Has NebuAd Ruined Behavioral Targeting?

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ADOTAS EXCLUSIVE — Online privacy issues around behavioral targeting (BT) for display advertising are causing chagrin among advertisers, leading some to look elsewhere. Yet with the uncertain economy and crowded theater for customer mindshare, they need more than ever to reach their audiences, engage them effectively, and drive additional return on ad spend. So what to do?

As soon as Charter Communications voiced concerns about the controversial NebuAd behavioral targeting system, two other ISPs immediately distanced themselves from behavioral as well. In many ways, behavioral has become the “hot potato” issue around targeting for Internet advertising. The privacy issues surrounding BT are nothing new either and go back as far as 2005, or even earlier. In a recent survey of online consumers conducted by Burst Media, only 2 out of every 10 respondents approved of having their information tracked, even if it meant more relevant advertising.

Another factor is that there remains a great deal of confusion around what BT actually does versus some of the other, historically more negative approaches like spyware and certain forms of adware. Add to this the fact that Internet users are not always fully aware of the role that things like cookies play in the targeting food chain. According to a study by JupiterResearch, 40% of Internet users delete cookies from their primary computers on at least a monthly basis. Other studies have put the figure as high as 55%. This behavior stems from an innate desire users have to retain control over their computers—and this has big implications for advertising and marketing firms that depend on cookies for BT.

Luckily for organizations that are bumping into these kinds of issues, there are a bevy of solutions in the marketplace that can perform as well (or even better) than BT when it comes to performance and efficiency lift for both direct response (DR) and brand advertisers. Now don’t get me wrong, I am not anti-behavioral, and many companies deploy unobtrusive behavioral methods that are working very well. However, if and when BT-related issues rear their ugly head, there are safe harbors from them in things like contextual targeting and other avenues. Marketing Sherpa’s 2008 Online Advertising Handbook surveyed almost 600 online advertisers from a range of companies and found that 40% of the advertisers surveyed felt that contextual targeting yielded a higher return on investment (ROI) while 36% preferred behavioral.

It is worth reiterating that while the invasive forms of behavioral advertising that have drawn the ire of companies like Charter and numerous other organizations and individuals, there are very legitimate and useful forms of behavioral advertising. As commonsensical as it may seem, I would advocate a mix of tactics that bring together the best elements of non-intrusive behavioral, contextual, ‘traditional’ search marketing and banner advertising and more. So while I’d prefer the industry find multiple ways to target for efficiency and performance, including non-intrusive behavioral methods, which many companies do well, there have long been targeting solutions that completely side-step the subject of privacy.

In addition to tried-and-true search marketing and traditional banner advertising, contextual can be sublimely elegant in this aspect, as it can draw its relevance directly from the impression in real-time to match the perfect ad to the user based on what they happen to be reading at the time. This avoids saving any bits from the user’s historical actions, yet can serve up an even more relevant ad at a time when users are interested in learning more about the subject and they are most receptive to a company’s message.

Contextual solutions can also bring a level of brand safety to the game that no other targeting mechanism can match today. When you take the time to deeply analyze the content and subsequent meaning of a particular impression, you have as a byproduct the ability to filter out undesirable content—be it hate or pornography or even simply competitive messages. And the inverse becomes true, as well.

With a deep contextual engine in the process, advertisers can also go out and target very specific competitive content. With the true meaning of the impression in-hand you have a safer bet to find a clean, clear, well lit space for your brands to live. This is especially important as advertisers try to leverage the long tail of exploding user generated content, sometimes referred to as the passion tail, where the real engagement lives.

And the applicability is as broad as the industry. Not only can advertisers and their agencies of record leverage these new technologies to lift performance and recognition, even the ad networks, exchanges, publisher optimizers and publishers themselves are already seeing great benefits from contextual analysis. Ad exchanges are the perfect example as open, free market ecosystems of display advertising partners all coming together under one umbrella. When you plug a contextual analysis engine into the mix, everyone from the advertiser to the publisher can benefit from targeting that is both unobtrusive and very focused.

