So, if we’re done panicking about how BAD “the economy” is today, why don’t we slap ourselves upside the head and go outside to look at what the weather is REALLY up to? Yes, we’re stuck under that immense National Debt left behind by our former national “leaders” (think of it as your third mortgage), but the sky isn’t really falling yet.

Many big companies currently have their heads in the sand and their Web marketing/advertising budgets pinched rather tight, but there are lots of farsighted, fast-moving smaller companies which are pushing ahead while the Major Players just cautiously “wait and see.”

If your corporation wants to be one of the fast-moving companies which, despite a difficult financial environment, budget aggressively to steal Other People’s Market Share, be reassured that others are succeeding in this pursuit:
“Web ad sales rise slightly from prior quarter” 
[nice quote from David Silverman at PriceWaterhouseCoopers: "I think, given the economic environment, seeing any increase in any economic activity — let alone advertising — would be a bit of surprise, but speaks maybe to the strength of interactive advertising."] 

Look around carefully at the companies which are maintaining or even dialing up their marketing budgets lately, and you’ll notice that such companies are doing well while the Major Players are doing almost nothing. “When the going gets tough, call in your Web-marketing agency!”

At a one-day conference on behavioral targeting in San Francisco two weeks ago, the major themes were privacy, Web 2.0, privacy, predictive modeling. And did I mention privacy?

I’m a huge fan of behavioral targeting especially since it’s becoming more and more sophisticated. And we have previously examined predictive modeling techniques used by Valueclick, aCerno, and Epic Advertising — each adopting very different methodologies to serve up highly targeted ads to the right audiences. AdBrite, another ad network, has now just announced it’s throwing its hat in the behavioral targeting ring.

At the conference, some of the interesting discussion topics, both on the panels and in the halls, were:

Behavioral Targeting for TV Ads? The Internet will morph with the TV to create one large media delivery vehicle in the next 15 years as standards and technology evolves. Will there be the option of doing behavioral targeting with TV placements and will the public allow it?

The Creepy Factor. “Things are only going to get creepier,” was a common remark heard at the conference. Many vendors struggled with increasing the sophistication of their applications and technology versus “creeping people out” with the implication of additional perceived intrusion into their privacy. If the objective of behavioral targeting is to serve up only the kinds of ads that the consumer would be interested in seeing, then we need to know more about, if not the consumer, then the cookie that represents that view. The two concepts seem to be counter productive, but the balance will be achieved with better education of consumers and more refined technology.

Data Portability (two words) vs. Dataportability(one word). The former is defined as the option to use your personal data between trusted applications and vendors. The latter is a fairly new organization, the DataPortability Project. It is a group created to promote the idea that individuals have control over their data by determining how they can use it and who can use it. This includes access to data under the control of another entity. The project’s stated mission is to consult, design, educate, and advocate interoperable data portability to users, developers, and vendors. Do check this group out and its Web site, which contains lots of valuable content. I know I’ll be following them.

Privacy. The most interesting, and contentious panel focused on privacy. Speakers included several lawyers, an AlmondNet executive, and a representative from TrustE. The lawyers for the most part, sided with the consumer to the extreme — any possible invasion of privacy — even if just perceived, is unacceptable. The industry, critics contended, is clearly not doing an adequate job of policing itself, and needs third-party regulation. The conversation was quite heated. It was exciting to have participants from outside the marketing industry throwing cold water on those of us within it. We get so wrapped up in the nuances of what we are doing that the outside view is sometimes a shock.

I was very impressed with the overall concern regarding privacy exhibited by all of the major behavioral targeting vendors including Acxiom, Revenue Science, AOL Platform A’s Tacoda, Tribal Fusion, ValueClick, and others. Their excellent contribution on panels around this issue, coupled with their participation or leadership on privacy committees or organizations (the Interactive Advertising Bureau and others) may be prompted by self-preservation but is certainly well intentioned and very well informed.

I will continue to watch the vendors utilizing predictive modeling. Having grown up in the direct response industry, where predictive modeling was born and still rules many prospecting efforts, I can’t wait to see how that expertise will translate to online marketing and how the consumer will continue to respond to this.

We have been doing a monthly column with ClickZ on Behavioral Targeting for several months.  OMMA (Mediapost) had a one day conference on the topic in SF yesterday which really was excellent.  Major themes were privacy, Web 2.0, privacy, predictive modeling and did I mention privacy?

I’m actually a huge fan of BT especially as it is becoming more and more sophisticated.  We have written previously about the predictive modeling techniques being used by ValueClick, ACerno and Epic Advertising - three companies using very different methodologies to serve up highly targeted ads to the right audiences.  AdBrite, another ad network,  has now just annouced that they are throwing their hat in the BT ring.

But the panel that was the most interesting, and contentious, yesterday was the one on privacy.  the panel consisted of several lawyers, a VP from AlmondNet, a fellow from TrustE.  The lawyers for the most part, sided with the consumer to the extreme – any possible invasion of privacy – even if just perceived, was unacceptable.  The industry is clearly not doing an adequate job of policing itself, and needs 3rd party regulation.  The conversation was quite heated – exciting actually to have participants from outside the industry throwing cold water on those of us in it.

My bet is still with the predictive modeling vendors.  Having grown up in the direct response industry, where predictive modeling was born and still rules many prospecting efforts, I can’t wait to see how that level of expertise translated to online.

“It’s the data, stupid”, might well be the mantra of the direct response industry.  Or a corollary “database segmentation and analysis is the key to ROI”.  Much of the analytical methodology and discipline is now popping up with a variety of BT products and solutions.

