CMO.com

No surprise: Behavioral targeting (BT) is a more efficient way to target prospects. It’s also nothing new. Marketers have long tried to micro-target their advertising. In the past, they used such tools as ratings and syndicated research, which are merely projections based on sampling with a significant margin of error. These days, sites such as Facebook can target ads based on people’s actual interests and behaviors. 

In terms of effectiveness, a recent study by the Network Advertising Initiative (NAI) reports that BT ad click-throughs and conversion rates are significantly higher than nontargeted ads.  Another study conducted by the Ponemon Institute says that 70 percent of marketers believe this type of advertising targeting is effective, and they would increase the portion of their budget for BT from 12 percent to 47 percent if privacy concerns were addressed.  

Therein lies the dilemma for CMOs: Do you embrace a technique that will increase your marketing ROI while possibly turning off your customers and prospects over privacy concerns?

Yes.

The concept of and actual phrase “behavioral targeting” has many consumers, privacy advocates, and Congress up in arms.  The technique suffers from an image problem among consumers who fear having their personal data collected and saved by companies that may redline them based on income, race, religion, or demographic profile.  Then there are concerns about online ID theft and possible fraud.  Rep. Rick Boucher (D-Va.) has a draft bill that would enact very tough standards for online companies that collect data.  Essentially, consumers would have to “opt-in” to data collection, which would greatly decrease the ability of sites like Facebook and Google to generate income by selling ads based on demographic and behavioral targets.  BT ads command a premium, so anything that inhibits the ability of a site to offer them to marketers is a blow to their revenue goals.

To ward off governmental regulation, the ad industry is making an effort to self-regulate with consumer education and advances in technology.  In the works is an online icon that will let consumers know the site they’re visiting is collecting general information about their Web habits and interests in aggregate, but that their behaviors are never tied to their actual identity, i.e., name, address, email, or phone.

Consumer concerns echo the early days of Web commerce, when the debate was whether to use credit card numbers to purchase good and services online.  The concerns seem quaint by today’s standards, but they serve as a reminder that technology is often ahead of changes in consumer behaviors and attitudes.  Consumer worry even might possibly be overstated.  For example, the well-publicized effort to get people to quit Facebook over privacy issues turned out to be a famous dud--perhaps more of a media sensation as the social network’s growth of users, page views, and time spent continues unabated.

Also worth consideration. . .