It accounted for $350M in spending in ’06, but behavioral targeting will hit $575M this year, said panel moderator Mary Morrison of BtoB Magazine, and eMarketer says it will grow to $3.8B by 2011. Yes, friends, BT is hot, with many such firms being acquired in recent times — the latest being Tacoda by AOL. Tim Mahlman of BlueLithium, an analytics firm, says his client Hyatt Resorts lowered its customer acquisition costs by 71% with behavioral targeting. Philippe Suchet, CEO of Kefta, the online personalization unit of Acxiom, says BT is needed today because customer acquisition costs are rising so rapidly. “There is no more low hanging fruit.” In addition, he said, “Users are now in charge. We’ve moved away from ‘mass market’.” 
Geoff Atkinson, marketing chief at Overstock.com, reiterated that “traffic is just getting so much more expensive to acquire.” His firm started using BT about a year ago. “When a customer first arrives, for example, we log how he or she got there — by a certain keyword, for example. Then, on the next visit, we know that customer and feed them something that’s relevant.” Brent Hieggelke, VP of strategic marketing at Omniture, said when he first joined the firm, his friends thought all this “on-site targeting was hocus-pocus.” But it’s quickly become for real. His firm calls it “automated 1:1 targeting.” The customer hits the site, and their technology builds a profile. “It’s a self-learning predictive modeling engine,” he said. “The optimal content decision can then be sent to the CMS (content management system).” What data is used to select content? “Site behaviors, temporal aspects (such as time of day), environmental aspects, and referrer values,” he said. “This enables companies to quit having those weekly meetings to decide what goes on on the home page.” It now can all be automated, down to the individual. Hieggelke also noted his firm has found that the log-off page is a great place for targeted ads. “Behavioral targeting is bringing marketing back to the marketing world.” A few good questions then came from the audience. The first was “What percentage of users totally wipe out their cookies regularly?” Omniture’s Hieggelke said he’s seen some say as high as 15-30%. “But we find it’s only in the single digits.” A second question related to customers’ concerns for privacy. “We think it’s important to keep a customer mindset,” said Kefta’s Suchet. “Don’t capture too much data — find just what’s relevant to you.” Omniture’s Hieggelke added: “A customer’s name and social security number has no value to us at all.” Suchet added that BT enables campaigns to be “continually learning, changing — you can’t sit still, you must always adjust based on what competitors are doing and so forth.” A final audience question: When building profiles, what data do you use? “Primarily clickstream data,” said Omniture’s Hieggelke, “because that’s easy. But also data from your CRM system, and whatever else is determined to be predictive. Most companies take existing web analystics data and feed that in first.”
Update: To fix a typo in “behavioral” in the title (duh). At least I was consistent — I’d done it in the rest of the post, too! 🙂
Tourists are everywhere here, and the Chicago people are, bar none, the best when it comes to hospitality. Why are we inside on a day like this? 🙂 Anyway, I got here to the conference center about 10:30 and hit the showfloor soon after it opened. Had a great conversation with Mark Carlson, CEO of 
This is a company with technology to help retailers, media companies, and marketers of all types use RSS feeds to sell their wares — instead of struggling with email marketing, which he says has a whole raft of problems. SimpleFeed’s online application has a dead-simple UI that lets even non-tech people set up and manage feeds — PR people, product managers, anybody. No geek needed. The firm counts some 50 customers now, mostly Fortune 1000, but, at a minimum charge of $2000 per month, even some smaller firms are taking advantage of the service. SimpleFeed is a Sequoia-backed company and launched at DEMO ’06. I remembered them from that event, and they’ve come a long way since then, Carlson says, increasing their customer count by 10x. Their partners include many of the major email marketing services – who, surprisingly, don’t see them so much as competition, but as a natural evolution in the practice of online marketing.
The firm is based in the Netherlands (with a new office in SF), and just launched at ad:tech Hamburg in May. Their ads are clickable so the viewer can interact with the video at just the right moment — say, when a car appears, he can click on a logo or ad for the car. The default is that, when clicked, the video pauses, while the viewer goes to the advertiser’s site. The intregration of the ad with the streaming video happens on the viewer’s computer. Ads can be targeted by geography or behavior. “Is anyone else doing this?” I asked cofounder and VP marketing, Menno Biesiot. He said YouTube and Metacafe are working on something similar, but his firm sees this as validation, and leading to standard-setting in this area of much-needed innovation. The software is available now for download at the company’s site, and a demo is available there. I was impressed with the presentation, and with the look and minimalism of the ads. Not too distracting, about as tasteful as ads can be in this medium, from what I’ve seen. Check it out and see what you think. 
No, seriously, I’m getting soo into ad technology and widget technology these days, how could I miss it? And I actually love being on Lake Michigan — literally! It’s being held in the Navy Pier conference center. Lots of good speakers and exhibitors at this one that I want to hear from. Please, definitely look me up if you’re there and think you have something disruptive in the world of advertising and marketing that we should all know about.
I’ll see a lot of my friends and clients at this one….including a bunch of you in my 
Looking forward to seeing many of my media and blogger friends at this one — and, yes, I know a lot of you VCs colleagues will be lurking about, too… 🙂 Nothing beats hearing some 70 startups, many heretofore in stealth mode, pitch their new wares. DEMO rocks! And you’ll read all about it again right here, o faithful readers….
Guys like Brad Feld, VC extraordinaire in Boulder, are involved, too. I just gotta find out more about the the brand of startup mojo those guys have going’ there — it’s awesome! And how can you miss an event with a sales pitch like this:
Okay, are you ready for it? Are you sure? Okay, drumroll, it’s…..“Search, Ads & Apps” !! No, I’m not kidding — that is it, friends. I know this really tugs on your emotions. But, please, try to control yourselves … from tearing up with brand euphoria.
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