Say you tossed some behavioral targeting in the mix — that might change opinions about relevancy. Show them a deal on a product they were just looking at and I’ll bet they’ll get engaged real quick-like.

Hold on — apparently 31% don’t want to click because they’re afraid their Internet activity will be tracked. That could be a problem… They want to see more relevant ads, but they’re scared of being tracked. Huh.

But this is a fearful bunch as the other major issue with banner ads is their tarnished legacy — that is, their history of being associated with scams. Of the 57% of respondents that don’t click on banners because they’re scared about what might happen:

54% just don’t trust most banners;
57% are afraid of receiving spam;
55% are worried about getting viruses; and
46% fear that pop-ups will take over their screens.

Conducted by Nielsen, the survey consisted of 600 respondents aged 18 to 54 who claimed to hardly ever or never click on banners. Considering their responses, I think the best conclusion to be drawn from this survey is that even if targeting technology offers more relevant and engaging ads, browsers who are scared or unwilling to click on banners are not going to change their behavior.

It would be interesting to see responses from people who “sometimes or often” click on banners.

AdKeeper, which offers technology that allows consumers to “save” banner ads and view them later on a secure site, highlights that 61% of the survey participants said “Online banner ads take me away from my current website, or from what I am doing.” If only there was a way to store the most interesting ads, maybe keep them safe so they could look at them later…

“Until then, it’s a nice flight,” he comments.

I look at him skeptically, but notice he doesn’t appear jet-lagged or exhausted.

He shrugs in response. “Now you have Internet on the flight — I feel like I’m in my office. I can send emails and everything.”

Entering the U.S. market hasn’t been that daunting considering that Criteo provides service throughout Europe despite a plethora of languages and currencies.

“It’s not as integrated as the U.S.,” Rudelle quips.

While building its European base Criteo had to explain the whole concept of retargeting; in the States, however, advertisers know about the tool but have been disappointed with the results. Around 90% of U.S. advertisers have tried retargeting at one time or another, but although the technology has been in existence for 10 years, no one has been able to scale the business.

Rudelle has found the best way to prove the value proposition — better ROI and big scale — of Criteo’s approach is to let them see the company’s CPC model in action, exhibiting that it’s risk-free and a pure-performance machine.

“We say, ‘What you’ve seen in the past with retargeting — forget it. This is going to be a complete new story,’” he says.

Traditionally retargeting has featured a view-through pricing model, meaning advertisers were charged if a user saw a retargeted banner, didn’t necessarily click on it, but still returned to the retailer.

That’s difficult to justify because there are many natural revisits, Rudelle says, hence why Criteo opted for a pure CPC model, which makes the value of the retargeting far clearer and allows advertisers to compare retargeting campaigns on a benchmark level with search campaigns as both have a post-click conversion rate.

With impressive results from its first six months on the western side of the Atlantic, Criteo seems to have succeeded in rebranding retargeting, closing with numerous large American brands that have been excited by the potential of the CPC model. The company has even piqued the interest of investors, closing a series C round of funding yesterday with $7 million from Bessemer Venture Partners. In total, Criteo has raised $24 million in funding.

Google lately re-awakened interest in retargeting by introducing it as an AdWords feature. Alas, Rudelle says the search giant is merely offering what’s been around for a decade. Criteo does Partner with DoubleClick on cookie targeting, but the service cannot personalize its retargeted ads.

Criteo specializes in luring a consumer back to a retailer’s website with the product he or she was gazing at plus similar and related items that may pique user interest. Rudelle boasts that 100% of Criteo’s banners are personalized “on the fly” based on past behavior — the company serves 4 billion unique impressions as no two banners are ever the same.

On average consumers make five visits to a e-tailer’s site before making a purchase, Rudelle says, highlighting the importance of getting them to return to a specific site. Retargeting provides immediate ROI for an advertiser but also makes higher-funnel campaigns more profitable by increasing their efficiency. In fact, Criteo’s analytics display the effectiveness of complementary campaigns.

However, if a retargeted banner makes upsets a viewer, not only will Criteo lose the consumer but also its CPC business model means that money spent on creating and serving has gone to waste. On a single-case basis it doesn’t sound terrible, but these do have a tendency to add up.

“It is important that it’s the user’s choice,” Rudelle explains. “When users understand the program they are much more comfortable.”

