Value of Behavioral targeting: Are Social networks the first in line?

Internet community is talking a lot about behavioral targeting these days. Members of this discussion can be divided into two camps: Like and don’t like.

Like camp
Imagine the nightmare of less annoying ads that might actually provide more useful information to site visitors? Isn’t serving up “untargeted” dumb banner ads for heart medicaments to young people and Victoria’s Secret ads to school kids the problem of modern online advertising? We actually make advertising more relevant and interest-based!

Don’t like camp
People are concerned about privacy in the internet. Advertising sell people things they don’t actually need. Things like television sets, automobiles, catsup, mattresses, cosmetics, ranges, refrigerators, and so on and on are only optional stuff. Behavioral targeting allows manipulating people more effectively. 🙂

Here are some interesting readings related to this topic:
– Online Advertising & User Privacy: Principles to Guide the Debatehttp://www.pff.org/issues-pubs/ps/2008/pdf/ps4.19onlinetargeting.pdf
– Targeted Online Advertising: What’s the Harm & Where Are We Heading?http://www.pff.org/issues-pubs/pops/2009/pop16.2targetonlinead.pdf
Platform for Privacy Preferences (P3P) Projecthttp://www.w3.org/P3P/

But no matter if you like it or not online advertisers will try to improve effectiveness of campaigns. Meanwhile the Network Advertising Initiative (NAI) released a study called “The Value of Behavioral Targeting” by Howard Beales- derived from explicit data from 12 ad networks, including nine of the top 15 ad networks by total unique visitors according to comScore’s December 2009 rankings.
Results of this study indicate that behavioral targeting is an essential part of ad network, publisher, and advertiser success.

Three main conclusions from this study, quote from article:
„First, advertising rates are significantly higher for behaviorally targeted (BT) ads. The average CPM for BT advertising is just over twice the average CPM for run of network (RON) advertising. On average across participating networks, the price of BT advertising in 2009 was 2.68 times the price of run of network advertising. Second, advertising using BT is more successful than standard run of network advertising, creating greater utility for consumers and clear appeal for advertisers. Conversion rates for BT advertising are more than twice the rate for RON advertising. Third, a majority of network advertising revenue is spent acquiring advertising inventory from Web content and services providers, making BT an important source of revenue for publishers as well as ad networks.“
This study clearly explains why social networks as Facebook, MySpace, Twitter and others are so popular for online advertisers – these social networks already include all elements required for behavioral targeting. For example in Facebook, if you are a fan of „Photo club“ page or a group than you will see an ad of a new camera or photographer related stuff more often.

Implementation of behavioral targeting out of the scope of social networks is quite challenging and technically not so easy solution since it requires personalization of anonymous cookies. So, let‘s use the power of social networks! 🙂

Final word – I vote for personalized content rather for dumb ads.

p.s. if you are paranoiac about your privacy just clear cookies more often 🙂