With the advances in technology shaping trends across different industries, the advertising and marketing landscape has changed significantly. Today, having a more focused advertising campaign is rewarded with higher engagement and conversion rates.
Using behavioral advertising, marketers may employ data on customer habits to create content that provides more relevant and more effective messages. It is an approach that enables marketers and publishers to target consumers based on their online browsing and even online shopping patterns.
This article will walk you through the fundamentals of behavioral targeting so you can understand how it works and whether it is appropriate for your advertising campaigns. Furthermore, given there’s a growing worry about privacy and the collection of private data, we also address how the process fits into the future of digital advertising.
What is Behavioral Targeting?
Behavioral targeting is a marketing method that uses web user information to strengthen advertising campaigns. The technique involves gathering data from a variety of sources about the potential customer’s online browsing and shopping behaviors.
This information helps create ads that are relevant to that specific user’s habits and interests, which the publisher can then display in that visitor’s web browser.
The primary purpose of this technique is to deliver advertising messages to the behavioral target markets that have shown the most interest in them. The process entails compiling web searches, purchase histories, frequently visited websites, and other data to create a comprehensive user profile that reveals what your target audience wants, avoids, and purchases.
Using these data points, companies can formulate ads that align with the individual consumer’s trackable preferences and needs, without conveying messages the viewer would find unappealing or irrelevant.
How Behavioral Targeting Advertising Works
So, how does behavioral targeting work to create these personalized and profitable advertising experiences? It’s all about tracking user behaviors online and collecting pieces of data from these behaviors called “cookies.” The process often involves four steps.
#1. Collect Cookies
When users visit new websites or create an account, for example, a cookie is placed on their computer, stored either temporarily on a local memory drive from which it is deleted after the browser is closed or more permanently on the device’s hard drive.
#2. Create a User Profile
As cookies are collected and stored over time through new page visits, ad clicks, time spent on particular content, and other data, behavioral patterns can form related to shopping and search habits.
#3. Designate Customer Groups
Using the patterns and profiles created, companies can separate users into different target market groups. After these differences are formed, websites that focus on behavioral targeting will be aware of the purchase tendencies, interests, likes, and dislikes of the members of these individual audience segments.
#4. Share Relevant Information With Viewers
At this point, instead of receiving random ads, consumers will only view custom content and personalized ad material that draws from past behaviors when they reconnect to the network or website.
This process requires a powerful data collection tool as well as a successful implementation method in order to be successful. To do so, the best behavioral advertisers use a data management platform, like the one we offer at Lotame, that provides reliable data-collection tools and cutting-edge analytical resources.
Types of Behavioral Targeting
Behavioral targeting is classified into two types.
#1. On-site behavioral targeting:
This typically happens within a particular site. It focuses on delivering the customer a tailored internet experience by presenting advertising according to behavioral patterns observed from other pages on the same site.
It lets advertisers and publishers show relevant ads that can prompt a desired lead-generating action from site users, like subscribing, inquiring, or purchasing.
#2. Behavioral network targeting
This method entails making implicit choices for the target audience. Advertisers collect data such as purchase intent and interests and use it to provide a more targeted and personalized campaign.
It enables marketers and publishers to collect data, like cookies and IP addresses, and share this across other sites.
The information is processed by an algorithm that can build a predetermined “image” of a customer, such as their age and prospective purchase choice, enabling networks to craft highly tailored advertisements that consumers are more likely to click on.
Why Behavioral Targeting is Important?
Behavioral targeting has several advantages for both the advertiser and the consumer. It can:
#1. Drive an increase in user engagement
Behavioral targeting enables advertisers to connect with users who have specific habits or engage with particular types of content. Advertisers and publishers can build advertising that allows people to quickly obtain information about a firm, instilling openness and trust in them, both of which are critical in driving customer involvement.
#2. Lead to more ad click-throughs
Relevant ads are more likely to be clicked on. Customers are more likely to act if you create personalized ad campaigns that are relevant to their preferences. They might want to learn more about a certain brand or find similar products or services within the site.
#3. Deliver better conversion rates
Targeted ads appear more relevant to users and can prompt them to take a desired action, such as learning more about a product or purchasing it. This, in turn, helps companies see an increase in sales, patrons, and revenue.
#4. Improve the user experience
Aside from giving users a more satisfying ad experience, behavioral targeting can provide a more pleasant and convenient online shopping journey. The approach makes it easier for consumers to find relevant products and knows more about them. With a few clicks, they can breeze through the “add to cart” and checkout process.
The Behavioral Targeting Process
#1. Collection and Analysis of Data
User data is acquired from a range of sources but is commonly done via tracking pixels (also known as third-party cookies) and kept in a DMP or other AdTech platform like a DSP. The more data, the more accurate the targeting. The collected data is then analyzed and used to create user segments.
#2. Segmentation
Users are clustered into segments by behavior (for example, people who travel a lot, people who like bikes, people who often return to the same product category, etc) (for example, people who travel a lot, people who like bikes, people who often return to the same product category, etc).
#3. Data Application
Ad campaigns are implemented to match a specific user segment, making the advertising more relevant for specific groups of users and increasing the likelihood of conversions and responses.
Apart from using data collected by DMPs and other AdTech platforms, behavioral targeting can be enriched with data pulled from registered users’ profiles.
- b make a purchase in an online store. Those sales, along with the user’s site navigation history, are frequently saved and analyzed in order to make targeted offers the next time the user visits the website.
