Behavioural Targeting

Behavioural Targeting

Ever wondered how websites these days display ads in areas of your interest? Kevin explains how technology helps companies keep a track of your choices.

Kevin Mathew Jacob

IInd Year,

PGDM

‘Quality in a service or product is not what you put into it. It is what the client or customer gets out of it.’

Peter Drucker

We often hear that ‘Customer is King’; but the reality is that keeping track of what the ‘King’ wants is becoming increasingly complex with the advent of the online world – the Internet. To quote a statistic: in the US, a person spends 27 hours per month online, on an average. While this looks like a great marketing opportunity for any company, the vastness of the internet makes it next to impossible to target customers.

So the question that naturally arises is – how do companies like Google, Microsoft, and Yahoo target their ads to the right customers? The answer lies in what is called Behavioural Targeting. Behavioural Targeting is a technique used by online publishers and advertisers to increase the effectiveness of their campaigns.

It uses information collected on an individual's web-browsing behaviour, such as the pages they have visited or the searches they have made, to select which advertisements to display to that individual. Practitioners believe this helps to deliver their online advertisements to the users who are most likely to be interested. Behavioural targeting techniques may also be applied to any online property on the premise that it either improves the visitor experience, or it benefits the online property; typically through increased conversion rates or increased spending levels. The early adopters of this technology are primarily retail or other e-commerce websites, who use it to increase the relevance of product offers and promotions on a visitor by visitor basis. More recently, companies outside the traditional e-commerce marketplace have also started to experiment with such emerging technologies.

The typical approach to this starts by using web analytics to break-down the visitor mass into a number of discrete channels. Each channel is then analyzed and a virtual profile is created to deal with each channel. These profiles can be based around Personas that give the website operators a starting point in terms of deciding what content, navigation and layout to show to each of the different personas. When it comes to successfully delivering the profiles, it is usually achieved by either using a specialist content behavioural platform, or by bespoke software development. Most platforms identify visitors by assigning a unique id cookie to each and every visitor to the site, thereby allowing them to be tracked throughout their web journey; the platform then makes a rule-based decision about what content to serve.

Self-learning onsite behavioural targeting systems will monitor visitor response to site content and learn what is most likely to generate a desired conversion event. Some good content for each behavioural trait or pattern is often established using numerous simultaneous multivariate tests. Onsite behavioural targeting requires relatively high level of traffic before statistical confidence levels can be reached, regarding the probability of a particular offer generating a conversion from a user with a set behavioural profile. Some providers have been able to do so by leveraging its large user base, such as Yahoo!. Some providers use a rule-based approach, allowing administrators to set the content and offers shown to those with particular traits.

A prime mover of behavioural targeting is Google, which recently announced their new ‘Interest-Based Advertising’. What happens behind the scenes is depicted in the flow diagram.

To put it simply, the process consists of three main steps:

1. When the user visits websites that display ads provided by Google's AdSense program, Google stores a number in the user’s browser (using a ‘cookie’) to remember his visits. That number could look like this: 114411. A cookie is a small piece of text stored on a user's computer by a web browser and can be used to store specific information about users, such as site preferences.

2. Because many of the websites that the user visits are related to gardening, Google puts his number (114411) in the "gardening enthusiast" interest category (using Double Click’s software).

3. Now, the next time any website with AdSense is visited, it tracks the cookie number stored in the User’s PC and displays the relevant ads on the visited website.

As can be seen from the above process, a whole gamut of privacy issues have been thrown up by Behavioural targeting, in general, and Google’s ‘Interest Based Advertising’, specifically. The main issue being that this service will track just about everything you do and everything you are interested in, no matter how personal or sensitive. Anonymity for users browsing the net will be compromised due to the usage of cookies to track where they go, what they buy and where their interests lie.

However, Google has also been at the forefront of developing systems to ensure that control of this service remains with the users. Users now have the choice to either opt out of interest based advertising or control the ads they see, by choosing the interest groups they would like to be included in. Google currently offers over 25 main interest categories, each having several sub-categories to choose from. You will need to set your ad preferences in each browser you use and on each computer in your home.

Google ensures privacy protection by adhering to the following four tenets:

• Transparency in the right place at the right time: Prominent notices to customers are placed in the ads themselves

• Meaningful Choices: Preference Manager feature allows users a high level of control over how their information is used

• Respecting Choice: Single cookie opt-out or a permanent opt-out plug-in

• Transparency beyond privacy policies: Plain language, videos and user-friendly interface

The online advertising industry is keen to push behavioural ads and, at the beginning of March, the UK-based Internet Advertising Bureau (IAB) published a code of practice that Google signed up to.

In spite of all the drawbacks of Behavioural Targeting, online advertising has reached immense proportions. Consumers are far less concerned about this than people think they should be. The truth is that they want to see well-targeted ads rather than random ads. According to Forrester Research, 26% of European online advertisers used behaviour-based advertising during 2008. The IAB estimates that it could generate an income of £200m in the UK alone annually.

The future lies in increased personalization, with both software and hardware being tailor-made to suit each individual’s tastes and needs. What Behavioural Targeting does is take a step in the right direction towards achieving this personalization. With more firms jumping onto the bandwagon, we can say with confidence that this is just the tip of the iceberg.