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BEHAVIORAL TARGETING GAINS IN FAVOR AMONG ADVERTISERS

Lack of Web Inventory, Rising Costs, Clutter and Effectiveness Cited

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AMELIA ISLAND, Fla. (AdAge.com) -- Sixty-four percent of interactive ad agencies surveyed by iMedia and research firm Ponenom Research are currently using behavioral targeting in their client's online campaigns.
Online bahavioral targeting is rapidly gaining in favor among interactive advertising agencies and thier client marketers.
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Of those who aren't using it, 58% said they plan to do so in the next year. Those who are staying away from the Internet ad-serving tactic said they are concerned about privacy issues.

The findings were made public at last week's iMedia Summit here.

Database-driven system
Behavioral targeting is a database-based online ad targeting system that tracks a consumer's behavior on a Web site to determine his or her interests, then serves ads to that person relevant to that interest. Some systems serve the ads to wherever the person goes within a Web site; others can serve the targeted ads across a larger network of Web sites.

For example, someone who spent time on a financial site looking up mortgage rates could be assumed to be in the market for a new home, so they could be served ads from a mortgage company on whatever Web pages they visit. They could see a mortgage rate ad while they are checking the weather or sports headlines.

Tacoda, Revenue Science
For the iMedia study, behavioral targeting refers to companies such as Tacoda and Revenue Science that serve ads on publishers' sites; companies like 24/7 Real Media that do targeting based on behavior across a network of sites; adware firms such as Claria and WhenU, whose ad software is downloaded to work from the hard drives of individual consumer's computers. Agencies surveyed were those attending the iMedia summit here on Amelia Island.

The practice is growing because there "is a shortage of prime real estate inventory on the Web," said Neil Perry, vice president of market intelligence at iMedia Communications, referring to premier locations such as the home pages of portals like Yahoo or MSN and well-trafficked vertical interest sites. Often the best inventory is snatched up early in online upfronts, said Mr. Perry, who oversaw the analysis and writing of the research and presented the results at the conference.

Another reason for the popularity of behavioral targeting is that prime inventory has become very expensive, Mr. Perry added. Sites have become very cluttered with ads from an advertiser's direct competitors appearing on page after page of the site.

'Significantly better results'
Marketers have also realized that behavioral targeting "gets significantly better results than prime ad locations," Mr. Perry said. For example, a Volkswagen Jetta A4 campaign done by remnant advertising network Advertising.com, placed 100 million branded placements, and received 9,000 clickthroughs from consumers looking for more information. But among 10 million impressions served on behaviorally targeted sites, there were 10,000 clickthroughs for more information.

"When you can serve people an ad that shows people what they're looking for, it gets great results," Mr. Perry said. "Behavioral targeting is targeting people, not pages."

Indeed, 83% of advertisers using the method were satisfied or very satisfied with it, according to the survey.

Most use publisher's site
Most advertisers (90%) use behavioral targeting through a publisher's site, their agencies told the survey takers. One-half use the tactic through an ad network. One-third use adware.

Advertisers' main concern is privacy or the perception of privacy not being honored. Some 78% of survey respondents said it is important that a behavioral targeting company not be perceived as a source of spyware. And 97% said good privacy and data security are the most important issues in using the method.

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