Behavioral targeting may keep advertisers front and center with their target audiences. It may also keep some publishers in business.
The practice, which involves tracking consumers' Web surfing and shopping habits so marketers can deliver ads to audiences most interested in them, is paying off for the companies that are dabbling in this space, according to a survey the Network Advertising Initiative (NAI).
The survey, conducted with 12 advertising networks, shows that conversion rates for the targeted ads are 6.8%, compared to 2.8% for the nontargeted. That means that consumers who click on ads targeted specifically to them are more than twice as likely to buy the advertised product.
Publishers, too, are seeing the benefits of behaviorally targeted ads. The average cost per thousand clicks of a behaviorally targeted ad in 2009 was $4.12, up 108% from a run of the network ad sold in the same year.
The study by the NAI, an association of advertising networks, data exchanges and marketing analytics services, shows that behavioral ads are a small but fast-growing part of their business. For nine of the advertising networks surveyed, the ads brought in 18% of their collective $3.3 billion in revenue last year.
The survey is supposed to bolster the ad industry's case for behavioral targeting before Federal regulators and policymakers introduce Internet privacy regulation. Policy discussion around advertising and privacy has thus far lacked enough data on the value of behavioral ads to publishers, ad networks and consumers, says Howard Beals, a commissioner of the NAI study and former director of the Federal Trade Commission's Bureau of Consumer Protection. The FTC is expected to err on the side of consumer protection and may prohibit behavioral targeting not voluntarily chosen by consumers.
"The study demonstrates the increasing significance of behavioral advertising to the economic model supporting free online content and services for consumers," says Charles Curran, executive director of the NAI.
