patents.

Another patent lawsuit involves a familiar name. InformationWeek said Google picked up its fourth infringement lawsuit this year, as Web Tracking Solutions and Daniel Wexler accused the search advertising giant of infringing an accounting reporting patent with Google’s AdSense service.

Throw in Yahoo’s BlueLithium and Right Media, and WPP’s 24/7 Real Media, as similar purchases, and it looks like everyone suddenly decided to make moves in that direction.

Morgan commented in a Jordan, Edmiston Group client briefing that the Microsoft and Google moves in particular surprised him.

“Not because I didn’t expect these companies (DoubleClick and aQuantive) to be acquired at some point, but because the transactions happened so quickly,” said Morgan.

“Clearly, neither of these acquirers wanted to take a chance on missing the anticipated growth of online display advertising.”

Blame the attention-divided audience, both on- and off-line for this. Morgan said this audience fragmentation is accelerating, posing a significant impact on the whole media, marketing, and advertising ecosystem.”

“The future is about serving ads to people, not to pages or programs,” said Morgan.

After a long gathering of online advertising companies, they’ve finally created a full-fledged advertising division. Or, perhaps they’ve just revamped all of their old ones and cobbled them into a new, single unit with a new headquarters.

To date, these acquisitions include:

• July 2007, TACODA, behavioral targeting ad network
• May 2007, ADTECH AG, ad-serving and e-mail marketing network
• May 2007, Third Screen Media, mobile ad serving
• May 2006, LightningCast, streaming video/audio ad serving
• 2004, Advertising.com, direct-response network

All of these acquisitions came under the Advertising.com branch of AOL. The new advertising unit, MediaPost reports, will be called Platform A and will reach 90% of Internet users. The former CEO of TACODA, Curt Viebranz, will head the division.

By finally and thoroughly coordinating its advertising lines, AOL hopes to revamp its fortunes. MediaPost says that media buyers have positive initial impressions of the new AOL ad division.

If perception is 90% of reality, at least one new aspect of the company is already working in their favor: the division has moved its headquarters from Dulles, VA, to New York City (which, while not a great city of origin for salsa, is a great city of origin for an advertising network).

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My experiences with behavioral targeting have been always in tandem with other marketing campaigns, all supporting each other and working together. Behavioral targeting as a stand-alone marketing technique can potentially be effective, but I have seen more success with multiple campaigns interlaced together to make each one perform better.

If you are looking to learn more about behavioral targeting, then keep reading for more on the basics of this technique to help you launch your first behavioral targeting campaign.

Intro to Behavioral Targeting:

The basic idea behind behavioral targeting is to match the most relevant ads to those users browsing pages on a given network. This is done by tracking behavior anonymously and then feeding relevant ads based on a user’s behavior. Unlike PPC and CPM-based ad platforms like AdWords and YPN where you target sites and key phrases, behavioral targeting takes it a step further by studying a user’s behavior across a network of sites and then producing the right ad for the right person. Targeting in this fashion ultimately lowers your CPA, CPM and CPC.

Get to Know the Networks:

The big boys in the industry are Revenue Science and Tacoda (recently acquired by AOL). They reportedly have the largest networks; however, the leap towards search engines creating their own behavioral targeting networks is on the rise. Yahoo already has one, AOL acquired Tacoda, and MSN is now offering behavioral targeting as well.

The first question I always ask these guys is how big is your network? I try to find out as much information I can about their partner sites. Just because they have a large network, it does not mean I want to be a part of it unless it’s a quality one. Today there are a good number of behavioral targeting networks to investigate. Each one should be researched. Cultivate a relationship with someone on the staff, as you will need a person you are comfortable working with to refine your campaign, which can be time-consuming.

Three Dimensions of Behavioral Targeting:

I think Andy Chen from the ClickZ network summed it up well in his classic article about three dimensions of behavioral targeting. In a nutshell, the three dimensions are as follows:

1. Customer Relations Management: Behavioral targeting can bring your message to the right people, but the way you interact with your clients/customers is one of the deciding factors on conversion and viral success. Making the customer’s experience a positive one will inevitably lead to more conversions.

2. Branding: The power of brand marketing in the long term is a powerful concept. Think of brands like Pepsi, Johnson & Johnson, eBay, Proctor & Gamble. Brands such as these have made their way into our homes and minds and become an everyday staple in our society. If you are looking for brand ubiquity that is targeted and direct, then behavioral targeting can accomplish this goal for you.

3. Direct Response: Each internet marketer is after direct response. We want each ad dollar to result in some kind of reaction. In many cases, we see our advertising money flushed down the drain and often see unimpressive results. Behavioral targeting allows you to put an incentivized offer in front of viable, qualified, and actionable consumers. A marketing rule of thumb is if you get your message to the right people, you will be successful. Behavioral targeting can help facilitate the direct response we all crave.

Metrics!

