Retailers Can Benefit From Behavioral Targeting

By Claudia Bruemmer

Behavioral targeting (BT) can be rewarding for retailers. However you have to know how to measure and track the relevant variables to get the best results.

The Lure of BT

As a retailer, you probably use direct response and various types of promotions as a major part of your marketing strategy. Most retailers favor online programs such as affiliate marketing, email marketing and paid search strategies. These programs follow a direct marketing ad model.

The promise of BT has grabbed the attention of retailers because it fits right into the direct marketing model. BT can also address some of the key issues that challenge online retailers. Issues such as increased competition, escalating keyword prices in paid search, new customer acquisition and incremental sales goals.

BT for Retailers

The inclusion of BT strategies in an online marketing program can significantly advance your revenue goals and grow your business. ValueClick Media General Manager David Yovanno says, “We have consistently found that by using behavioral targeting in a scalable environment, marketers can reliably expect significant and repeatable increases in their ROI.”

However, retailers need to understand that BT is more of a tool for building demand and qualifying potential buyers. It’s not a sales-driving tactic at the last point in the conversion funnel. Strategies like search engine marketing will drive people to the point of sale in a demand market, and BT helps earlier in the sales cycle, building demand and qualifying your prospects.

To get the most bang for your buck from BT, you need to understand as much as you can about your customers’ behavior patterns. There are a lot of great analytics platforms that can provide rich data and insight to fuel your BT strategy. Other insights that can contribute to an effective BT program include seasonality, industry trends and market conditions.

Identifying Actionable Behavior

You can gain insight from actionable data that will help you sharpen your competitive edge. Meet your stated business goals by integrating behavioral targeting concurrently with search marketing, email marketing and other media.

An understanding of customer behavior such as shopping cart abandonment can be put together with information from industry trends to help you effectively plan marketing campaigns. If an industry study shows that consumers like certain policies such as a liberal return policy or a purchase online with in-store pickup policy, you can elect to initiate those policies based in industry data. Simply target the prospects that visited your site but didn’t purchase with an email message advising them of your new return policy or in-store pickup capability. This type of retargeting often results in many new conversions.

Data In, Data Out

In addition to understanding customer behavior, retailers must also understand the results data from a BT program. While most retailers measure click-throughs to conversions/sales, this may show a high percentage of view-throughs, even as high as 90 percent. While this represents exposure to your ad or message, the actual conversion or sale can take place at different points in time after the initial ad impression. By using cookies, you can determine whether or not your site visitors have been exposed to an ad previously, enabling proper credit of a view-through.

It is important to measure the impact of BT programs on your search programs, looking at such metrics as Overall Increase in Sales, Reduction in Cost of Sale, Increase in Average Order Value and so forth.

Retailers can experience significant overall lifts in conversions when introducing BT. For instance, ValueClick Media reported that an electronics retailer client saw conversion rates to sales of over 15 percent with behavioral targeting, which compared to a 2.97 percent conversion rate from its run-of-network campaign. However, you need to understand these metrics, what the numbers mean and how your promotional programs interact with each other to achieve overall success.

BT Tips for Retail Sites

• Do not measure BT solely on a direct-to-sales metric.

• Be aware of customer behavior patterns, industry trends, sales pressure, and market opportunities to determine your targeting strategy.

• Consider the impact of BT on all other marketing programs to determine ROI.

• BT programs take time to develop. Give yourself six to eight weeks before trying to determine results.

• Proper BT budget allocation is important in order to realize gains. This can depend on your overall online marketing and advertising budget.

BT has the power to fuel online marketing and advertising programs. As a retailer, you must understand how to measure BT within your overall ROI equation and business goals to fully engage its potential.

Microsoft offered its version of the future of online advertising this week at its third annual Demo Fest, a two-day gathering at Microsoft’s Redmond campus.

The event focused on showcasing the digital advertising tools developed in Microsoft’s adCenter Labs. The tools represent nearly 60 technologies at various stages of development, including keyword technologies, consumer orientation technologies, video display technologies and many others.

“The technologies showcased at Demo Fest will help create unprecedented opportunity for developers and search engine marketers like the Keyword Services Platform,” said Tarek Najm, engineer and general manager of Microsoft adCenter at Microsoft. “KSP is a service that provides a framework for researchers to plug in advanced algorithms in the form of building blocks to be consumed by developers for building sophisticated advertiser applications.”

Below is a sample of the new adCenter Labs technologies that can help provide a good advertising experience for users, advertisers and developers.

