Interest in targeting alternatives rising as online CPM costs rise

Targeted marketing was one of the original promises of the web, but paying extra for targeting was less attractive to marketers while the cost of CPM advertising was cheap. Now, with the online ad market recovering, marketers are increasingly interested in new targeting techniques.

DoubleClick Inc.`s Doug Knopper, senior vice president and general manger, advertising and publishing solutions, tells Internet Retailer the company has seen a rising trend over the past six to nine months among both advertisers and publishers toward advanced targeting. In response, the company has rolled out advanced targeting capacities including the latest, a partnership with Digital Envoy that enhances DoubleClick`s ability to serve up geo-targeted ads. Digital Envoy is the provider of NetAcuity, an IP-based geo-targeting platform.

“What we are seeing is a very strong trend among advertisers and publishers toward advanced targeting – contextual targeting, behavioral targeting, profile targeting, any means of providing a deeper way of reaching the consumer online while targeting the message. Geo-targeting is one more way to approach that,” says Knopper.

Interest in geo-targeting and other ad targeting techniques is increasing as the online ad market recovers from a downturn. “During the downturn of the last couple of years, the cost of media declined so dramatically, the increased premium paid for targeting wasn’t justified. In other words, why spend XX in CPM to add an additional targeting layer on your media when you could just go out and buy an additional billion impressions for half that cost?” Knopper says.

According to Nielsen/NetRatings` Ad Relevance, the average rate card CPM as reported by sites showed a general downward trend from August of 2002, when it was $20.06, to October 2003 when it troughed at $11.53. By Feburary of this year, it had risen to $12.56.

“Now that the ad market is recovering online and CPM prices are stabilizing and potentially rising, people are saying they need to find better ways to make their advertising work more efficiently and effectively,” Knopper says. He adds that many advertisers with strong local presences are particularly interested in online geo-targeting. “They have operations in some parts of the country or the world, but not in others. Why would a Wal-Mart, for example, want to advertise in New York City when it doesn’t have any retail outlets there?” he says.

Under the agreement, Digital Envoy will supply DoubleClick’s ad serving products, DART for Publishers, DART for Advertisers, and DART Enterprise, with IP-based geo-targeting data. The partnership will build on geo-targeting functionality that DoubleClick already has in place, with Digital Envoy able to target users based on continent, country, state, country, city or township, postal code, area code, ISP domain and time zone. In the second half of the year DoubleClick expects to add the capacity to target ads by bandwidth and user DMA.

Knopper says that smart marketers are using several different filters to target online. “I can’t look at one form of targeting over another and say, for example, that a targeted campaign by geography will give me a better response than a campaign where I would use some type of behavioral or profile type targeting,” he says. “The key is to test and evolve campaigns in an iterative fashion to make sure you are constantly using every tool at your disposal. It is a constant layering of different filters that you want to apply to your targeting efforts.”