Vonage embraces behavioral targeting

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Challenge: VoIP provider Vonage Holdings Corp. wanted to increase the conversion rates from its extensive online marketing efforts. The company, which counts about 20% of its customer base in the small office/home office, b-to-b camp—-customers with eight or fewer telephone lines—has made a strategic choice to focus its marketing efforts online.

Internet advertising represents more than 50% the company’s marketing budget, according to CMO Dean Harris, who noted that online campaigns are especially appropriate for Vonage because its Internet-based telephone service requires that customers use a broadband connection.

"Our customers are broadband users and we’re an online brand," Harris said. By emphasizing online campaigns, he added, Vonage can distinguish itself from traditional phone companies, such as AT&T Corp., which recently unveiled its own VoIP initiative.

While Vonage currently enjoys VoIP leadership, with about 270,000 customers, the VoIP market is burgeoning. According to a recent Yankee Group report, the VoIP market will grow from more than 1 million users by the end of this year to 17.5 million four years from now.

"It doesn’t make sense for us to try and dominate newspapers, TV or direct mail," Harris said. So it was natural that this company committed early to exploring the potential of one of the newest forms of online advertising: behavioral targeting.

Solution: Vonage turned to, a leading interactive network that applies its LeadBack behavioral segmentation technology against inventory from Web, search engine and e-mail publishers. was acquired by America Online in August.

For the Vonage project, was able to deliver sequenced messaging to prospects depending on how they interacted with Vonage’s site.

The targeted messages were delivered to site visitors while they were on Vonage’s site or whenever they entered a site on’s network. For instance, customers who entered the Vonage e-commerce site but didn’t complete a transaction were shown tailored creative. Carat Interactive was the agency on the project.

Over time,’s automated systems weighted, or gave more impressions to, Vonage ads that resulted in high conversion rates across the network.

Results: While Vonage had tried behavioral targeting on some large, horizontal portal sites, the network of sites was more effective, according to Harris, who said the company saw a 172% lift in conversions.’s own Optigence study, released in June, concluded that showing consumers ads based on their real-time online behavior has a greater impact on campaign performance than reaching users based on predetermined profiles.

Harris said that about 40% of his online spending is now being applied to behavioral targeting.

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