Next Step in Behavioral Targeting?

Marketers know that segmentation is key to targeting which, in turn, leads to increased marketing ROI. From the beginning of the Internet savvy marketers have seen the potential for improved targeting that comes from tracking customer activities on the web, as indicated in the chart from eMarketer (newsletter, June 19, 2008). Behavioral targeting is well established, although not without issues from the consumer perspective. Remember the controversy over Facebook’s Beacon advertising program?

Consumers are wary that their privacy is being invaded by ad targeting efforts. eMarketer’s July 29 newsletter quotes a study from Harris Interactive that shows 55% of respondents “very” or “somewhat comfortable” with the privacy and security policies of sites that allow targeted advertising. That leaves 45% who are “not very” or “not at all comfortable” with those same policies. That’s an interesting split! In the same newsletter they quote a TNS study in which a large majority of respondents describe themselves as knowledgeable about both privacy threats and tools to deal with them. With due respect to our customers, I absolutely don’t believe they are knowledgeable. I know how much trouble behavioral marketers have in trying to explain behavioral analysis and targeting to potential customers. I also know how unaware my own graduate marketing students are of the basics of behavioral targeting on the web. Consumers think they are aware, but it’s highly unlikely that they understand the intricacies. If they knew, would they be more or less concerned? My guess is more, not less.

That’s not going to stop the unrelenting advance of technology though. In this iMediaConnection video Jim Calhoun of PopularMedia describes what his firm is doing to add data from the social graph to targeting models. Direct marketers have long known that people gravitate to others like themselves and have used that kind of affinity in segmentation and targeting. The next step may well be mapping out the social graph and using those connections to better understand consumers. The first 2 minutes of the video talk about the behavioral marketing developments; the second half is a bit of background on the social graph. Watch either or both segments—it will either fascinate you or creep you out—depending on your personal perspective!
View the video here.

Then think about your customers, and how they’re likely to feel. Then consider the following quote from Fran Maier, executive director of TRUSTe, the privacy organization.

“Education once again appears to be the key to finding a constructive balance between behavioral targeting and consumer privacy, because no matter how much we assure anonymity, there is still significant discomfort with the idea of tracking . . .We have a solid indication that consumers want us to find a way to get them the advertising that is relevant to them. In order to do this, behavioral targeting is one of the most promising methods, but at the very least, it has to be made more transparent, provide choices, and deliver real value.”

While I agree with that statement, I still have a question. Is “education” best done by a single enterprise or would it be better received from an objective third party? Third parties like TRUSTe have a major role to play, but so far it’s not clear to me that they are reaching the great mass of Internet users with any impact. I think businesses should worry about that. They should also make a herculean effort to let their customers know what they are doing and to explain the value that targeted advertising does bring. They have to do that in a way that’s comprehensible and not too self serving. That’s a tall order, but it’s necessary to build and maintain consumer trust!