Don’t you just love epiphanies? Those brief moments in time when a great idea just hits you. I feel like I had one of those this morning, an opportunity so obvious, it alarms me that ad networks and portals have yet to have stumbled on the idea themselves.
A few days ago I had a wonderful opportunity to have dinner with a number of exceptional industry analysts. Our discussion moved fluidly through display and brand advertising, search marketing, the future of the portals, mobile, and local search. We met at Scott Howard in San Francisco giving me a chance to pop into one of my favorite Irish pubs for a Guinness before dinner. To digress… at one point in the evening I shared my often cited sentiment that I look forward to the day when behavioral targeting works well. I firmly believe that consumers will welcome and appreciate advertising when it is truly relevant and timely. Behavioral targeting (and personalization) hold this promise by tracking my search queries and content consumption; an ad vendor can serve media that responds to my perceived demand. Searching for a GPS Devices? GPS ads are served to you while on other websites. Unfortunately, behavioral targeting has yet to successfully deliver any instance of exceptional results.
I cringe when I hear Tom Shane’s voice on the radio and am tired (ahem) of Sleep Train ads
Why? Well, yes, certainly, I’ve had enough of Tom’s voice and the train whistle makes me change the dial but more so simply because they are all over the radio when I have no need of jewelry or mattresses. Traditional marketers would argue that those are successful Brand/Awareness ads, after all, I’m talking about the brands now (queue the congratulatory write up in Ad Age). In fact, I am more frequently turned off a brand by being inundated with irrelevant advertising which wastes my time. What marketers neglect is that consumers increasingly turn to search engines to begin the shopping process. I don’t go to Shane Co. when I want jewelry, I go to a search engine and end up at the store that 1. appeared when I was actively seeking jewelry information and options and 2. is closer to me. But the importance of search isn’t my point (in this case).
How frequently are you bombarded online with Mortgage and Netflix ads?
Clearly, everyone is in the market for a mortgage and movies by mail.
The fundamental problem with behavioral targeting online is that it never takes the customer out of the market. Targeted effectively, mortgage advertisers identified that I was in market for a home, two years ago, when I was searching for real estate information, visiting respective web sites, and clicking Realtor ads (does anyone really still use Realtors?) but the targeting fails to take into account that bought that home and have no further need for a mortgage nor intention of even refinancing for at least a year.
Does this explain why behaviorally targeted ads fail to drive significantly higher CPMs for publishers?
I for one believe so. CPMs are dictated by market demand and relative performance. As a media buyer, if I put behaviorally targeted advertising against contextually targeted advertising, with the optimization managed as I’ve outlined, the experience models something like:
- Contextual targeting – consistent 10 to 1 ROI; eCPM of $5 works for me
- Behavioral targeting – 30 to 1 ROI within the purchase cycle after the first indication of intent; eCPM of $15 works BUT 5 to 1 ROI after the purchase cycle of the customer (worse than other ads because the customer is no longer in market!); in other media opportunities I wouldn’t buy this inventory.
Ad networks that enable frequency caps need to enable floating end dates on campaigns, end dates that are associated with the initial indication of customer intent. Track my first search for “Dell Computer”? Stop serving me computer brand and retail ads 1-2 weeks after that initial query and don’t bother again for 6 months to a year at least. During that time, take into account that my queries for “Dell Computer” are more likely the result of my looking for support, customer care, or warranty information. Further, be sure to build the optimization technology such that it recognizes data and behavior in aggregate: a search for “HP Computer” in that interim is no more an indication that I am in market again than was the latent “Dell Computer” search. Once I have made my purchase, I’m done. Don’t waste inventory or advertising dollars chasing what you claim are engaged, behaviorally targeted customers when they are in fact the least valuable audience to target.
Now, what’s next on the list?