Advertisers Cool on Behavioral

Publishers and advertisers are both adopting behavioral targeting, but at very different rates. Publishers continue to sign-on in strength, while advertisers aren’t jumping on the bandwagon quite as quickly as they have in the past. That’s according to a new report from 24/7 Real Media, which is expected to be released today.

The past three quarters have shown an increase in the number of publishers using behavioral targeting to serve ads through 24/7 Real Media’s OnTarget system. In this most recent report, for the second quarter of 2005, publisher participation was 289 percent higher than in the fourth quarter of 2004. Last quarter, adoption among publishers was 181 percent higher than Q4 2004. (The company uses the fourth quarter of last year as a benchmark because that’s when it started issuing behavioral targeting reports.)

Advertisers also continue to show strong acceptance of behavioral targeting, though participation dropped slightly between the first and second quarters of 2005. In the second quarter, usage of behavioral targeting was up only 129 percent over Q4 of 2004, while in the first quarter it had been up 147 percent.

Research supports the effectiveness of behavioral targeting, and 27/4 hopes data will invigorate interest from advertisers. Last quarter’s report touted a significant increase in click-through-rates (CTRs).

“When retargeting campaigns are done well, the results in terms of sales are unparalleled,” said Jack Smith, vice president of product strategy at 24/7 Real Media.

The report focuses on retargeting, a technique in which a person is tagged with a particular label — like “PC buyer” or “electronics site visitor” — based on his or her behavior. Then that person receives targeted messages when visiting others sites on the network. One case study cites a click-to-sale conversion rate increase of 270 percent, and a 50 percent decrease in cost-per-acquisition (CPA). Other companies practicing behavioral targeting have observed a reduction in clicks and an increase in conversions

“There are some segments that we don’t see a dramatic reduction in click through and the conversions are high,” said Smith. “It depends on the segment as to whether the clicks decrease; in general it does perform better.”

The report also points out the variations in CTRs among different creative types. It identifies the 160 x 600 unit as being the most effective size ad.

“In behavioral segments, this was a superior format,” said Smith. “We’re going to continue to test that as it performs over time.”