Should You Invest in Profiling Your Audience?

Last week we talked about profiling on web sites; how it works for e-commerce sites, and how that translates to advertiser effectiveness for ad-funded sites. Many online advertisers don’t think it works very well because their click rates don’t go up proportionately to the increased CPMs for the profile targeted inventory.

What’s the problem? Shouldn’t ads that speak to my interests increase the odds that I’ll click through? Sure it should, if we assume that every consumer is always in buying mode for everything they are interested in. We are back to that old direct response vs. brand awareness issue.

To stay with last week’s example, if a visitor goes to etoys, parentsoup and babycenter.com, it is a pretty good guess that the person is a parent. And potentially in the market for children’s items. But can those sites tell the difference between a parent visiting a week before the child’s birthday, when shopping is top of mind, and a week after, when they can’t imagine needing another new toy or gift for years? Nope, profiling can only identify areas of likely interest, not a present predisposition to buy.

Most parents we know are always on the lookout for great toys and gifts and children’s items, always curious about educational tools, always open to great new ideas to make their kids happy. But they are not always making a purchase. Much of that looking and research, like all consumer and B2B information gathering, is with the idea of storing the information in memory until the appropriate time to make a purchase. So profiling, while great for finding the likely prospects (when done well), is not necessarily a great way to generate immediate click-throughs.

More and more research is showing that branding does work online. We’ve covered it here before and most likely will again. That’s not today’s debate, though. If you are selling your ads largely on the merit of click rates, the issue is whether it makes sense to invest in profiling your audience.

For advertisers who will evaluate your site’s effectiveness based only on clicks (the most primitive measure available to online marketers today), investing in personalization is like building a cruiseliner for a traveler who just wants to walk. Overkill, big time.

That’s not to say that personalization tools and profiling efforts are not great investments for an advertising-funded site. They are, if you are selling to advertisers and agencies that can appreciate this caliber of information, and if your sales force is equipped to make the most of these sophisticated tools. Most of the online ad sales teams we’ve seen, still need training to help them utilize these rich-selling tools.

So, what do we recommend?

• Evaluate your advertiser base in order to understand how advertisers make ad-buying decisions now.
• Evaluate whether your site is a good potential buy for the more targeting savvy and discriminating advertisers out there.
• Understand both the advertiser and the agency point of view on buying online; don’t assume they are a match.
• Analyze your site’s potential to see if personalization will help you better understand and describe your audience.
• Invest in personalization tools ONLY if you are willing to also invest the effort in training your sales team on making the most of them.
• Support that investment with marketing messages to your advertisers so they know the advantages your profiling can offer.
• Use the findings of those personalization tools to continually improve your site and audience segmentation to make more and more refined ad offerings possible.

Personalization and profiling can both be enormous boons to the ad-funded site, but neither serve well as a band-aid. Use the tools to rethink your sales effort, or you could be wasting your time.