Tattertech Blog

Thanks to Google/DoubleClick, the FTC, and of course most recently, Facebook, privacy concerns have become front and center on the internet. While I’ll touch on the privacy concerns later (and thoughts on how to mitigate them), it’s important to first have a conversation on who benefits from behavioral advertising and why.

To properly scope the discussion - and to give the most basic background on what behavioral advertising means I am discussing here advertising that uses data determined from the user’s actions prior to showing the ad as behavioral (stored by cookie or login). Most likely this will concern tracking that the user visited some site or section of a site and using that to determine what ad to show to the user. This can obviously be across ad networks or within a publisher or portal.

So who benefits? Let’s start with the obvious…

The Advertiser:

It’s not difficult to see how the advertiser can benefit. In the case of a remarketing campaign, the advertiser gets to push the message to user’s who have already shown interest and push the user towards converting (or at least visiting again). Even outside of remarketing, the advertiser can tailor a message to an individual with specific interests or seek users likely in the market for the advertiser’s products/services. The advertiser can focus their efforts on the correct types of users (at least if they understand their customers) and cut out wasted impressions.

The Publisher (and/or Ad Network):

This one’s not too difficult to understand either. In this case the publisher (or ad network depending on the circumstance) can demand higher price from the advertiser because of the increased relevancy and value of each impression. And the publisher doesn’t even have to use up their most valuable impressions on the advertiser. Instead of having to put the ad on the front page or next to the applicable content (inventory that is already valuable and has a high price), the publisher can provide the same level of value outside of those premium impressions. This means greater monetization across their entire inventory. The location is no longer the primary concern for price, but rather the user being reached.

The User:

And here’s the crux of the deal - the end user benefits too. Rather than seeing useless ads that have nothing to do with actual interest, ads are delivered that are relevant to current interests. A greater debate about the good of advertising aside, a person interested in purchasing a car in the next few months is going to be more interested in ads related to cars than ads about cellphone plans. Behavioral even in its most simplest form is the recommendation engine of the internet advertising. It funnels the long tail of advertisements to the users that are potentially the most interested.

In short:

• The advertiser reaches the proper potential customers with the least waste.
• The publisher/network potentially increases the value of its least valuable inventory and drives higher margins/revenue without increasing page views or other metrics.
• The actual user sees more relevant ads instead of random clutter and hopefully derives some value from the advertiser’s directed message.

The largest cost in this ecosystem (although there are some technology and scaling concerns behind the scenes) is the user’s sense of privacy while I’ll tackle in my next post (such riveting topics as opt-in vs. opt-out, acceptable tracking, etc).

Tags: Advertising, behavioral, privacy

This entry was posted on Tuesday, December 11th, 2007 at 9:48 pm and is filed under Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.