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Tuesday, July 24, 2007

Target practice

It seems online ad spend supported by behavioral targeting (BT) works.

“Behavioral targeting” is a strategy in which marketers analyze consumers' online activities to figure out who is most likely to be interested in its product - and then place ads on whatever sites those consumers are visiting. While it helps marketers reach a more engaged audience with fewer ad impressions, publishers monetize their “long tail” pages that otherwise remain unsold or goes cheap (remnant inventory). For users, ads targeted by their actions seem relevant and are often welcomed.

The effectiveness of focused strategies can be gleaned from the rapid pace of deals for Ad-networks. Four deals in 35 days — Google-DoubleClick, Yahoo!-Right Media, WPP Group-24/7 Real Media, Microsoft-aQuantive and now AOL-Tacoda — are a clear indication of the onrush of brand-focused advertisers onto the Web.

Now the question that begs answer is scalability. It involves several factors, including the broad reach among Web sites either thro portals or ad networks, needed to allow fine-tuned segmenting and yet maintain a reasonable size for each slice of the audience. Another element holding back BT growth is the technology itself, which despite its benefits still seems counterintuitive to many advertisers - that they need to pay nearly the same rate for a remnant page as they would for a contextually targeted page placement, goes against the grain.

So far as India is concerned, I would lay my bets on wider user adoption of www. That would leave us enough time to learn from others' mistakes and to develop a suitable strategy based on our market segments and its online behavior. Here's an insightful op-ed piece by Jeremy Liew of Lightspeed Venture Partners I found interesting.

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