Rudelle considers Criteo ahead of the American market in terms of transparency and user privacy because of its European privacy laws are far stricter. In particular, you’d never believe how rigid the Germans are about online privacy, he says. I respond I’m not surprised considering the tangles Google keeps falling into.

In effect, Criteo has been imposing code of conduct in regards to user privacy for several years that bears a striking resemblance to the measures outlined in the draft privacy legislation recently unveiled by U.S. representatives Eric Boucher (D-Va.) and Cliff Stearns (R-Fla.). In every banner Criteo serves, there is a direct link to a page explaining the information Criteo is using to target and the ability to opt out of any behavioral targeting campaign. Users can mix and match, opting out of every Criteo campaign or deciding which advertisers they would like to receive banners from.

“I’m very pleased to see that the government putting together a new law in the U.S. that does the exact same,” Rudelle says. “Opt out is okay as long as it’s embedded in each banner; if it’s hidden in the corner of a page where nobody goes, that doesn’t make sense. It has to be readily accessible for each user.”

Rudelle is aware that Criteo has entered the U.S. market when it’s a quite fragmented. Although the cost to enter is still low, he sees consolidation is on the horizon for the display arena and imagines only five to 10 players emerging with the others going the way of the dinosaur. The ecosystem changing rapidly as online advertising becomes more and more dependent on technology, he says, which requires heavy R&D investment.

“Not a lot of people are going to be able to keep up with the R&D necessary to be on the cutting edge of this market,” Rudelle explains. “Only the most efficient players are going to survive — the ones truly showing superior ROI for advertisers… Mainstream online advertising is becoming a very tough game. You need huge volumes and scale to be efficient.”

Although display is a large market, by specializing in retargeting, Criteo has found a comfortable niche at the bottom of the funnel and doesn’t plan to expand into the higher levels. Rudelle feels its better to be excellent in one field rather than average in many and sees retargeting becoming a central tenet in many marketing strategies alongside brand-building and search.

“It’s really the last mile,” Rudelle says. “You have all those different marketing campaigns bringing first-time visitors to websites, but 95% are leaving without buying anything…. We re-engage these users by acting as a safety net behind the website bringing those visitors back.”

The stations are syndicating local news widgets to blogs and hyper-local sites; the widgets will feature the top local headlines and images with links to video and text stories to the local CBS sites. The widget will include a banner display advertisement.

Owners of the sites that publish the CBS widgets will get a portion of the display advertising revenue. CBS will have an in-house department sell the banner ads. SyndiGO, a division of advertising network Seevast Corp., will recruit and manage the local blogs and social media networking sites will form the core of the ad network.

“The CBS Local Ad Network again positions our stations at the forefront of an unprecedented locally focused venture,” said Jonathan Leess, president and general manager, CBS Television Stations Digital Media Group. “After first setting the standard for local news coverage online, our stations now lead the effort to engage other local sites — and we invite them to share in the revenue. The CBS Local Ad Network also opens up exciting new avenues for our advertising partners to efficiently extend their reach to valued local audiences while associating themselves with our CBS brands and content.”

AT&T, Liberty Mutual Insurance and North Texas Honda Dealers are among the advertisers who have signed on to the advertising network.

Those who are most influenced by sponsored links have an average age of 40.7 – and 62.6% are Caucasian.

Adults who are anticipating major life events in the next six months are more likely to be influenced by sponsored links: starting or having a child start college was the biggest motivator (12.3%), while getting married (7%) and expecting a baby (5.3%) were also significant triggers.

Consumers who are planning to make major purchases within the next six months were also more likely to be influenced by sponsored links. Computer-buyers led the pack (27.3%), followed by TV-buyers (25.7%) and furniture-buyers (23.5%).

“Consumers who are influenced by sponsored links appear to be on a mission due to some event in their lives. As a result, they are self-directed when using media, which is why they prefer digital media options that allow them to get the information they want when they want it,” said Gary Drenik, president of BIGresearch. “Advertisers looking to reach people in the market to buy should look at this consumer segment as an important part of their ad mix.”

Those influenced by sponsored links are most likely to be triggered by magazines to start an online search (52.7%). Coupons (50.8%) and TV Broadcasts (47.5%) round out the top three.

“Since being acquired by Lingo Media in October 2007, we have consistently achieved our Speak2Me development milestones,” stated Michael Kraft, CEO of Lingo Media. “Most important among these was the technically arduous task of preparing our suite of CD-ROM English learning products and speech recognition technology for use on the Internet. That achievement allows Speak2Me to offer an online English learning service in China at www.speak2me.cn.”

