Advertisers are spending more and more online as a ..

1
THE STATE OF ONLINE MARKETING
BEHAVIORAL
TARGETING
AND OTHER KEY TRENDS
2
THE STATE OF ONLINE MARKETING
Advertisers are spending more and more online as
a result of increased Internet penetration and
media usage.
Online Penetration in Western Europe, 2004 to
2010
Total Online Advertising Revenues in Western
Europe, 2003 to 2009
70
60
50
40
30
20
10
0
2004
2005
2006
2007
2008
2009
2010
Source Jupiter Research, June 2005
Source Jupiter Research, August 2004
3
THE STATE OF ONLINE MARKETING
Online spending will continue to increase, due to
new opportunities provided by such emerging
marketing tactics as behavioral targeting.
Top-Performing Online Tactics as a of
Respondents
US Behavioral Targeting Ad Spending
1,000
900
Rich media ads
800
Email house list
700
600
In Millions
500
Affiliates
400
Paid search
300
200
Behavioral targeting
100
0
2003
2004
2005
Source MarketingSherpa, 2005
Source eMarketer, 2004
4
WHAT IS BEHAVIORAL TARGETING?
Behavioral targeting reaches users whose previous
actions indicate that they are interested in a
given product or service.
Site-Side Solutions
Network Solutions
Adware Solutions
NEWS
Targets ads via software that users download onto
their computers.
Enables publishers to target audiences within
their site based on surfing behavior.
Targets specific audience behaviors across a
network of websites.
5
ADWARE SOLUTIONS
Adware solutions are highly targeted and have
significant reach, but are prone to privacy
issues and a high churn rate.
Behavioral Targeting via Downloadable Software
Advertising Professionals Opinion Regarding the
Use of Adware
45
40
35
30
25
20
Consumers agree to receive advertising in order
to download free software.
Adware programs track user activities and deliver
pop-up ads based on behavior.
15
10
5
0
Strongly Opposed
Somewhat Opposed
Somewhat Supportive
Strongly Supportive
Source AAF, November 2004
6
SITE-SIDE SOLUTIONS
Site-side solutions are highly targeted and
increase the value ofpublishers run-of-site
inventory, but provide limited reach for
advertisers.
Lift in Brand Metrics Behavioral vs. Content
Targeting on iVillage
Behavioral Targeting within a Single Website
Inventory within the travel section of a news
website can often book quickly.
Behavioral targeting reaches this travel
audience across the publishers site.
Source Dynamic Logic
7
NETWORK SOLUTIONS
Network solutions overcome the challenges of
alternative providers intheir ability to deliver
a highly targeted audience with sizeable reach.
8
WHY THE RISE IN BEHAVIORAL TARGETING?
Behavioral targeting delivers unprecedented
relevancy, response and ROI for online
advertisers and publishers.
9
WHY THE RISE IN BEHAVIORAL TARGETING?
Increased spending results in valuable content
selling out. Behavioral targeting reaches users
across content based on observed interests.
Percent Sold Inventory, 2003 2005
US Online Advertising Spending, 2003 2008 (in
billions)
25
20
15
10
5
0
2003
2004
2005
2006
2007
2008
Source AdRelevance, house ads versus non-house
ads
Source eMarketer, May 2005
10
WHY THE RISE IN BEHAVIORAL TARGETING?
Marketers have benefited from the relevancy of
contextual and search. Behavioral targeting is an
extension of this in the moment marketing.
Users' Willingness to Click on Ads that are More
Relevant to Their Interests
US Search Marketing Spending, by Segment,
2003-2008 (in millions)
45
5,000
Contextual listings
40
4,500
4,000
35
Paid placement
3,500
30
3,000
25
of Respondents
2,500
20
2,000
15
1,500
10
1,000
5
500
0
0
Absolutely yes
Most likely yes
Unsure
Most likely no
Absolutely no
2003
2004
2005
2006
2007
2008
Source Ponemon Institute, Revenue Science,
Chapell Associates, September 2004
Source Forrester Research, October 2003
11
CASE EXAMPLE VOLKSWAGEN
Goal Drive consumers to configure a new
Volkswagen A4and request information from a
local dealer.
85 configurations and 36 requests per million
impressions
1,077 configurations and 822 requests per million
impressions
Demographic Targeting
Behavioral Targeting