- Unregistered users can be targeted using cookie information saved on the customer’s browser. When the user visits the site again, the cookie (unless it was deleted by the user) is sent to the web server, making it possible to target the user.
There is also a way to collect and track data through Internet service providers (ISPs) who perform methods like deep packet inspection to analyze their customer’s traffic and determine the types of websites they visit.
Then, the data is sold to marketing and ad-serving companies to deliver more personalized ads. This is a common practice because many ad-serving companies purchase behavioral data from third-party vendors such as Nielsen (formerly eXelate) and Datalogix.
Benefits of Behavioral Targeting
From delivering ads more effectively to easing users’ online buying process, online behavioral advertising offers many perks to both advertisers and consumers. Some of these benefits include:
#1. Better User Engagement
Behavioral data informs advertisers on the marketing materials customers engage with more often. It helps marketers create and deliver personalized ads to online users, contributing to better engagement.
#2. Increased Ad Click-Through Rates
People interested in tailored adverts are more likely to click for extra information. According to a recent study by Emerald Publishing, behavioral advertising has much higher click-through rates (CTRs) than non-targeted advertising.
#3. Improved Conversion Rates
By design, behavioral advertising displays targeted ads that resonate with individuals. For example, showing a night cream ad to someone who has been searching for it online increases the likelihood that they will click on the ad. This improves the chances of a successful conversion.
#4. A More Efficient Purchasing Procedure for Users
Online behavioral targeting advertising can help advise consumers by streamlining the buying process.
Because ads are delivered based on a user’s online activity, these ads may present a more convenient purchasing route than using search engines to search for a good or service. This is an even more attractive option for time-poor consumers.
Disadvantages of Behavioral Targeting
Though it helps create more effective ad campaigns, behavioral advertising has been a subject of criticism, especially in terms of how data is collected.
With the growing concern over data privacy, behavioral advertising has been at the center of public discussion for a number of years. Among the most frequently mentioned issues with behavioral advertising are:
#1. Privacy Concerns
Although behavioral advertising delivers highly personalized ads, the way it collects private data has concerned some people. This has led to a rising criticism that the privacy of individuals is being compromised.
As a result, more consumers are using ad-blocking software to prevent cookies from gathering personal data.
#2. Fear of Data Exploitation
The collection of personal data on a major scale may lead to many possible risks, such as security breaches or the large-scale trade of private data.
Therefore, behavioral advertising’s approach to personal data collection has stoked global cybersecurity concerns.
What is Contextual Targeting?
Contextual targeting refers to displaying an advert on a website depending on its content. The ad’s content is closely tied to that of the website in this way.
Contextual advertising allows you to place your advertisement on healthcare or beauty blogs. Search engines also utilize this strategy to display advertising on their result pages by matching the search query’s keywords to the ad’s content.
Contextual targeting evaluates user interests using session data rather than user data that has been collected and analyzed over time. Because it employs data collected from in-the-moment user activity rather than prior habits, this type of targeting satisfies privacy issues and legislation.
Contextual Targeting’s Benefits
#1. Personal information is not required.
Because contextual targeting is based on keywords and other factors rather than a user’s personal information, it does not require cookies or a user’s personal information to display relevant product advertisements. This means that publishing an advert is more efficient and compatible with privacy standards such as the EU’s General Data Protection Regulation.
#2. Easier and More Efficient Implementation
Contextual advertising doesn’t require a vast amount of user data. Thus, it’s easier to execute than behavioral targeting.
Furthermore, you do not need a large team or sophisticated tools to publish your ad using this method, which could save you time and money.
#3. Contextual Data Can Be More Effective
With technology advancements, consumers now shop at a faster pace and their past behavior may not always indicate present needs.
However, extrinsic elements, such as weather and events, may influence a buyer’s purchase decisions. In these instances, contextual ads can be significantly more effective than behavioral targeting.
What’s the Difference Between Behavioral Targeting and Contextual Targeting?
Contextual targeting entails presenting adverts that are related to the content of the page. Typically, this method of targeting does not use user information; instead, it makes use of the ad’s context. Yet, behavioral data can be used to improve the relevancy of contextual adverts.
Behavioral targeting allows advertisers and marketers to target specific consumers. The strategy is based on the assumption that the ad should be relevant to the user rather than the page. Behavioral targeting has been widely used in online advertising and marketing for over a decade due to the growing availability of user data.
Behavioral targeting must contain enough knowledge about the user to be effective.
Will Contextual Targeting Replace Behavioral Targeting?
Third-party cookies are being phased out. Therefore, it’s probably time to think about implementing a different ad strategy for the future if your ad campaigns rely on third-party data.
The comparison between contextual and behavioral targeting has been a subject of discussion among marketers for a long time. But as we move into a cookie-less future, contextual targeting will likely have an upper hand.
So, will it replace behavioral targeting? It just might.
Last Thoughts
Behavioral targeting has proven to be an effective method for communicating a brand’s messages to the right audience in the digital world over the years. But, the demise of third-party cookies is destined to disrupt the digital advertising environment.
Both marketers and publishers should be looking to incorporate alternative ways to deliver relevant ads to potential customers.
Making marketing forecasts and informed marketing decisions is now easier than ever. That might be one of the reasons why more advertisers are aiming to use contextual advertising in future campaigns.
It may be the perfect time for you to shift to a new method of advertising that doesn’t rely on personal data.
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