Online behavior is advertising’s Holy Grail

Behavioral targeting is the path for local media companies who want to leapfrog their competitors in the online advertising space. Most companies are slow to move in this direction for many reasons. One, they just don’t understand it. Two, it requires building a local network of websites. Three, there’s no demand for it from local advertisers (yet). And four, nobody else is doing it (yet). That last one is the greatest barrier to progress that I encounter on a regular basis in my work.

eMarketer graphicA new report from eMarketer may accelerate growth in the space. Behavioral Targeting: Advertising Gets Personal projects significant growth over the next few years.

The $1 billion that eMarketer projects for behavioral targeted ad spending in 2008 represents only 11% of the US display, rich media and video market. With the greater attention paid to overall ad targeting, however, and the rising focus on brand messages online, this market will nearly quadruple by the end of 2011.

Behavioral’s share of total online ad spending will grow from 2.6% this year to 8.4% in 2011, and its share of display and rich media spending will grow from 8.9% to 25.8%.

But those numbers could actually be low, if the local media industry moves aggressively into this area. It begins with the creation of local online verticals and the building of a network of local sites. I tell clients that this should occur in two phases: build your own network first and then work to include other sites in the market. And this, of course, assumes the ability to serve this type of advertising, too.

Behavioral targeting is the Holy Grail of online advertising — whether it’s video or display — because targeting brings with it higher rates. If you are serious about growing an advertiser-supported business online, you need to be proficient in this area.

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