Speak2Me patent-pending Conversational Advertising platform takes product placement to a new level by allowing advertisers to place their products in Speak2Me’s library of more than 300 lessons – so instead of seeing a banner ad, users learn to converse in real-life situations in the context of an advertiser’s product.

No one knows, because the business is too young to have a track record.

Already, there are indications that some of the Web’s biggest sites are feeling the same spending pinch that has started to impact traditional media properties like print. Mighty Google has seen its shares drop sharply as investors fear the economic downturn could affect its market-leading search-based ad business.

But the Internet is vast, and outside of the big names, a struggling economy could turn out to be a boon for some players.

“I don’t want to say everything is going to be rosy,” said Ray Costa, president of Flatiron Media, a firm that sells ads for Web properties, “but sites that have engaged users and are targeted to a particular niche should do well” in a slow economy.

“In a weak economy, people will look for efficiencies,” agreed Brad Agens, a senior vice president of advertising sales for Gorilla Nation, an agency that represents roughly 500 Web sites.

The Internet — which still gets less than 10% of ad spending across all media — is far more measurable than traditional media.

“It is a more accountable media for brand advertisers and I’m confident people will look to spend money wisely online during a slowdown,” said David Friedman, president of the central region for online marketer Avenue A/Razorfish.

There is reason to believe online advertising will not be immune to a spending slowdown. A late February report from ComScore showed that Google’s paid clicks for ads slipped for the first time in January compared to the year-ago period.

But Google specializes in search-based ads “and companies are getting smarter on how to allocate money between search and other vehicles,” said Friedman. “They often overspend on search. As companies get more sophisticated about online advertising, you will see more move away from Google.”

That’s why he and others believe online advertising should keep growing during a slowdown.

In 2007, the online ad industry continued its torrid growth rate. Preliminary results from the Internet Advertising Bureau show online ad spending should reach a record of $21.1 billion, a 25% improvement over 2006, when final figures are released in May. During the fourth quarter of 2007, when recession talk grew amid a worsening housing market, spending hit a high of $6 billion, the figures show.

Hope Pryor, owner of CooksRecipes.com, a fast-growing site that caters to the everyday chef, said she isn’t worried.

“My numbers go up every year,” she said of the site she founded as a hobby in 1999 that attracts more than 1 million unique visitors a month. “They are still going up.”

Her site belongs to one of the fastest growing categories on the Web for generating ad revenue, what’s called “vertical” sites, or those with a niche focus.

“We are increasingly supporting these sites,” Friedman said. “As they have gotten bigger and better at improved targeting, they really are starting to meet the needs of our clients.”

Pryor said that’s because the products advertised on her site have a direct relationship to the editorial content — recipes, in her case.

Spending has reflected this trend.

Media billings hit $735 million for Avenue A/Razorfish in 2007, with the buying spread across 1,800 Web sites. That is double the sites the agency targeted money at in 2006. Some of the sites receiving those dollars included Habbo.com (an online virtual world for teens), BallerStatus.com (a site for hip-hop culture) and StyleHive.com (a fashionista social network).

Web portals, on the other hand, could be vulnerable to a slowdown. Friedman compared portals like Yahoo to traditional media properties, which already have seen ad revenues fall as the economy slows. Yahoo said in January it would eliminate 1,000 jobs after fourth-quarter profits dropped sharply. Many analysts believe the company’s deteriorating financial picture was a catalyst behind the timing of Microsoft‘s unsolicited bid to buy Yahoo.

Yet there is one big unknown in a recession that could have a big impact on online advertising: consumer behavior. People curtailing their spending because of economic concerns might be less likely to shop — online or off.

“How will consumers change?” asked Friedman. “Already a lot of people use the Internet to comparison shop before making a purchase. During slow times they may rely more on the Web.

“So there’s a good possibility a recession may be great for the Internet.”

Eric Benderoff is a reporter for Chicago Tribune.

Compliments of Chicago Tribune.

AdBrite has subtly shifted its focus recently, putting larger sites in its crosshairs. “We’ve expanded from our roots as a self-serve tool for small pubs to serve a diverse set of sites, including some of the biggest premium publishers,” said Paul Levine, VP of marketing at AdBrite in an e-mail. “This scale – across large and small sites – is significant in that it allows advertisers to reach their target users across a wide variety of geographies, demographics, behaviors and contexts.”

