Transcript Document

THE STATE OF ONLINE MARKETING:
BEHAVIORAL
TARGETING
AND OTHER KEY TRENDS
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THE STATE OF ONLINE MARKETING
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
€ 5.0
€ 4.5
70%
60%
€ 4.0
€ 3.5
50%
€ 3.0
€ 2.5
€ 2.0
40%
30%
€ 1.5
€ 1.0
20%
10%
€ 0.5
€ 0.0
0%
2004 2005 2006 2007 2008 2009 2010
Source: Jupiter Research, June 2005
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Total Online Advertising Revenues
in Western Europe, 2003 to 2009
2003 2004 2005 2006 2007 2008 2009
Source: Jupiter Research, August 2004
THE STATE OF ONLINE MARKETING
Online spending will continue to increase, due to new opportunities
provided by such emerging marketing tactics as behavioral targeting.
US Behavioral
Targeting Ad Spending
Top-Performing Online
Tactics as a % of Respondents
$1,000
$900
Rich
media ads
$800
In Millions
$700
$600
$500
Affiliates
$400
Paid
search
$300
$200
Behavioral
targeting
$100
$0
2003
Source: eMarketer, 2004
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Email
house list
2004
2005
Source: MarketingSherpa, 2005
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
NEWS
Targets ads via
software that users
download onto
their computers.
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Enables publishers to
target audiences within
their site based on
surfing behavior.
Targets specific
audience behaviors
across a network
of websites.
ADWARE SOLUTIONS
Adware solutions are highly targeted and have significant
reach, but are prone to privacy issues and a high churn rate.
Advertising Professionals’ Opinion
Regarding the Use of Adware
Behavioral Targeting via
Downloadable Software
45%
40%
35%
30%
25%
Consumers agree
to receive
advertising in
order to download
free software.
Adware programs
track user activities
and deliver
pop-up ads based
on behavior.
20%
15%
10%
5%
0%
Strongly
Opposed
Somewhat
Opposed
Source: AAF, November 2004
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Somewhat
Supportive
Strongly
Supportive
SITE-SIDE SOLUTIONS
Site-side solutions are highly targeted and increase the value of
publishers’ run-of-site inventory, but provide limited reach for advertisers.
Behavioral Targeting within
a Single Website
Lift in Brand Metrics – Behavioral
vs. Content Targeting on iVillage
80%
Behavioral
Targeting
70%
60%
Content
Targeting
50%
40%
Inventory within
the travel section
of a news website
can often book
quickly.
Behavioral
targeting reaches
this “travel”
audience across
the publisher’s
site.
30%
20%
10%
0%
Purchase
Brand
Brand
Awareness Intent Favorability
Source: Dynamic Logic
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NETWORK SOLUTIONS
Network solutions overcome the challenges of alternative providers in
their ability to deliver a highly targeted audience with sizeable reach.
Percent
Lift –
Capitalizing
on Behavior
on
Behavioral
vs. Run Website
of Network
the Advertiser’s
Lift in CTR
Lift in CVR
Advertiser A
192%
167%
Pixels on
Advertiser
B
to those
94%Ads sent
2,232%
advertiser’s site
users after they
anonymously
exit the site and
identify
activity,
within
Advertiser
C e.g., 225%visit sites
3,130%
researched flights.
the network.
Source: Advertising.com
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Network
Behavioral
Targeting
Capitalizing
on Behavior
onvs.
SingleThird-Party
Site Content
Sponsorship
Websites
Single Site
Content
Sponsorship
Network
Behavioral
Targeting
Pixels on publisher
sites are used to
create behavioral
segments based on
site activity.
CPM
Source: 24/7 Real Media
Advertiser
campaigns are
served across
websites to their
desired segment.
CTR
WHY THE RISE IN BEHAVIORAL TARGETING?
Behavioral targeting delivers unprecedented relevancy,
response and ROI for online advertisers and publishers.
Why Behavioral Targeting is Hot
Increased spending by traditional
advertisers who rely heavily on targeting
Increase in online spending leads
to sold-out inventory on some sites
Success of contextual and search
has marketers demanding more
relevant advertising
Source: eMarketer, September 2004
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WHY THE RISE IN BEHAVIORAL TARGETING?
Increased spending results in valuable “content” selling out. Behavioral
targeting reaches users across content based on observed interests.
US Online Advertising Spending,
2003 – 2008 (in billions)
Percent Sold Inventory,
2003 – 2005
80%
$25
70%
$20
60%
50%
$15
40%
$10
30%
20%
$5
10%
0%
$0
2003
2004
Source: eMarketer, May 2005
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2005
2006
2007
2008
Q2’2003
Q1’2004
Source: AdRelevance, house ads versus non-house ads
Q1’2005
WHY THE RISE IN BEHAVIORAL TARGETING?
Marketers have benefited from the relevancy of contextual and search.
Behavioral targeting is an extension of this “in the moment” marketing.