Keyword Technologies
Keyword technology plays a vital role in paid search and contextual ads by allowing advertisers to reach consumers interested in their products and services based on the terms entered into a search query box.

Commercial Intent Detection: This advanced keyword analysis tool helps differentiate consumers ready to purchase online from consumers searching for information about products or performing other tasks. The tool provides a probability score indicating the likelihood that a keyword or phrase is part of a search with commercial intent. This can be used to track user progress through the conversion funnel, or to determine that the user is not looking to buy.

Query Entity Detection: This technology detects the best way to break down a multiword query. For instance, if a user searches for “real estate agent,” this tool can tell that “real estate” is one phrase and “agent” is another. This tool helps determine the meaning of a query term, improving the relevance of search results.

Keyword Services Platform: This will enable developers to build more intelligent applications for online advertising. It provides a set of web service APIs related to keyword technologies such as keyword recommendation, forecasting, categorization and monetization. To quote James Colborn, product manager for adCenter Labs, “We’re making it an open network by publishing and sharing the algorithm. We’re excited to see how our partners will build on the KSP.”

Contextual Advertising: This technology classifies web sites and keywords into a hierarchical taxonomy. This helps increase the relevance of contextual ads by ensuring the categories of publisher sites are relevant to advertisers’ products and services.

Consumer Orientation Technologies

When placing online ads, marketers must consider the idiosyncrasies of different consumers audiences.

Sensitive Content Detection: This technology can help detect when web pages contain content considered objectionable by the general public, such as pornography, crime or terrorism.

Large Display Feedback: This vision-based technology creates interactive public displays that can measure audience size, track audience gestures and estimate demographics.

Content Classification: This technology will help increase the probability that ads displayed during web searches are relevant to consumer queries. The technology does this by accurately analyzing and matching the web pages included in search results.

Video Display Technologies

Online video gives advertisers a powerful medium to connect with consumers, particularly when the video includes interactive and other advanced technology.

Social Video Sharing: This tool allows users to highlight and comment on information within a specific area of a video frame. This allows users to participate in meaningful, social interactions on specific topics within the video. Users can discuss how the umpire just made a bad call on a pitch, or ask questions about a step in baking instructions.

Video Hyperlinks: This stand-alone tool allows marketers to embed video hyperlinks within online video ads. The hyperlinks can be associated with specific products in the video, leading consumers to web sites where they can get additional information or purchase products.

Search marketers have using Microsoft adCenter for a few months now and are generally satisfied with its targeting capabilities. The major shortcoming is traffic volume, due to ads displayed on limited inventory. ContentAds is expected to help expand inventory.

You can view the Press Release here: http://www.microsoft.com/presspass/newsroom/msn/factsheet/adCenterBreakthroughsFS.mspx

I’m sure you’ve all heard about the Net Neutrality issue and how AT&T was fighting this legislation tooth and nail but then made a concession not to pursue two-tiered pricing on the Internet in return for getting FCC approval for it’s lucrative ATT-BellSouth merger.
However, this concession by ATT does not mean that the legislation is going to be passed. Republicans have historically opposed it while Democrats are in favor. Recently, two senators, one a Democrat (Sen. Byron Dorgan, D-ND) and the other a Republican (Sen. Olympia Snowe, R-ME) have introduced a bill to guarantee that Internet service providers do not discriminate against content providers with two-tiered pricing policies. Rep. Edward J. Markey (D-MA), head of the House Energy and Commerce subcommittee on telecommunications and the Internet, plans to hold hearings on a newly introduced Net Neutrality bill later this year.
Both House and Senate refused to pass Net Neutrality legislation last year, and it could also be an uphill battle this year. The very nature of the Internet is threatened if Net Neutrality does not pass. It will no longer be a level playing field for all comers if two-tiered pricing is allowed to prevail, abandoning both free speech and commerce.
We at JP Communications support this legislation. Net Neutrality will guarantee that all companies and individuals, large and small, will have the same access to consumers on the Internet. This democratic principle lies at the foundation of the Internet and should remain intact as we go forward.

