Everything Advertisers Need to Know About Behavioral Targeting

behavioral advertising
  • Post category:Ad Tech
  • Reading time:17 mins read
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Digital advertising has completely overthrown traditional and become the most popular marketing format in recent years. This takeover came from the advanced technology that allowed advertisers to target their audience more effectively, serving actual relevant ads to consumers, unlike traditional advertising, where ads are not consumer-specific. Today, this targeting technology, more precisely behavioral targeting, has become the backbone of many digital marketing campaigns.

What Is Behavioral Targeting?

Behavioral targeting is one of the central targeting methods of online advertising. This method tracks and analyzes individual users’ online behavior, with the goal of delivering highly personalized advertising content to each online user. It relies on invaluable data, such as the user’s web browsing history, social media interactions, purchases, and other online activities, to create a profile of user interests and preferences.

behavioral targeting illustration
Behavioral Targeting

How Does Behavioral Targeting Work?

Behavioral targeting requires marketers to collect information about their audience, analyze it, and then use it to deliver more relevant ads. Collecting data is usually done with the help of a data management platform (DMP). These platforms collect, store, and manage first-, second-, and third-party user information. 

In simple terms, DMPs segment and organize raw data to help brands and advertisers easily assess their target audience and adjust their campaigns accordingly. CMPs collect data with the help of third-party cookies and tracking pixels. 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. Either way, this data is separated into two categories:

  • User Information — User information refers to audience demographics ( i.e., age and gender), GEO information, mobile device data, subscriptions, registration data, and similar. These insights help advertisers narrow down their target groups.
  • Consumer Behavior — Consumer behavior includes data such as purchase histories, page dwell time, most visited pages, web searches, ad and link clicks, and website interactions. These interactions can also give you insight into whether a certain ad format will perform better than another. For instance, if your target users have a history of interacting with video content, pushing video ads in your campaign might be the right choice.  
Consumer Behavior  illustration
Consumer Behavior

The final step in the targeting process is to ensure the delivery of advertising content to the most relevant users. Of course, this will require some A/B testing, regular campaign tracking, and optimization. Many DMPs have built-in tools that you can use to track your campaign’s success, like in-depth analytics, heatmaps, and more.

Types of Behavioral Targeting 

Overall, behavioral targeting can be based on on-site and off-site data. So, we can differentiate between:

  • On-Site Behavioral Targeting — On-site behavioral targeting collects data from a specific website and focuses on serving ads on said website with user experience in mind. This means that users are delivered ads based on their data and activities on that specific site. 
  • Network Behavioral Targeting — This behavioral targeting method relies on data collected from the Internet, more specifically, across multiple websites. Network behavioral targeting collects data through third-party cookies and IP addresses, without tracking the user’s personal information. In other words, it delivers ads based on the user’s overall online behavior.

Behavioral vs. Contextual Targeting

An alternative targeting method to behavioral is contextual. Contextual targeting is a less personal approach and relies on contextwebsite page content, and not the user’s online behavior patterns. This means that the ad content will be in some way related to the webpage content. For instance, if a user visits a bookshop website, the ads on the website will have something to do with books (e.g., audiobook apps, book event promotions, etc.). Overall, contextual targeting offers a less intrusive way to advertise, and with the third-party cookies phase-out in the process, it is potentially a valuable alternative to behavioral in the long run.

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Pros and Cons of Behavioral Advertising

As with any advertising method, there are both benefits and downsides to implementing behavioral targeting into your strategy. Especially with new privacy policies, advertisers need to make sure that this targeting option best coincides with their campaign goals. 

Pros

  • Product/Service Relevance — With behavioral targeting, advertisers can deliver personalized ads that cater to the user’s interests and preferences. 
  • Better Engagement — With greater relevance to the user, targeted ads are more likely to capture the user’s attention and in turn, receive higher engagement and potentially higher click-through rates. 
  • Higher ROI — By targeting users who are more likely to be interested in their products or services, advertisers can potentially see a higher return on investment from their ad campaigns.

Cons

  • Privacy Issues — One of the biggest problems with behavioral advertising is how intrusive it is, causing privacy and ethical concerns. Many users find personalized ads that know too much about them unsettling. As a result, GDPR made sure that users have a say in which cookies are allowed to collect their data. This means that accurate user data is much harder to collect than it was before. 
  • Unreliable Data — At first glance behavioral targeting seems more precise due to the tracking of online user behavior patterns. However, this is not always the case. For instance, If multiple people use the same device or if the historical data is no longer relevant (e.g., a person has already bought something they were viewing two weeks ago, but the ads are still showing when they browse online), it leads to inaccurate targeting and consumer dissatisfaction. 
  • Disappearance of Third-Party Cookies — With many browsers already preventing third-party cookie usage and Google soon to follow suit, behavioral advertising will, one day, be completely replaced. 

Behavioral Targeting in the Post-Cookie Era

With the third-party cookie phase-out underway, advertisers see contextual targeting (ad serving based on website page content) and consent-driven data (first-party cookies collected directly from website and app visitors) as plausible alternatives. However, the biggest aid in the post-cookie era will most definitely be Google’s new feature within the Privacy Sandbox mechanism, Topics API. Topics API enables interest-based advertising (IBA) without the need for tracking websites and user visits. It works as follows:

  1. The browser observes and records topics that the user shows interest in based on their browsing activity.
  2. The information is recorded on the user’s device. 
  3. Then, the Topics API can give API callers (such as ad tech platforms) access to a user’s topics of interest.

However, this will not reveal any additional information about the user’s browsing activity except for the topics of interest.  

Third-Party Cookies illustration
No More Third-Party Cookies

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FAQ

1. What is behavioral targeting?

2. How does behavioral targeting work?

3. What is an example of behavioral targeting? 

4. What is behavioral targeting vs contextual targeting?