US Search Marketing Spending, by
Segment, 2003-2008 (in millions)
$5,000
45%
Contextual
listings
$4,000
Paid
placement
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
40%
% of Respondents
$4,500
35%
30%
25%
20%
15%
10%
$500
5%
$0
0%
2003 2004 2005 2006 2007 2008
Source: Forrester Research, October 2003
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Users' Willingness to Click on Ads that
are More Relevant to Their Interests
Absolutely
Most
yes
likely yes
Unsure
Most Absolutely no
likely no
Source: Ponemon Institute, Revenue Science, Chapell & Associates, September 2004
CASE EXAMPLE:
VOLKSWAGEN
Goal: Drive consumers to configure a new Volkswagen A4
and request information from a local dealer.
85 configurations
and 36 requests
per million
impressions
1,077 configurations
and 822 requests
per million
impressions
Demographic Targeting
Behavioral Targeting
Impressions
100M
Impressions
9.7M
Configurations
8,495
Configurations
10,449
Information Requests
3,609
Information Requests
7,970
Conversion Rate for Configurations
10%
Conversion Rate for Configurations
42%
Conversion Rate for Info Requests
4%
Conversion Rate for Info Requests
32%
 Targeted to consumers who researched
cars online in the past six months
Source: Advertising.com
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 Targeted to users who visited the VW
website but did not configure a vehicle
Source: Advertising.com
CASE EXAMPLE:
Goal: Leverage behavioral targeting to convert consumers who
visited the Lane Bryant website but did not complete a sale.
Delivered Revenue
Revenue Goal
Source: Advertising.com
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Cost per sale
Online sales revenue
Beat
revenue
goal by
408%
Cost per Sale
Delivered Revenue
Beat
cost-persale goal
by 85%
Target CPS
Source: Advertising.com
Actual CPS
CASE EXAMPLE:
Goal: Convert consumers who researched
VoIP services, but did not immediately purchase.
Conversion
rate more
than doubled
Behavioral
targeting
Weekly Conversions – Before and
implemented
After Behavioral Targeting
Conversion Rates – With and
Without Behavioral Targeting
Conversion Rate
Conversions
1,400
1,000
600
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Week
Source: Advertising.com
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Without Behavioral
Source: Advertising.com
With Behavioral
WHY THE RISE IN BEHAVIORAL TARGETING?
Behavioral targeting enables marketers to reach in-market
consumers and increases the value of publisher inventory.
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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-ofsite inventory
 Behavioral targeting
provides the level of
relevancy – and
response – delivered
by the ever-popular
search marketing
BEHAVIORAL TARGETING CHALLENGES
For continued growth, providers must address the underlying
challenges and issues associated with behavioral targeting.
Challenges of Behavioral Targeting
Consumer privacy concerns
The debate over data ownership
Lack of industry standardization
Source: eMarketer, September 2004
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BEHAVIORAL TARGETING CHALLENGES
With the rise of network solutions, the issue of data ownership has
become a challenge for website publishers and their behavioral partners.
The Consumer Data Trail
Overcoming Data Ownership Issues
WEBSITE
NETWORK
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
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BEHAVIORAL TARGETING CHALLENGES
Publishers, technology providers and advertisers define each behavioral
segment/audience differently and lack universal success metrics.
Standardization
Publishers
?
Technology
Providers
?
Overcoming Standardization Issues
Advertisers
?
While awaiting industry standardization,
advertisers must define on their own:
 The audience they want to reach and
how behavioral targets are defined
There are currently no industry
standards with regards to
how behavioral targeting is
defined and measured.
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 The definition of success, e.g.,
conversions, audience composition,
brand lift, against which all providers
are measured
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
 With advertisers
demanding
increased reach,
network solutions
will continue
to grow
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Multi-channel
behavioral targeting
Increased
accountability
 Behavioral solutions
are expanding
beyond the Web
to include searchand email-driven
platforms
 Advertisers are
looking past basic
reach metrics to
determine campaign
impact on actual
revenue
THE FUTURE OF ONLINE MARKETING
Wireless advertising will also grow, as a result of
increased use of mobile devices by European consumers.
European Wireless Penetration,
2004 to 2010
80%
€ 800
79%
€ 700
78%
€ 600
77%
€ 500
76%
€ 400
75%
€ 300
74%
73%
€ 200
72%
€ 100
€0
71%
2004 2005 2006 2007 2008 2009 2010
Source: Jupiter Research, April 2005
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European Mobile Marketing
Spending, 2004 to 2010 (in millions)
2004 2005 2006 2007 2008 2009 2010
Source: Jupiter Research, April 2005
THE STATE OF ONLINE MARKETING
Advertisers will continue to shift media dollars to the Internet as consumers
increase their online usage and marketing technologies advance.
Questions?
For additional information,
please contact
Advertising.com’s Danish office:
Århusgade 88, 4.
2100 Copenhagen
Phone: + 45 36 91 38 00
Email: [email protected]
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