AdBrite now serves eight of the 20 largest U.S. online properties. The network has mushroomed in the past 18 months, providing ads to 50,000 sites in February of this year, compared to 20,000 in September of 2006. According to comScore, AdBrite is the fourth-largest ad network by pages viewed.

Part of AdBrite’s swift growth has been attributed to its horizontal ad platform. “We offer text, banner, full-page ads and other innovative products like BritePic and InVideo,” Levine said. “We launched banners about a year-and-a-half ago and they’ve become our biggest movers from a revenue perspective.”

Clients also go to AdBrite for its high levels of transparency. “So many other networks are blind,” Levine said. “That’s because a lot of publishers don’t want to disclose who they’re working with. But our clients care where they run and where their positioned on the page. Brand advertisers like that we offer a suite of products that they can pick and choose from – and they can see, in a line item by line item fashion, where they’re running and how often. It helps them optimize and manage their campaigns on a site-by-site basis.”

By expanding its strength as a self-serve publisher marketplace to partner with large sites and specialty content sites, advertisers can target millions of unique visitors per month. New clients include General Motors, Sony BMG, Verizon and Live Nation.

“AdBrite helped SONY BMG deliver our artists’ products to targeted audiences across a large, diverse set of high-quality sites,” said Kyle Sherwin, VP of media at SONY BMG.  “AdBrite’s mix of ad products and transparent marketplace model have made for several successful campaigns.  In addition to providing great results, AdBrite offers terrific client service.”

Facebook announced that Sandberg will join the social networking site as COO starting March 24. Mark Zuckerberg has not conceded the throne: he will remain CEO of Facebook, the company said.

Sandberg was poached from Google, where she served as VP for global online sales and operations. She had a fabulous reputation as a relentless go-getter, developing the hugely lucrative online ad programs, AdWords and AdSense. She also managed global operations for Google’s consumer products – and helped launch Google.org, the company’s philanthropic arm.

Zuckerberg plans to put Sandberg’s smarts to work while continuing his mission to connect every member of planet Earth. The company is looking to tap revenue from its 66-million plus user base and Sandberg will be set with the task of figuring out how to capitalize on the Brobdingnagian base — expand overseas, develop an ad network and guide the company’s marketing and human resources departments — without alienating it.

“Sheryl is a great manager who will help scale Facebook’s operations globally,” said Zuckerberg. “She has relevant experience and a track record of scaling business operations and building new kinds of advertising networks. Sheryl understands Facebook’s goal of connecting everyone in the world and is passionate about building a business that will enable us to realize this mission.”

Facebook’s unbridled passion for connectivity hasn’t always pleased its users: when it launched Beacon, a program that allowed advertisers to exploit data from Facebook’s internal user information to produce targeted ads. The program was swiftly derided as a privacy nightmare and users were allowed to “opt out” of Beacon.

David Fisher, currently VP of online sales and operations, will reportedly take over Sandberg’s job.

Brian McAndrews, Microsoft senior VP-advertiser and publisher solutions told AdAge that search giants AOL and Yahoo don’t even come close: “They won’t have all the components of an ad platform. I’m certainly not saying Yahoo, AOL are going away. … But I don’t see [them] competing against Atlas and DoubleClick.”

AOL’s CEO Randy Falco asserted that it does in fact have the tools to compete with the likes of Microsoft and Google. “We have Platform A, the largest ad network in the world. Microsoft and Google can ignore us and leave us off of charts if they ant, but they do that at their own peril,” Falco said, according to AdAge.

Canada’s local online search directory, ZipLocal, says selling online products Google AdWords and Yahoo Search Marketing was a no-brainer because getting into the online ad market in Canada is no longer just one of many options.

“As online becomes a necessary advertising choice in Canada, we are thrilled to add these two leading and complementary product offerings to our existing arsenal of online advertising options,” said Elaine Kunda, president and CEO of ZipLocal. “Offering top tier search advertising products from both Google and Yahoo Canada ensures that ZipLocal can offer one-stop shopping for clients to develop highly competitive keyword search advertising programs.”

“With the addition of Google(TM) and Yahoo! Search Marketing ad products, we are poised to become a leading choice for major keyword search ad campaigns,” Kunda said. “As we see explosive growth in the demand for top tier online advertising, ZipLocal continues to keep pace. By continually adding to our offerings we strengthen our expertise as a leading online only national advertising solution.”

ZipLocal will begin reselling Google AdWords and Yahoo Search Marketing ads on April 1.