In the analytics area, the big search and portal businesses are lending a hand to the display ad marketplace.
It makes economic sense. Jupiter Research reports online display revenues of $5.8 billion and search market revenues of $6.5 billion during 2006.
Let's look at how we're helping marketers analyze behaviors and optimize their display ad results.
In the March issue of Business 2.0, there's an excellent overview called “The Quest for the Perfect Online Ad.” (Print edition.)
In the article, we are reminded that people only conduct searches around 5% of the time. During the remaining 95% of time online, people reveal their interests through additional browsing behaviors. While standard searches have been put to good use, these other behaviors can be harnessed more effectively.
Display advertisers can target people based on their click streams, or all the pages they are visiting across domains. If someone is looking around for cars, then advertisers can reach her in many more places.
Of course, cookies make this possible. Yahoo, AOL and MSN all set cookies to follow your (actually your computer's) surfing behaviors. Others suppliers like Tacoda and Revenue Science operate in a similar way with tags.
At Google, Gokul Rajaram says they are not applying cookies because they don't want to keep track of individual users. They rely on comScore analytics for targeting audiences overall, which puts them at a competitive disadvantage.
With the behaviors collected, however, it's possible to show display ads in a far more sophisticated fashion. Marketers can target audiences based on specific interests rather than on a domain basis. The audiences they are reaching don't seem to be complaining, either.
It's been several years in the making, but these analytics are finally taking off. According to Carla Hendra, co-CEO of Ogilvy North America, “Marketers now all have to understand the power of algorithms.” Since Ogilvy can target and also adjust ads quickly, she says that optimized ads perform up to 30% better than status quo.
At this juncture, behavioral and analytical power may re-ignite the display marketplace and the billions at stake. We'll be watching.