Getting to Really Know the Consumer

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Historically, advertising decisions have been based almost exclusively on consumer demographic segments, with little ability to gauge a return on investment. Today, marketers increasingly feel they can get more bang for their buck when interactive marketing decisions are data-driven and targeted.

Within the area of interactive advertising, the approach is already generating demonstrable returns by driving the best price for new and existing ads, increasing product sales over normal sales predictions, and reducing coupon blanketing while increasing ad yield. With online advertising projected to represent 13% of the total advertising spend in the U.S. by 2012, it will become increasingly important for media companies to provide the audience intelligence necessary to support a targeted advertising approach.

The ability to measure (and make sense of) results from online campaigns and assess a return on investment begins with tracing the source of actions (e.g., engagement, leads or sales) back to individual ads, e-mail campaigns or search phrases.

Demonstrating the effectiveness of interactive advertising by matching consumer behavior to ads viewed requires comprehensive data mining, a technique of collecting and then analyzing myriad information extensively used by major corporations for decades.

But cookie-based tracking and last-click analysis are not sufficient. These place disproportional emphasis on the consumer's most recent behavior, when in reality purchase decisions follow a series of impressions, generally from multiple media channels and over time. Marketers need to collect and integrate audience, transaction, advertiser, ad-performance, enrichment and behavioral data throughout the engagement cycle and across all channels.

To accurately determine consumer behavior, the collected and integrated behavioral information is then analyzed and grouped into consumer profiles. Individuals can have multiple behavioral profiles at any one time based on how they interact across channels. For example, a person can interact as a parent, hobbyist, travel planner, wine connoisseur or dozens of other profiles. This leads to the ability to create thousands of micro-segments that are ultimately more valuable to advertisers. By collecting and analyzing this audience intelligence, marketers can more effectively engage and convert consumers at the point of interaction, based on real-time relevancy.

The most important asset that media companies must protect is their relationships with advertisers, and they can do this by offering a holistic view of the effectiveness of their media efforts. By bringing together detailed visibility of individuals, and the ability to continuously update these micro-segments based on real-time individual behavior, advertising can be carefully matched to the right people, at the right time, through the right channels. The results can be documented and a market premium value established for this capability.

Advertising data is often associated with consumers to support audience segmentation, but at least as important is data about the performance of advertising. Analysts estimate that approximately $100 billion in U.S. advertising is wasted annually. The behavior-based, micro-segmentation approach enables advertisers to reduce waste through more accurate targeting and measurement to validate effectiveness.

As consumer behaviors and preferences are better understood based on their online activities, advertisers now have the opportunity to reach their target audience far more precisely than ever before. The result—audience quality—is fast becoming the yardstick by which value is measured through new-media channels.

The ultimate objective is to develop and deliver behavioral-based, micro-segmented and highly relevant audiences to advertisers. By aggregating historical and real-time consumer data from across multiple channels, including leveraging data from across affiliate sites to gain a more granular picture of the consumer, content providers and distributors can serve relevant ads and content to consumers. Only an integrated approach can deliver this, and data is the lifeblood.

Detailed customer data should not to be confused with private customer information. The challenge of improving brand intimacy and consumer engagement by providing relevant content and advertising must be balanced against consumer expectations for privacy.

Successful behavioral targeting does not require knowing the identity of the consumer, and this information can be stripped away. However, if behavioral advertising is to succeed, consumers must be made aware that their online activities are being tracked and give their approval. This could be as simple as asking consumers to “opt in” to being tracked anonymously in return for incentives (e.g., access to special offers).

Creating a clear view of consumer engagement within an interactive advertising operation enables a company to tailor its advertising and content to consumer demands. It is a crucial capability for media companies that wish to remain competitive. In today's adverse economic climate, it can mean the difference between business success and failure.