Measuring your success with behavioral targeting falls 100% on you! If you have a departmentalized organization, it would be best to push for extra tracking and metrics on your end instead of relying completely on a company like Tacoda or Revenue Science to provide tracking for you. If you work in a centralized infrastructure, you will have a lot easier time getting your needs meet.

I strongly stress the need for leveraging mulitple metrics and internal tracking not just for behavioral targeting, but all of your marketing needs. Without relaible tracking you are reduced to making decisions based on theories and not facts.

Start with these tips and investigate some avenues of behavioral targeting if you’re intrigued by the concept. It might just be the extra boost your ad campaigns are looking for.

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Tacoda was founded in 2001 and uses technology that allows advertisers to serve ads based on consumers’ online behaviors. Using Tacoda’s technology, AOL will extend its targeting capabilities to advertisers and publishers along with extending the reach of its third-party display network Advertisng.com.

"Behavioral targeting is a fast-growing part of the advertising business, as marketers increasingly look to get efficient and measurable results from their advertising dollars. With Tacoda, we can offer advertisers state-of-art targeting tools," said AOL Chairman and CEO Randy Falco.

"Combined with our own network, our Advertising.com third party network, and our other recent acquisitions in the advertising space, AOL now has one of the most robust and sophisticated advertising platforms in the business."

According to eMarketer, the behavioral targeting market is on track to increase to $3.8 billion by 2011, from $350 million in 2006.  There have been a number of companies buying online ad networks, the largest being Microsoft’s purchase of aQuantive for $6 billion and Google’s acquisition of DoubleClick for $3.1 billion.

Financial terms of the deal were not released but estimates put the amount between $200 million and $300 million according to the New York Post. Tacoda will continue to be based in New York.

Here are the results:

Source: http://news.com.com/How+search+engines+
rate+on+privacy/2100-1029_3-6202068.html

So what did the Search engines say about Behavioral Targeting?

AOL was very open about using Behavioral Targeting. They have been using Revenue Science and recently purchased Revenue Science’s competitor Tacoda.

ASK said they do not use behavioral targeting. I have not paid much attention to ASK so I cannot comment if that is true or not.

ASK said they do not use behavioral targeting. I have not paid attention to ask so cannot comment if that is true or not.
Google said they do not use behavioral targeting. However as I showed you last month, they use same session targeting, I call it behavioral targeting. Their following answers were not clear to me

"CNET: Do you do behavioral targeting, meaning showing ads to users based on their behavior across multiple queries?
Grand: We are committed to protecting user privacy. We also want to provide users with a more rewarding online experience by making the advertising and content users see relevant to them. We believe the targeting capabilities, reporting and analytics we offer today provide advertisers with an excellent ROI and provide a high-quality user experience. Currently, our system incorporates a large number of signals (such as the user’s query, the user’s location, type of site, content, and the advertiser’s landing page) when targeting and ranking ads. We have not focused on demographic targeting to date for targeting ads on search result pages."

Isn’t that what is called behavioral targeting? Demographic is one element and is not the main ingredient for Behavioral Targeting, Behavioral Targeting is based on behavior, demographic provides another criteria to segment the behavior by but is not required. Once again, do not confuse Behavioral Targeting with targeting based on Demographic information. Seems like Google is saying since we do not use Demograohic information we are not doing Behavioral Targeting.

"CNET: We weren’t able to figure out your answer to our question asking whether you do behavioral targeting. In other words, if I search for "New York City vacation" in one query and "vacation hotels" in a second query a moment later, does Google.com evaluate the two responses, figure out that I’m probably looking for New York City hotels, and display ads appropriately?
Grand (Google): No.

Well, I showed some examples of it last month, check out my article titled "Ad Targeting on Google Search Engine".

MSN: Representative of MSN said that they offer Behavioral Targeting through AdCenter. He indicated that they will begin offering behavioral ad targeting on third-party sites. He also said that MSN uses some demographic data from services such as Hotmail and Windows Live for targeting but uses in non-identifiable fashion."

Yahoo, was very open about using behavioral targeting. According to yahoo, "Per our privacy policy, when a user is logged into a Yahoo product or service, they are not anonymous to us. Logged-in users may receive customized ads based on general demographic categories such as geo-location, gender, and/or age range."

What does this all mean?

Well, Behavioral Targeting has arrived, you will be targeted (and already are weather you know it or not). Yahoo, MSN and AOL are doing it. Google, even if they are denying it, is already targeting you. ASK will follow suite soon. "It’s a Targeted Targeted Targeted Targeted World".

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Financial terms of the deal were not disclosed but the New York Post is putting the figures between $200 million and $300 million according to its sources.

Tacoda was founded in 2001 and uses technology that allows advertisers to display ads based on users online behavior. With the acquisition, AOL says it will be able to extend its targeting capabilities to advertisers and extend the reach of its third party display network Advertising.com.

"The acquisition of Tacoda will build on our advertising momentum, letting us better serve advertisers by enhancing our ability to precisely target advertisements across an even broader network," said Ron Grant, AOL President and COO.