In one case study we recently performed, we found a 76% lift in click through rates (CTR) for a direct response advertiser in a contextual environment that determined meaning down to a page level, but we also saw publishers’ yield increasing when advertisers could more accurately target their inventory. Historically, categorization has been at the section level and self-declared. But when you take the extra millisecond to determine true meaning on a page level, publishers can begin to expose much more highly targeted content to advertisers who, upon seeing the performance lift, are generally willing to pay more per thousand (CPM) because their campaigns are working much better.

So if behavioral issues begin to make you rethink your targeting needs, there exists a sound safe harbor for advertisers and publishers in contextual solutions. You can get all of the benefit of the most relevant ad possible—and with it the ability to drive up yield for publishers while creating a safe environment involving both traditional and social content in which brands can flourish.

5 COMMENTS

  1. Before I had heard of NebuAd and Phorm I wasn’t to bothered about cookies etc. Now I have an add-in to firefox called cookieculler and regularly blacklist any cookies I think look like trackers.

  2. Nobody actively desires advertising. I see no demand for PVRs that have a ‘skip the programme and play the advertising’ button, or browser add-ons that block page content and just show the ads.

    It’s a necessary evil we have to live with. In return we expect to be shown some respect. Something that companies proposing the monetisation of deep packet inspection (DPI) have singularly failed to do, in their past incarnations as adware companies, or in the present.

    They hoped to deploy their technology using the same stealth and social engineering methods they used in the past but they have been rumbled. The central focus of the furore is not anti-advertising. It is anti the monetising of DPI and its implications for distorting fundamental qualities of the net, reducing it to a giant mail-order catalogue, as ‘me too’ companies rush in with their own particular slant on what they can do with a wire tap between customer and ISP.

    A side effect has been to drag other forms of more benign tracking under the microscope.

    Yes Google tracks, but it offers valuable services in return and a modicum of user control, unlike the companies who wish to exploit our click streams for big bucks with no reward for us, the wealth generators, apart from ‘more relevant ads’, i.e. bigger revenues for the agencies and those selling ad space.

    If I was a client I would be very sceptical about being taken down that road. The most relevant, cost effective, ads are on the Google search pages and consume very little of the bandwidth that the subscriber is paying for.

    You advertise on sufferance, remember there’s a quid pro quo when you’re bathing in a sea of distancing nomenclature.

  3. I’m not sure why you are calling NebuAd “invasive” — they partner with ad networks and serve targeted ads in the exact same places on web pages that you would normally see ads if NebuAd didn’t exist. I don’t understand why everyone is so upset about getting ads tailored to their interests instead of HIT THE MONKEY ads flashing in their faces.

  4. This is a truly timely story as BT issues are all over the news lately. There are plenty of good BT methods that are not considered nearly as invasive as the ISP-level targeting that got Nebuad in hot water. Tacoda’s Dave Morgan had the blog-o-sphere all fired up when he called ISP-level behavioral targeting “creepy”. Now Adam Metz says he will “smack the next person who calls BT creepy”. He was kidding around of course but it shows you how emotionally charged and loaded this issue really is right now. Thanks Adotas!

  5. Its not the privacy/creepy issue guys, its the fact that Behavioral targeting allows folks to target users away from the content they are consuming (ie target NYTimes users on Myspace). That means that advertisers will substitute, and pay substantially lower rates to target the same valuable consumers, instead of the high rates they would pay on the NYTimes. Which winds up completely disrupting and destroying the NY Times business model.

    Thats why people (read: Publishers and Lobbyists) are getting excited about Behavioral targeting — and the creepy part is that while the NY Times can always control whether they want TACODA to drop a cookie on their users, they have no control at all over an ISP ad network — which is completely pervasive.

    Its simply an economic issue — and the privacy issue is a canard — it is a plausible argument for politicians to support. But if you are wondering where to stand, we should support the NY Times position and allow publishers to control who can target their users off site, because if we don’t, we won’t have any premium content providers left.

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