Behavioral Targeting Study Shows Higher Conversion Rates

Despite the controversy surrounding behaviorally targeted ads, marketers are committed to this way of reaching consumers. E‑marketer reports that businesses will increase BT ad spending from $778 million in 2008 to $4.4 billion in 2012.   According to a Network Advertising Initiative Study, there are two forces driving investment in this industry: Web publishers, ad network and services providers are generating profits from these efforts and marketers are seeing higher conversion efforts when consumers are behaviorally targeted.

Ad networks typically charge nearly twice as much  for BT ad services than for pure display advertising. The higher costs are associated with categorizing consumers, collecting data, and providing analytical services to marketers. But more marketers are will to pay for BT advertising because of the positive results. While a run of network display ad will generate a conversion rate of 2.8%, a BT display ad will increase conversion to 6.8%.

By industry, the Cost Per Thousand (CPM) varies significantly when behavioral targeting is used. The NAI study calculated the 2009 average rates as follows:

  • Autos $4.99
  • Arts/​Entertainment $3.06
  • Home/​Family/​Parenting $2.52
  • Finance/​Business $2.73
  • Health $3.18
  • Shopping $2.58
  • Sports $2.90
  • Science/​Technology $2.87
  • Travel $3.43

Privacy issues concern consumer advocacy groups because ad networks often predict future consumer behavior based on their past behaviors when Web browsing.  But the percentage of ad revenue coming from BT strategies continues to grow for ad networks and stood at 17.9% at the end of 2009. The sheer effectiveness of the strategy suggests that BT will continue to grow.

[Source: Beales, Howard. The Value of Behavioral Targeting. Network Advertising Initiative. March 2010. Web. 7 Apr. 2010] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.