Those who advocate charging more for rich media delivery content are the big telcos (AT&T and Verizon) and the cable companies (Comcast). They propose a two-tiered pricing model that would allow companies who can afford it to pay more for getting their rich media pages loaded faster. Convenient for them, but not for everyone else.
Note that these opponents claim regulation of the Internet is unnecessary and will stifle investment, innovation and creativity. However, Net Neutrality is not about regulating the Internet. It is about regulating the carriers.
We need to keep the barriers to entry low on the Internet. This position is held by Net Neutrality advocates such as Google, Yahoo, Amazon and eBay, to name a few. Many of today’s Internet giants did not even exist in the early ‘90s. It was only because of the Internet’s low-entry barriers and ability to connect consumer with marketers that these Internet companies are worth billions of dollars today. This will never happen again if Net Neutrality legislation is not passed. If you work in any Internet marketing channel, I urge you to support Net Neutrality. I urge you to support Net Neutrality by contacting your Congressional Representative and Senators to let them know how you feel.

Jason Prescott

If your company uses Yahoo Search Marketing pay per click advertising you probably are already aware there has recently been some changes, upgrades they like to call them, to the program. As a whole I am not particularly impressed but some advertisers I have spoken with seem very pleased.

Here’s what’s going to different.

Remember when you were setting up your old account? You had to generate separate ads for each key word or phrase. Now, titles, descriptions, and URLS can be applied to multiple keywords. This will cut down the time needed to create ads and will make it possible for quicker adjustments to your campaign.

If you have always wanted to test different version of an ad to see which is most effective the new manner of grouping keyword should make that easier. A single ad group will now be able to contain up to 1,000 keywords and 20 ads. This feature brings Yahoo Search Marketing more into line with Google Adwords.

If you already have an existing account you should have received an email telling you how you can see a preview of the upgrade of your account. This notice should come approximately one week before your upgrade is available. Once your preview is ready you can take a look at read-only version and get an idea of what’s up and how to navigate through the impressive collection of reports and ad building tools.

Whenever you are ready you can select to put the upgrade in place for your account. Now this process will take about eight hours and during that time you will not have access to your account so you will most likely want to choose a time during the night or other off period.

If you don’t want to fool with doing the upgrade yourself simply do nothing and Yahoo will do the upgrade themselves. Yahoo will send you an email telling you on what date they will make the changes. You will continue to use your old username and password but will need to go to the new login page. The emails from Yahoo will contain this link or there is a link to use on the old login page. If you have an account and haven’t heard from Yahoo you should probably get ahold of them to be sure there have been no mistakes.

While the new system isn’t an Earth shattering change it does make Search Marketing function more like Adwords. To my mind this is a pretty good thing as I have always found Adwords a good deal easier to work with than Search Marketing. Not bad, Yahoo.

On Tuesday January 10th Apple made its much anticipated move into the mobile phone business, unveiling a new device that’s controlled by touch, plays music, surfs the Internet and runs the Macintosh OS operating system. To stress the company’s move into consumer electronics Steve Jobs then renamed the company to “Apple Inc.” Dropping the word computer from their title. Kind of sad really, like the end of an era.

The new phone is called, not surprisingly, the iPhone, and will have a starting retail price of $499. The phone will “reinvent” the telecommunications sector and “leapfrog” past the current generation of hard-to-use smart phones, Jobs said. Although I must say that I never heard anyone complain about the difficulty of using their phone and reinvent is a term we hear all too frequently. But given the amazing success of many of Apples projects, iTunes and the iPod spring to mind, it is quite possible that electronics retailing might never be the same.

Unlike other smartphones, the iPhone will have no keyboard but will have a touch-sensitive screen from which users will be able to type messages, launch applications, dial phone numbers, and perform similar tasks.

“Every once in a while a revolutionary product comes along that changes everything,” he said during his keynote address at the annual Macworld Conference and Expo. “It’s very fortunate if you can work on just one of these in your career. … Apple’s been very fortunate in that it’s introduced a few of these.” The iPhone will be available in June in the U.S. but won’t be available in Europe and Asia until 2008.

Jobs set forth the rather modest goal of selling 10 million phones before the overseas release date. Assuming they meet this goal it will represent only 1% of the total cell phones sold in the United States this year.

Jobs also unveiled a TV set-top box that allows people to send video from their computers to their televisions. With the rise of online video downloads and similar media this device is likely to be a boost for the company. He announced a Feb. 1 ship date for the TV box.

Investor were certainly excited by the new venture, Apple shares climbed more than 6 percent on the announcement.