I spent quite a bit of time talking to a variety of Ad Networks, publishers and other suppliers around what’s new in BT during Ad-Tech in San Francisco in April.  I may sound like a broken record, but I continue to be astounded at how much the methodology behind many of the new targeting solutions are firmly based in direct marketing, data-driven practices now moving in to the online space. Utilizing techniques of working with anticipated click streams to predict future behavior, as opposed to merely measuring past behavior, the level of sophistication is rising.  Good news for the advertiser! 

I met with Don Mathis, president of Epic Advertising (previously known as Azoogle, plus an acquisition or two) to discuss how they have using BT and some upcoming changes.  Epic Advertising now encompasses two main units focused on online consumer traffic acquisition: AzoogleAds and Bazaar Advertising. AzoogleAds continues to provide broad-based traffic acquisition services leveraging the company’s leading performance-based ad network business. Bazaar Advertising continues to provide search engine management and marketing services, specializing in keyword discovery, purchase and optimization of online search campaigns.

While the company had previously offered a robust, classic BT solution to it’s advertisers, just this week, they are announcing the official launch of Performance CPM (pCPM), a patent-pending metric that allows advertisers to track performance-marketing campaigns by measuring “induced visits.” Advertisers can now determine campaign effectiveness utilizing a new, more comprehensive approach and gives a new definition to the concept of “behavioral”. 

 The premise of pCPM is rooted in induced visits, or visits to an advertiser’s site tracked beyond direct clicks.  A visit to an advertiser’s site is “induced” if it results in any way from an ad, even if there is no immediate response or direct click path from ad to site.  This metric goes beyond traditional campaign measurement tactics by employing scientific techniques to discern the broadest types of cause and effect, excluding things like “accidental clicks.” I was intrigued with Bill’s further explanation of “induced visit”:An “induced visit” from an ad is any visit that can be statistically linked to viewing the ad.  Because it is statistical, you can’t just have one induced visit; you have to look at lots of ad-views, and lots of site visits, and then do some careful correlations to discover how many more site visits you got with the ads – than you would have had without them. The math behind the metric is just subtle enough that others aren’t doing it, but it’s actually fairly simple, and has been used in signal processing and neurobiology for decades.  Along with measuring induced visits, the metric encompasses elements from traditional tracking methods – CPC, CPM and CPA – as well as inherent branding impacts to offer a more holistic view of an online advertising campaign’s success.  Because pCPM involves only statistics, it avoids any retention of Personally Identifiable Information (PII).    The ability of the advertiser to use these new metrics to increase performance of their BT campaigns will only increase their effectiveness in optimization. Don stated, “This method lets our advertisers do two new things:  they can see the impact of an ad beyond direct clicks, and they can put a solid measure of user-impact on their traditional brand-oriented CPM campaigns. We believe our method, marrying marketing and technology, is the next step in online marketing campaign tracking and will serve as a model for the industry. ” It all started to sound like smoke and mirrors until I spent additional time talking to Bill Softky, their “Chief Algorithm Officer”.  His academic background is in brain science and pattern recognition, and his mathematical work on neural irregularity and correlations is intimately related to the statistics of online advertising traffic. 

 Another company that offers a very sophisticated behind the scenes approach to BT (they refer to it as “dynamic” marketing) is Collarity which is actually a behavioral platform that optimizes content and ad targeting and is utilized by major publishers on the back end.   I spent some time talking to Deborah Richman, SVP Marketing and Business Development:

“We’re undergoing a revolution in behavioral targeting because it won’t take so much work to target anymore.  Publishers and advertisers spend a lot of time categorizing and defining content.  With behavioral platforms like Collarity, all people visiting a site can dynamically and effortlessly define what’s interesting instead.  This drives far better targeting from the existing ad inventories.  In fact, this will be necessary if ad targeting is to work and effectively monetize social and multimedia content today.” 

Current behavioral ad targeting is based on pre-set categories or segments, whether demographics, interests or site subject matter.  Targeting occurs when sites/destinations identify content based on what is mapped to these attributes.  Targeting also occurs when people are directly identified or tagged based on where they have visited.  One of the down sides is that some portion of visitors are targeted while others are not  

Current contextual ad targeting can vary based on the content on each page, as well as categories set by publishers.  Visitors will see the different ads on different content pages.  The ads are shown based on words on the pages.  Multimedia content and ads are depending on keywords tagged to them  

Several problems that Collarity’s behavioral platform addresses are that it applies to every visitor anonymously, without tagging them.  It dynamically targets ads, based on evolving content and interests.  Each visitor sees different ads as they click around and are “joined to” communities of interest. Much higher consumption and satisfaction for visitors, with ads that seem more relevant.

While this is once again in danger of falling into the smoke and mirrors genre, it really does not, once you look behind the scenes.  Publishers using Collarity harness 100% of all visitor click streams, anonymously.  These include content and ad consumption of all types – which is a significant statement given the explosion of social networks and CGM based sites now.  Community segments form based on intensity (rather than popularity) of interests.  Based on these dynamic segments, both content and ads are show to visitors 

A bit more detail: They optimize text, banner and video ads, relying on ad inventories and feeds used by a publisher.  They can deliver the most relevant ads, which typically doubles consumption of ads.  Ad buyers can see these dynamic profiles from publishersGenerally, they experience far better results from dynamic targeting and the Publishers end up selling more impressions and later higher CPMs;   

The common theme between the two companies is the ability to tap into the nuances of intuited or induced behavior to predict future performance. As we as an industry become more expert and rigorous in our technological capabilities, we all will benefit with far more relevant ads, less ad budget waste and happier end users.  What’s not to like?