"We are committed to bringing advertisers and publishers a full range of tools and services, along with the widest reach, and with Tacoda we’re taking another step toward that goal."

According to eMarketer, the behavioral targeting market is on track to increase to $3.8 billion by 2011, from $350 million in 2006.  There have been a number of companies buying online ad networks the largest being Microsoft’s purchase of aQuantive for $6 billion and Google’s acquisition of DoubleClick for $3.1 billion.

"AOL is a perfect match for Tacoda. By combining our targeting capabilities with AOL’s existing set of solutions, we can better serve online advertisers and publishers as the market for behavioral targeting continues to emerge," said Curt Viebranz, CEO of Tacoda.

This agreement makes the second company that is trying to incorporate behavioral marketing with search engine style text ads. AMS will enable BURST to identify and track large segments of its 39.4 million audience that are particularly attractive to advertisers.

Currently, BURST serves its own ads to over 2,000 specialty web sites. Tacoda’s AMS will enable BURST to develop targetable audience segments across its entire network based on more finite criteria such as which stories users read, what kind of ads they click on, and how often they return to similar kind of content.

BURST will also offer the behavioral targeting aspects of AMS in its AdDesktop, a licensed ad serving technology. Current customers of BURST’s AdDesktop deliver over 100 million ads per month and each may choose to target ads behaviorally within their site.

“When you have a total audience the size of BURST’s, the more you know about your users, the better you can serve them ads that they want to see. Better targeted ads means higher click-throughs and sales for our advertisers,” says Jarvis Coffin co-founder of BURST and President and Chief Executive Officer. “While we can infer a great deal about our audiences because the sites we represent have highly specialized content, Tacoda will enable us to build audience segments based on demonstrable user interests. We can then target ads to users anywhere on our network.”

Studies have shown that Tacoda’s behavioral marketed ads generate a higher rate of inquiries, higher in-store traffic, and higher actual sales compared to ROS online advertising.

“This is exactly the kind of environment Tacoda’s AMS was designed to work best in,” says TACODA CEO Dave Morgan. “An audience-centric approach to ad sales is a complement to contextual sales and frees BURST to create new ad inventory outside of high demand sections that may often be sold out. We have several studies that show when visitors see ads in context then later are served a similar ad when they are in a different part of the site, the advertisers get a tremendous lift in response.”

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Audience Match will give advertisers the ability to target text ads based on specific demographics. The service is similar to Google and Overture’s PPC campaign, but instead of bidding for keywords, advertisers will compete for specific demographic information. The text ads will then show up on sites that have partnered with Tacoda Systems.

This style of advertising is called behavioral targeting. To accomplish this, Audience Match uses profiles of Web surfers who have account-type standing with Tacoda’s group of online publishing partners. The information in these profiles are then used to target ads, which will perform like AdSense. Meaning the advertisers only pay when their ad is clicked.

Audience Match will be built on Tacoda’s Audience Management System. This system was designed to give advertisers more insight into their customers so they can better target their ads. The new service will be an extension of AMS.

The issue of privacy has reared its head in concern with Tacoda’s method of behavior targeting. The company acquires this data by, according to News.com, “draw[ing] from data-mining technology, tracking software such as cookies and Web site registration information.”

Tacoda has stated that they will not be releasing public information to advertisers, only the demographics that the profiles fit into. These demographics are what is being bid upon.

Gary Stein, an analyst at Jupiter Research, had this to say about behavioral marketing: “Behavioral advertising is definitely the ‘it’ thing this year, and advertisers are looking for a fast, easy and inexpensive way to do it.” Look for Tacoda to be in thick of it.

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The Tacoda Systems model, called AudienceMatch, is designed to target users based on profiles by categorizing them, much like websites are categorized for targeted ads. This approach is similar to the ad campaign that Engage attempted and abandoned.

According to ClickZ.com, “Tacoda’s network will target its ads based upon member publishers’ knowledge of the site visitor. That knowledge will come from registration data and from information about the person’s behavior across the network.”

aQuantive, much like Tacoda, is also developing behavioral ad targeting campaigns, called DRIVEpm. Whereas Tacoda is basing their campaign on user registration data, aQuantive’s approach will be different. aQuantive’s approach calls for the purchasing of online ad inventory from top publishers, then selling this information to advertisers at a higher price.

The company will use all information available except personal identification information. This includes demographic and geographic information, connection speed and context. “We believe that DRIVEpm is not only a win for aQuantive but a win for the online industry in general by helping to eliminate the common enemy in online advertising — advertising waste,” said Scott Howe, general manager of DRIVEpm in a statement to ClickZ.com.

With Engage and DoubleClick failing at a similar attempt to target ads based on user behavior, one has to wonder if Tacoda and aQuantive can succeed where others have failed. Although, given the financial success of contextual based ads, its easy to see why these companies are attempting this approach.

Thanks to MarketingVox.com for pointing this out.

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