• Targeted to consumers who researched cars online
  in the past six months

• Targeted to users who visited the VW website but
  did not configure a vehicle

Source Advertising.com
Source Advertising.com
12
CASE EXAMPLE
Goal Leverage behavioral targeting to convert
consumers who visited the Lane Bryant website
but did not complete a sale.
Cost per Sale
Delivered Revenue
Beat revenue goal by 408
Beat cost-per-sale goal by 85
Cost per sale
Online sales revenue
Revenue Goal
Delivered Revenue
Target CPS
Actual CPS
Source Advertising.com
Source Advertising.com
13
CASE EXAMPLE
Goal Convert consumers who researched VoIP
services, but did not immediately purchase.
Conversion rate more than doubled
Behavioral targeting implemented
Conversion Rates With and Without Behavioral
Targeting
Weekly Conversions Before and After Behavioral
Targeting
1,400
Conversions
1,000
Conversion Rate
600
200
0
Without Behavioral
With Behavioral
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Week
Source Advertising.com
Source Advertising.com
14
WHY THE RISE IN BEHAVIORAL TARGETING?
Behavioral targeting enables marketers to reach
in-marketconsumers and increases the value of
publisher inventory.
Increased spending by traditional advertisers
Increase spending sold-out inventory
Success of contextual and search advertising

• Experience/comfort with audience segmentation
  offline will lead to increased behavioral
  dollars online

• Ability to create behavioral segments across
  content increases the value of run-of-site
  inventory

• Behavioral targeting provides the level of
  relevancy and response delivered by the
  ever-popular search marketing

15
BEHAVIORAL TARGETING CHALLENGES
For continued growth, providers must address the
underlyingchallenges and issues associated with
behavioral targeting.
16
BEHAVIORAL TARGETING CHALLENGES
With the rise of network solutions, the issue of
data ownership hasbecome a challenge for website
publishers and their behavioral partners.
Overcoming Data Ownership Issues
The Consumer Data Trail

• Networks and publishers must
• establish a clear policy with
• regards to
• What data will be shared
• How the data will be used
• Ultimate ownership of the data

17
BEHAVIORAL TARGETING CHALLENGES
Publishers, technology providers and advertisers
define each behavioralsegment/audience
differently and lack universal success metrics.
Overcoming Standardization Issues
Standardization
Publishers ?
TechnologyProviders ?
Advertisers ?

• While awaiting industry standardization,
• advertisers must define on their own
• The audience they want to reach and how
  behavioral targets are defined
• The definition of success, e.g., conversions,
  audience composition, brand lift, against which
  all providers are measured

There are currently no industry standards with
regards to how behavioral targeting is defined
and measured.
18
THE FUTURE OF BEHAVIORAL TARGETING
As targeting, tracking and reporting technologies
advance, behavioral solutions will expand across
objectives and channels.
The rise of network solutions
Multi-channel behavioral targeting
Increased accountability

• With advertisers demanding increased reach,
  network solutions will continue to grow

• Advertisers are looking past basic reach metrics
  to determine campaign impact on actual revenue

19
THE FUTURE OF ONLINE MARKETING
Wireless advertising will also grow, as a result
of increased use of mobile devices by European
consumers.
European Mobile Marketing Spending, 2004 to 2010
(in millions)
European Wireless Penetration, 2004 to 2010
800
80
79
700
78
600
77
500
76
400
75
300
74
200
73
100
72
71
0
2004
2005
2006
2007
2008
2009
2010
2004
2005
2006
2007
2008
2009
2010
Source Jupiter Research, April 2005
Source Jupiter Research, April 2005
20
THE STATE OF ONLINE MARKETING
Advertisers will continue to shift media dollars
to the Internet as consumers increase their
online usage and marketing technologies advance.
Questions? For additional information, please
contact Advertising.coms Danish
office Århusgade 88, 4. 2100 Copenhagen Phone
45 36 91 38 00 Email mchabert_at_dk.advertising.co
m