October 31, 2006, 12:00 AM

Targeting behavior to catch the most customers with online ads

A study by ad network Blue Lithium found that behaviorally targeted online advertising often produced a higher conversion rate when served out of context than in context. The findings support an earlier study by Next Century Media and Tacoda.

Internet Retailer

Conventional wisdom says that to catch a fish, you have to go where the fish are. But to stretch a metaphor, fish aren’t always where you’d expect to find them. In fact, ad network BlueLithium found in a study that behaviorally targeted online advertising often produced a higher conversion rate when served out of context than in context.

Users whose online behavior characterized them as “travelers,” for instance, showed the highest conversion rate when served ads not on travel sites, but on career sites. BlueLithium’s research division, BL Labs, analyzed more than 400 million online ad impressions across multiple sites, evaluating both click-through and conversion rates across several pre-determined behavioral and contextual categories. It also analyzed nine behavioral categories containing more than 10 million impressions for patterns across contextual categories.

Analysts discovered that ads showing the same context as an identified behavior had a higher click-through rate in seven of the nine categories, and ads shown in a different context had a higher conversion rate in five of the categories. “The click rate measures interest level in the ad, but it doesn’t necessarily mean it will drive people that end up converting,” says senior vice president Dave Zinman.

Out of context
The findings support those of an earlier study by Next Century Media and Tacoda. That study speculated on reasons for the seemingly greater conversion effectiveness of ads served out of context. They included the surprise factor of seeing an ad out of the expected context, as well as the fact that out-of-context ads may be more noticeable when not placed among similar, competing ads.

Although Blue Lithium’s study didn’t speculate on why out-of-context ads converted at a higher rate, it found that advertisers shouldn’t rely only on pre-packaged audience segments and rules-based targeting, but also on custom segmentation and human analysis. Today, a sophisticated portal or ad network should have the ability to help marketers test a variety of custom segments, determine which are getting the best response, and continually optimize the campaign accordingly, says Zinman.

“What this means for merchants is that there is now a way for them to predictively pay less for traffic and get higher conversion rates,” says BlueLithium CMO Dakota Sullivan.

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