The Alchemy of Behavioral Targeting

Remember in the not-too-distant past, when customer relationship management meant keeping track of "touches"—calls, emails, and face-to-face meetings that happened in the course of the sales cycle? A salesperson usually entered notes about a prospect or a deal in the system, and they may or may not have been looked at again. But CRM systems gave companies a shared repository of customer relationship information and, five years ago or so, it seemed like a pot of marketing gold.

Those simple times are gone for good.

Customer relationship management has been alchemically refined into a discipline the industry refers to as behavioral targeting, which refers to the collection and correct interpretation of vast amounts of customer data. The data is then used to build an ongoing relationship with the customer based on a genuine understanding of what is relevant and timely to that customer.

As in any real relationship, customers should feel known by the company that speaks to them, and, as in a real relationship, that interaction should not be limited to any one exchange or communication medium. Your customers' lives span physical, digital, mobile, and a myriad of social contexts. Today's successful marketing relates to customers across all of these channels.

These interactions have to be consistent, relevant, useful, and enjoyable. Data yielded by each interaction should enrich the feedback loop to ensure that each upcoming engagement is even more relevant than the last.

Real Numbers on Spend and ROI

According to eMarketer, behaviorally targeted online ad spending is projected to reach $2.6 billion by 2014, which actually exceeds the 485 percent growth rate Forrester predicted for U.S. advertisers' targeting spend just two years ago. Even in economically rocky 2009, clients of one prominent e-commerce targeting software vendor experienced a 550 percent increase in traffic, a 44 percent increase in conversion rates, and a 15 percent increase in order size, all while reducing operating costs by as much as 80 percent.

In this new world, peers' opinions carry more weight than advertising does, more than 60 percent of consumers research products online before they buy, and a whopping 80 percent of mobile users say they prefer free advertising apps to ones they have to pay for. It's crystal clear that behavioral targeting, along with its close cousins, profiling and personalization, make up the foundations of modern customer engagement and experience management.

Three Targeting Trends You Need to Understand and Apply

Is today's customer a genuinely new species or simply the same person with faster Wi-Fi and a better mobile phone? Perhaps it's the latter. There are a number of clear trends emerging that will shape the foreseeable future, which is another way to say they're already happening at the cutting edge.

24/7, multichannel engagement is essential. In the course of any day, your customer swings through many moods and contexts, and switches up devices more than a few times. What she's likely to respond to at 8:00 a.m. is probably quite different than what resonates at happy hour later in the day. The more data a company has on its customers, the better it can predict not just the side of the person they will be addressing at 4:00 p.m. on a Saturday, but where they are, who they're with, and what's on their mind. The key is to be always available to your customers, always helpful, and always aware of what is important to them.

Gamification makes it fun. I am online, therefore I game. It's a reality of our multichannel world—being connected means being willing to compete. It doesn't necessarily need to make a lot of sense, or even offer a big reward for winning—it just needs to be amusing, engaging, and raise the stakes a little. How about getting to be mayor of your favorite restaurant on Friday night? If you bring the most friends to the art opening, you'll automatically be entered in the drawing for a first-edition print. Amass points, discover clues, solve problems—all of these scenarios increase a customer's appetite for engagement. Coupons still work, but putting a game edge on your offer makes it that much harder to resist.

Big data + big analytics = big rewards. As consumers recognize how targeted online ads are, we may sometimes find it unsettling to think how much companies know about us. As marketers, however, we want to know that much and more about our customers, and we want our ads to outperform the competition's. Our best friends in this are the Data + Analytics Duo, those new superheroes able to amass data points and turn them into actionable insights at virtually the speed of light.

If you offer people exactly what they want, exactly when they want it, you have a winning formula for a winning customer experience and true customer engagement.

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Robert Carroll is CMO of SDL's Web Content Management Solutions division. He has more than 20 years of strategic marketing experience at both start-ups and Fortune 500 companies in the software, media, online publishing, and software-as-a-service industries.

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