- Category: November - December 2009
For years the real intentions and motivations of web customers have remained a mystery to retailers, revealed only at the last click. Recently, however, behavioural marketing has been gaining column inches as a means of evaluating customer thought processes as they journey online. This silver bullet of online retailing success, which increases sales by focusing on visitors as opposed to visits, has certainly dazzled the industry and stirred as much controversy as it has conjured return on investment.
Online retailers have been eager to craft behavioural targeting into their web analytics strategy to boost campaign results. However, misperceptions are rife and, in their rush to reach pre-qualified audiences and drive impressive conversion rates, many retailers have left the very audiences they sought to connect with behind.
Stories of marketers making online mistakes are covered widely in the press, with Skittles being one of the most recent examples. Keen to take advantage of the increasing popularity of social media, Skittles streamed live, unmonitored ‘tweets’ to its homepage. While a brave move into social media, Skittles did not actually engage in conversation with its customers and hadn’t even opened its own Twitter account. This left the brand unguarded against negative posts from disgruntled ‘tweeters’ who engage in the social media platform in search of dialogue.
When done well, online marketing yields a far superior experience for consumers through relevance and personalization and avoids targeting consumers with spam. Its inherent measurability means that marketers can easily see the return on investment, enabling them to allocate budgets accurately.
Getting to grips with behavioural marketing is also a complex task – not least because there are different types of behavioural marketing that work in different ways. Any retailer that has sought to understand its nuances can be forgiven for getting confused.
“Onsite targeting”, for example, allows site owners to deliver relevant content to audiences, whereas “retargeting” helps retailers recover abandoned shopping trolleys onsite, through targeted display advertising across ad networks or by email. With ISP-based behavioural targeting, Internet providers track users’ online journeys across the web. This not only adds another layer of complexity to behavioural marketing but has sparked further debate as both consumers and publishers are calling for ISPs to seek their permission before capturing this data.
With the industry itself still struggling to fully comprehend the different applications of behavioural marketing, it is no wonder that consumers and the media are uncertain and tentative around the privacy implications of behavioural marketing.
Using web analytics to profile audiences is certainly a vital piece of marketing intelligence. Marketing’s very purpose is to identify, anticipate and satisfy customer requirements profitably and behavioral marketing allows this to happen online.
Sophisticated analytics have become essential for any retailer looking for a more complete understanding of their customers than free tools allow. Without it audience segmentation is impossible and marketers lose the ability to target with precision and relevance.
However, the increased conversion rates delivered by behavioral marketing have distracted retailers from securing an essential requirement for success. While congratulating themselves on their rejuvenated campaign success, they have made two critical oversights. Customer education and empowerment.
Responsibility for education is also causing a stir, with disagreements over whether this should be an industry-wide initiative, lie with suppliers or the brands that customers recognize. While providers are encouraged to proactively reach out to consumer audiences, site owners increasingly need to make opt-out mechanisms available and display their privacy policies on their websites.
Some retailers are feeling cautious about behavioral targeting, but a recent survey commissioned by Coremetrics showed that retailers shouldn’t assume consumers share these concerns. The survey found that 45 per cent of Asia Pacific customers confirmed that they are happy with behavioral targeting, as long as there is an option to opt out.
What’s more, 35 per cent of consumers were able to reference personal benefits of behavioral targeting such as saving time and money. This shows that if retailers are open and honest about behavioral targeting initiatives and consumers are empowered by the decision to opt out, it can be a useful tool for all parties concerned.
At first glance, the indiscretions of hasty retailers can be forgiven. Struggling to fully grasp the different nuances of behavioral marketing themselves, educating the market is bound to be a challenge. And in the heady, fast-paced world of online, surely it is better to ride the crest of technological innovation than to allow competitors to seize the initiative, and competitive edge, from their more hesitant counterparts.
Although retailers can be applauded for actively embracing behavioural marketing to augment results, their focus on exploring the medium to attract, convert and retain customers has distracted them from the equally important task of securing consumer buy-in. What’s more, this blunder has the potential to turn the golden chalice of behavioural marketing into a poison one.
Behavioural marketing and online privacy have, in fact, become such an area of concern globally, for example the European Commission started legal action against Britain in April following complaints from UK citizens and members of the European Parliament about ISP targeting without customer consent.
Incorporated Society of British Advertisers (ISBA), the British advertising body, has called on the European Commission to cancel its legal action against the UK Government over its support for ISP behavioral targeting. In the UK’s defense, ISBA cites Good Practice Principles launched by the Internet Advertising Bureau (IAB), the UK's first self-regulatory principles to set good practice for companies that collect and use data for online behavioural advertising purposes, proving that the UK enforces its own regulation.
Legal concerns stem from lack of education, which has bred distrust. With marketers themselves not entirely clear about behavioural targeting, consumers and the media have been poorly informed and, unsurprisingly, many have reached the wrong conclusions.
Behavioural marketing is more commonly known as “behavioural targeting”. However, this term has been quick to court controversy and generate mistrust.
Although a dream concept for retailers, the very phrase “behavioural targeting” has implied negative connotations for consumers. The notion of being “targeted” in the sites of a faceless corporation has some online users reacting unenthusiastically. What’s more, consumer groups are rallying against Orwellian misconceptions and spawning governmental concern.
A simple linguistic adjustment, using the phrase “predictive advertising” instead could dispel negative connotations and could be a small first step in addressing anxieties. Predictive advertising sounds less intrusive than behavioural targeting, and is a more accurate description of the term’s function. Introducing universal opt-out mechanisms could also go a long way to ensure that consumers feel they have choice and their privacy is not being infringed.
Some individuals are actively taking steps to block companies from tracking them – even those companies who, inadvisably, do not provide them with an opt-out option. Ad blockers can ban cookies from most large ad servers, and plug-ins are also available that dilute results by making false search enquiries.
We must reassure customers and lawmakers alike that information is being used responsibly and is not personably identifiable. Ultimately, the industry needs to take the time to explain to users what’s in it for them. Without understanding the benefits to them personably, it’s unlikely that consumers will feel well disposed.
Retailers need to measure and understand the return on investment of behavioural targeting and the positive impact that it has in reaching consumers with information that is relevant.
Likewise the benefits of behavioral targeting should be communicated to consumers so that it is not seen as an underhand, suspicious practice. By being completely open about how the tactic is used, and providing a visible opt-out option, even more consumers will become aware of the relevance that behavioral targeting brings to their online experience.
Transparency around behavioral marketing is essential. Customers need to understand what data is and is not captured about them. Importantly, the industry must take the time to clearly communicate and reassure them that behavioral marketing is a solution to spam and an opportunity for them to receive offers of interest to save them time and money.
Behavioural marketing is a powerful tool for retailers and a huge benefit to consumers. Let’s avoid the irony of the communication profession losing out because it has forgotten to explain this.
By Tony Tsang, General Manager, Greater China Region, Coremetrics