Advertising has come a long way from its traditional forms like print advertising, TV and radio commercials, and direct mail ads. Nowadays, everything is taking place in the online world, including advertising. As more and more consumers are turning toward the digital realm, the benefits of advertising online are increasing by the day. But one of the most prominent game-changers in the digital advertising industry was the introduction of a brand-new technology — behavioral targeting.
Behavioral targeting was like a godsend for advertisers worldwide; it brought with it a solution to the core issue of traditional advertising — the lack of ability to serve customer-centric and relevant ads.
Targeted advertising quickly took off and became a widespread norm in the online world due to its innovativeness. As many as 93% of businesses saw substantial revenue growth as soon as they implemented it.
With such huge numbers at play, it quickly became apparent that behavioral targeting was here to stay. And not only did it stay, but it quickly outshined all of its competition and became a norm in the online world.
For all of you unfamiliar with online behavioral advertising, we are going to cover everything you need to know about it — what it is, how it works, how it compares to other online advertising trends, and its benefits and downsides. So if you wish to learn more about behavioral targeting or are looking to see if this advertising method is for you, you’re in the right place!
Behavioral targeting is an online marketing technique that utilizes users’ personal information and online behavior patterns to deliver more relevant ads. This method entails collecting various types of personal data from different online sources, which we’ll cover in-depth a bit later.
OK, now that the definition of behavioral targeting is clear, what is behavioral advertising? Is it the same thing?
Not quite, but it is similar. While behavioral targeting is the technique used to deliver more relevant ads, online behavioral advertising (OBA) is the type of advertising that uses behavioral targeting to provide personalized promotional content to users.
Behavioral advertising goals are to provide the best possible user experience by only delivering ads the users are interested in seeing. This consumer-centric approach by eliminating irrelevant or unappealing messages from the marketing equation is why behavioral targeting proved revolutionary and quickly overshadowed traditional advertising.
As we’ve explained above, behavioral targeting requires marketers to collect information about their audience, analyze it, and then use it to deliver more relevant ads. But the question you probably have is — how do they do that?
The easiest way to collect behavioral data is by using a data management platform (DMP). These platforms usually gather, store, and organize audience information and their behavior on various websites. The advertisers then use that info when deciding whether to display their ads on a particular site.
DMPs don’t only collect data from websites, though; some of their other sources of information could be CRM systems, mobile apps, and other marketing automation systems, so advertisers have plenty of options.
The entire behavioral targeting process consists of three steps: data collection and analysis, segmentation, and application.
Let’s learn more about each of them!
The first step in your online behavioral advertising journey is data collection and analysis. Marketing automation systems and DMPs can help you collect different information on your site’s visitors that you can then use to serve relevant ads to them.
These platforms usually collect that data using cookies or tracking pixels, which you can later use to create a user profile. User or customer profiles contain all the necessary information on your visitors like gender, age, or interests that you can use to provide them with a better advertising experience.
Let’s look at the two primary types of user data you should be collecting:
Getting essential consumer data is an excellent start when preparing your online behavioral advertising campaign. This information can be anything from the users’ gender to their age. Such data is the first step toward pinpointing and reaching advertisers’ ideal customers. Here are some of the examples of information you will be collecting:
All of the above is tangible data that gives advertisers excellent insight into their audience demographics and helps narrow down their target advertising group. But there is much more to behavioral advertising than that.
As we’ve already mentioned, the backbone of behavioral advertising is behavioral targeting, and that is precisely what it sounds like — tracking and analyzing consumer behavior online to learn more about their interests and purchasing habits. The data you can collect to get this information is the following:
All of the above behavioral targeting metrics can be incredibly promising if used correctly. But collecting this data is just the first step. Now that you’ve done that, you have to segment and create your target audiences.
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Once you collect all the necessary behavioral data, it’s time to designate different consumer groups. You will do that by sorting your target audience into multiple groups, which will differ based on your product or service.
Let’s say you are a confectionery that specializes in custom-made cakes. If you decided to try using behavioral targeting to promote your business, you’d likely segment your audience as in the example below:
As you can see, the most relevant and most likely customers will be those who’ve already bought cake recently. However, those who have a sweet tooth for chocolate are also quality prospects. As for those who were looking for a cake recipe, their search intent does not match the product you’re offering, but they are still worthy prospects if you’re willing to invest in raising brand awareness. Who knows — maybe they decide it’s easier just to order a cake than bake one when the next birthday comes around?
Advertisers can apply this same process to any product or service out there. Just keep in mind that audience segmenting is crucial to your behavioral advertising campaign’s success!
Once you’ve finally designated your audience into different consumer groups, it’s time to implement your campaign. This process entails creating, launching, and optimizing your campaign.
Measure your advertising performance is crucial here. That is because you’re unlikely ever to make the optimal campaign without A/B testing it first. Luckily, most DMPs have various tools you can use to track your campaign’s success, like in-depth analytics, heatmaps, and much more. Using these to their fullest is essential to ensuring your campaign is going in the right direction.
Now that you’re familiar with how behavioral targeting works and how you should approach it, it’s time to compare this advertising method to one of its most prominent alternatives — contextual targeting. The differences between the two are pretty straightforward.
Behavioral targeting is superior to contextual targeting regarding user experience and ad relevance. The only downside to this technique over contextual targeting is that behavioral advertising requires investing in data collection, like a reputable DMP. The investment is often well worth it. In 78% of cases, businesses who invested in behavioral targeting and personalizing their ads saw substantial revenue growth, so why not join them?
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We’d be remiss not to mention that online behavioral advertising has had both positive and negative reception among consumers and advertisers alike. So despite it being an incredibly effective way of personalizing your ads, it does have its downsides. The best way to decide whether you want to use behavioral targeting to grow your business is to decide yourself. Here are the most notable pros and cons of behavioral advertising.
With all the above in mind, we cannot give a definitive answer to this question. Behavioral targeting gave advertisers worldwide the tools needed to optimize their ad spend by targeting only the most relevant consumers. At the same time, behavioral advertising has proven superior to all other forms of online and traditional advertising; that much is undeniable.
However, OBA does bring multiple legitimate privacy concerns that are yet to be addressed, but it’s only a matter of time before these questions reach the governments worldwide. So the question is — what will happen when it does? Will its effectiveness be impaired? Will it be banned? Or will it remain unchanged? We cannot say. But one thing is sure — using behavioral targeting can be an excellent tool for growing your business! The only question is if that will still be the case in the future.