Why Behavioural Targeting is such a Big Deal?

If you want to run ads for your products on online or offline media, you’re going to have to take care of 2 things:

Reach – You can focus on increasing the reach of your ads. This is a time tested concept; if you have the money to reach out to a very large crowd, you’ll always find some people who’d be interested in purchasing your products – TV does it very well. The only problem is - your ad spend may not be optimized. Along with people who’ll buy your stuff, you are also wasting your marketing budget on a very large number of people who have no intention of doing business with you.

Frequency – Focusing on increasing the frequency of your ads is quite intuitive. After all, if you keep repeating your adds hundreds of time, some people will eventually buy your stuff just to see what the heck it is that you can't stop bugging them with. There are various theories about how frequency capping can achieve optimum result. For a long time, advertisers believed that showing an ad 3 times was the most optimum thing to do. This theory was disputed in 2003 by Atlas (now part of Microsoft), which claimed that even though the ROAS (return on ad spend) was optimum with 3 ad impressions, following such a “frequency capping” strategy could severely compromise on reach. The new optimum number is 10 as per Atlas. Needless to say, betting on frequency is not the most optimum way of spending your marketing dollars.

Alright, now consider this – what if someone told you that neither reach nor frequency is as important as “knowing the recent behaviour of your potential customers” – that is – if you could somehow find out what people are looking for exactly when they are looking for those things, you could narrow down your reach to a highly targeted group and your ad frequency could actually be reduced to 1 – these guys are already at a stage in their purchase funnel when just one impression could convert them into actual buyers – capture the right buyers at the right time and you can save a fortune on reach and frequency – This is precisely what behavioural targeting helps you achieve. BT is not only extremely efficient, it’s also ridiculously cheap. No wonder it’s one of the hottest contemporary trends in digital media. eMarketer estimates that the BT market will grow to 4.4 billion dollars by 2012 (see figure on right).

Ever wondered why you don't see too many contextual ads anymore; they are being replaced by behaviourally targeted ads. Check it out for yourself – go to zappos.com, ad a few items to your shopping cart and then abandon your browser. Now open your favourite golf blog - you won’t see a contextual ad selling you golf clubs, rather you’d see an ad from Zappos – that’s BT. Zappos knows your recent intent and it’s re-targeting/re-marketing/re-engaging you. One of the Zappos customers puts it this way – “I’ve started to actually think I never really have to go back to Zappos to buy the shorts — no need, they’re following me.

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