Retailers Can Benefit From Behavioral Targeting

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.