ECommerce-Guide
By Michelle Megna, November 27, 2006
While devising strategy for your holiday marketing campaign, you've likely mapped out and executed search-engine and multi-channel promotions and offered incentives such as free shipping. But there's a less traditional approach that you can add to the mix that's worth considering: out of context behavioral advertising.
The way these ads work seems counterintuitive, but according to marketers, they produce higher conversion rates compared to contextual ads. Behavioral ads are placed at sites that have nothing to do with the product being sold. Instead, they are posted out of context at other Web sites that a consumer is likely to visit, based on a profile of their actions, or behavior, while surfing the Web.
This differs, obviously, from contextual ads, which are placed at Web sites that pertain to the goods being offered. In the latter case, for example, pots and pans may be advertised at a gourmet cooking site featuring recipes and the like. However, in the case of a behavioral ad, a profile of your surfing habits would show that you like extreme sports in addition to cooking, so the ad for pots and pans is placed at the sports site.
Element of Surprise May Benefit Sellers
"Data shows that people are more likely to click on the ad when out of context, when they wouldn't normally expect to see it," said Dakota Sullivan, chief marketing officer of BlueLithium. "And more importantly, our studies show they are more likely to convert that click to a sale. So if you have an ad for pans in an environment that's not competing with other cooking gear, it's more effective at grabbing the person's attention and motivating them to buy."
BlueLithium employs behavioral ads for clients — 6 billion a month to about 100 million unique users — by doing the following: its ad network is comprised of about 1,000 different Web sites, ranging from larger portals like Yahoo! to what Sullivan calls "more granular content sites." The network includes more than 70 of ComScore's top 100 sites in regard to traffic. Potential customers are assigned anonymous cookies (no personal information is gathered) as they browse, and a profile of their surfing habits is built, which is tracked with the cookie ID number. Ads are then served across the network that corresponds to their behavior.
For instance, if BlueLithium can tell a person is visiting a lot of wedding planning sites, but also likes to check the stock market frequently or a local newspaper, a client selling wedding favors will have its ads appear out of context at the financial and news sites rather than the wedding pages.
According to Sullivan, who cites a report by the company's research arm BL Labs, the click-through rate is 108 percent higher for behavioral ads served out of context compared to contextual ads. "What's better," Sullivan says, "is that the conversion rate is 20 percent higher. You're getting a lot more people clicking, but you're also getting more buying."
In the study, BL Labs analyzed more than 400 million behaviorally targeted impressions across dozens of sites and campaigns. They evaluated click-through rate and conversion rate performance across many behavioral and contextual categories. Sullivan says some BlueLithium clients realize anywhere from three to 30 times more sales with this method than they do with traditional ad placement.
For small Web shop owners there is also another advantage. "The implications are great because you're no longer competing with the big dogs, in the case of selling cookware, say a Williams-Sonoma, who is placing ads at the usual places like gourmet sites. The cost to place the ad at, say, a local news site rather than epicurious.com is much lower, and there's not going to be a bunch of other competitors there."
Alyson Yaffe, an online media buyer for Media Contacts, agrees and says they produce "huge results" for her clients, who sell travel services and clothing, among other things.
"I recommend this approach for clients with small budgets because it's a lower cost per conversion because you're paying much less for the space," says Yaffe. "And on top of that, you're getting ads served across the network, not just at one site, so you get more for your advertising dollar."
Customized Campaigns, Repeat Visitors
Another benefit to this style of advertising is the capability to target shoppers individually in real time.
When surfers show up on sites that serve BlueLithium ads or on one of its advertisers' sites, the company adds that history of clicks to its database, creating what it calls a "click-stream" of data. This is used to determine within seconds which ad to serve up the next time the potential customer goes to any of the 1,000 sites in the network where BlueLithium buys ad inventory. The click-stream can then be used to target people on an individual basis.
In addition, Yaffe says another aspect of this type of ad approach that produces results is "re-targeting," which involves offering Web surfers incentives to return to a site they've already visited. "Re-targeting has proven to be very successful," said Yaffe. "We know they went to the site but didn't purchase, so we know they have interest in the product, so within the network we serve more ads saying if you come back to this site, you'll get a special deal or something to that effect."
Meanwhile, no one is quite certain why behaviorally targeted ads shown out of context covert better. Sullivan says one theory is that they do a better job of catching consumers who are in a purchasing mindset.
"Our test data show that when you identify someone's interests correctly and serve a behaviorally targeted ad in editorial content that matches that theme, you're likely to get a click-through just out of curiosity — just as the number one sponsored link on a search page gets a ton of tire kickers. But serve the same ad to the same person when he or she is in different editorial content and you're likely to only get the person's attention when he or she is seriously in the market for that product or service."