Business and professional users searching for work-related information on the web are not finding needed data through general search engines like Google and Yahoo. A 2006 study by Outsell reported a search failure rate of 31.9 percent among business users when searching from major search engines. With one-third of the B2B and professional business queries producing unsatisfactory results on Google, this presents an opportunity for vertical search engines (VSEs).
Another study by Convera conducted in December 2006, shows that professionals in virtually every industry cannot find important work-related information on the major search engines. Convera surveyed 1,112 professionals in publishing, advertising, marketing, healthcare, finance, government and other industries. Results show that B2B professionals using general search engines do not find queried information quickly or easily.
One of the problems is that Internet search engines were not designed to be used as business tools. Another reason is that most industry professionals are not trained in research practices. As a result, only 4 out of 10 professionals are very satisfied with search results on general search engines.
· Only 11 percent always find what they are looking for on the first attempt.
· Only 43 percent always find what they are looking for after several attempts.
· Only 21 percent feel their query is always understood.
General Search Engines Work Well for Consumers
General search engines rely strongly on the popularity theory that rewards sites with authoritative inbound links. Website popularity and keyword relevancy (among other variables) help determine rankings. The relevancy model works well for consumer search, and consumers usually find what they are looking for on page one of search results. For instance, a search for Toyota Camry brings up 2,630,000 results on Google and 6,740,000 on Yahoo (at time of writing). So there is no scarcity of information on Google and Yahoo when consumers are looking for product information.
Professionals, on the other hand, get a mixed bag. They are used to instant success with their consumer searches, but when it comes to looking up business information, it’s a different story. Here’s what generally happens with many business searches.
When several business searches fail, 93 percent of professionals will enter a similar term into the same search engine hoping for better results. (This is the same result found in other studies on search behavior.) Some of them (53%) will try a different general search engine. When these searches lead nowhere, 52 percent will turn to a vertical or topic-specific search engine. A third may give up altogether; however, 41 percent will make 6 to 10 search attempts before quitting, and another 47 percent will try up to 5 times.
Sounds like work, right? So it’s no wonder that many of these professionals report getting lost or distracted. Here’s what professionals do when they don’t find what they need, and they don’t give up easy.
· 17 percent quit before 5 minutes
· 42 percent continue up to 15 minutes
· 24 percent continue up to 30 minutes
· 17 percent continue more than 30 minutes
So it’s no surprise that 70 percent of the professionals surveyed reported that they get sidetracked during the search process. Of that group, 68 percent end up on sites they did not expect to visit and are not relevant to their work.
When the search process fails, 52 percent believe the data they seek exists but they just can’t find it. Only 23 percent are very confident they’ve covered all the bases. About one-third admit to making decisions without all the needed information.
More Relevant Search for B2B

The past year has seen a number of new VSEs targeted at professionals. These resources offer options that allow professionals to tailor searches according to their own requirements. The most significant trend is that of trade publications developing their own online vertical search destinations for their professional communities. These customized search engines will provide a more relevant search experience for B2B users. When asked about their expectations for these new vertical search resources, nearly 90 percent of professionals indicated they believed such search engines would offer more relevant contact.
· 86 percent said VSEs would locate content more quickly.
· 85 percent believe VSEs would offer access to content not indexed by popular search engines.
Vertical Search in Wholesale Merchandising
Because the current general search options do not meet the needs of B2B and professional users, vertical search is becoming more important than ever before. Both vertical search engines and customized search engines are making it easier for professionals to find the data they need.
If you are in the wholesale general merchandising industry, the following VSEs put buyers and sellers of wholesale merchandise together:
TopTenWholesale is a B2B wholesale merchandise search engine offering pay-per-click, banner and promotional marketing to wholesale companies.
Wholezilla is a B2B wholesale product comparison search engine and the only wholesale search engine on the web that lets retailers compare pricing and product information from wholesalers. Wholesalers can submit their data feeds at no charge.
OffpriceNetwork is the only wholesale directory for the Off Price Apparel industry. Wholesalers can add their websites to the directory (6 sites for a $249 listing fee). OffpriceNetwork caters to the wholesale apparel and fashion accessory industry, offering over 80 categories, blogs, classifieds and forums.
WholesaleU is the most mature directory of wholesalers on the web, offering access to wholesale companies at no fee. Wholesalers can add their websites to the directory (6 sites for a $249 listing fee). Catering to the general merchandise, closeout, and dropship community, WholesaleU offers over 80 categories, blogs, classifieds and forums.
Vertical Search Meets the Needs of B2B
Today, it appears that general search engines do not adequately serve professionals, leaving them with unmet needs. The advantages of vertical search will go a long way toward providing professionals with relevant business results.