Targeting Methods in Online Advertising

Filed Under , B2C Marketing, Digital Marketing, Ecommerce, Online Advertising, Online Marketing, Search Marketing, Segmentation, Web Analytics | 1 Comment

Selecting the right audience is the key driving factor in online advertising - your marketing campaigns’ performance depends on it almost 90 percent. With numerous tracking systems for monitoring users behaviors online, their ways to interact, their purchase habits, there are a number of targeting variables available to modern marketers. What is a well-targeted advertising? It is more relevant, compelling and subtle. What are the tools we have these days? According to the Advertising Research Foundation in its latest publication titled as The Online Advertising Playbook , there 7 highly usable methods:

Demographic Targeting - the old and familiar approach that defines audiences by gender, age, occupation, household size. It will always be there due to its advantages for broader product categories. It is easy to project behavior for such products based on demographic information and it costs less than tracking individual purchase behavior. More on the tips for successful demographic targeting, read the article on iMedia Connection.

Contextual Targeting - implies placing ads on sites that are related in content to the products, as an example: diet programs ads show up on healthy living related sites, financial products ads are displayed on money and investment sites. Contextual placements catch shoppers at the time when they are thinking about the product or related to it issues, catch up on news or read up on tips.  Due to the fact that shoppers (potential and actual) are caught in the active state - it becomes quite important to select quality sites, with relevant and most popular content to make your campaigns perform.  Site credibility is also important for the product especially when sales occur offline. Thus, it is a key consideration for your branding efforts.  Also, if you are tasked with building a community around your product, having a group of high regarded sites extends your influence further with the already highly engaged audience.  More on the contextual targeting, check this blog post that cites the research study on its effectiveness.

Behavioral Targeting - is the hottest method these days and the most controversial, allows marketers to track users’ site “hopping” through the cookies and come up with models and behavioral patterns for targeting those users later on those sites. Advertisers use these models to serve ads that are relevant to those “mapped” individuals across the various sites. It could be cheaper to do behavioral targeting than a contextual one: you have more points to reach the same audience. At the same time, it has its pitfalls and Jack Jia covers them well in his recent article.

Geographic Targeting - is especially powerful for smaller businesses that would like to capitalize on the local searches for products and services. DMA areas, area codes, time zones, GPS coordinates and IP protocols provide some geo targeting capability and allow marketers maximize the reach.  In addition, it can always bring additional sales to the brick-and-mortar store if you send your shoppers to the nearest location to pick up the purchase. More on the ways you can leverage geo information, read this blog post by Charles Thrasher.

Daypart Targeting - comes back to online advertising from the more traditional media (TV, radio) where it reaches specific audiences. Daypart targeting varies by audience size and specifications, can be very cost-efficient - as you expose your message to the largest audiences at the right time when they want to hear, see, view your message. Internet is used differently throughout the day with the highest percentage of people shopping and surfing the web during the normal business hours at work! According to emarketer, 31% people shop online at work, and if you add more detailed data on at which hours exactly they heavily engage into it - you are in business!

Affinity Targeting - refers to reaching customers on their favorite sites (usually related to hobbies and interests) that they heavily visit and interact with. Those users spend more time online (on those sites), are more favorable to the site content and ads and purchase faster and easier. If you like one site that you visit daily, you are more open to digest the message in the ads and in fact act on it. Works every time.  Affinity targeting especially works for brand evangelism.

Purchase-Based Category Targeting - represents a new method of merging data from the online behavior database to the purchases. It is very efficient, but very costly since you do have to customize the databases for your specific markets.  Companies like Nielsen try to create profiles of the “heavy shaving cream users” and low-carb dinners buyers” and map it against their online surfing patterns and predict their next purchase across product categories.

With all those methods, marketers are indeed empowered to deliver the right message at the right time to the right audience, even when the data is not perfect. Select 2-3 methods that fit your business and marketing strategy and find the good enough fits for your audiences and you are bound to have success.

What Is Your Conversion Rate? Plus Two Other Metrics That Make It More Meaningful

Filed Under , Ecommerce, Online Advertising, Online Marketing, Web Analytics, Web Technology | Leave a Comment

Posing this question to myself last week, brought me to a number of nuggets that I wanted to write down for reference and share.

Conversion rate is a percentage of your audience that was successfully “sold” to your message and engaged into a purchase to the overall audience that viewed your communications. Conversions come in various shapes: sales, leads, sign-ups for newsletters, information requests, linking to your site or blog, views of a certain page, downloads of a specific media material or referrals. In other words, it could be any action that you want your target audience to do as a response to your communications.

Conversion tracking becomes a very “magical” tool when you want to test the efficiency of your ads, copy or keywords in your online marketing initiatives. As an example: you can have 2 versions of an ad with a rate of 1.3% CTR (click-through) and 1.7%. If you just rely on the CTR, you will keep using the second version with a higher rate. However, even though more people clicked on the second ad, how many did actually register a purchase? This is answered by the conversion rate that might prove the opposite regarding the effectiveness of your ad. Perhaps the “catchy” headline in the first ad was very effective, but call-to-action copy failed to deliver. By having the conversion rate metric you can use the call-to-action copy from the second ad. And test.

You still need CTR! To calculate the profits you make from your ads. That’s where CPC (cost per click) comes in. Thus, you can see how much you spend relative to what you gain. But again, we are only using 2 metrics and can miss on the information. As an example, you might have an ad or a keyword with a lowest CTR and low CPC, but it can convert very well. Here you need to add another dimension - the amount of traffic which you can measure as well. How valuable all the traffic that this ad brings to your site? This way you need to calculate the profit each ad brings. To do so you need to calculate the total number of conversions (number of clicks multiplied by the conversion rate and divided by 100) and the value of a conversion (which you can assign (example your sale is $50 and you keep $30 after subtracting all the costs and fees, thus $30 is your conversion value). The value of a conversion helps you understand how much this action is worth for your business. The profit per ad = (conversion value X total number of conversions(profits)) - costs).

“Common Mistakes That Drive Customers Away” from the Online Market World, Day Two

Filed Under , Consumer Behavior, Ecommerce, Online Marketing, Phychology, User Experience Design | 1 Comment

Day Two for the e-commerce conference brought new ideas (from starting my own online business after watching all those people making a living while selling anything!) to confirming new directions that I would like to take in my career: CRM and web analytics that affect conversion rates (multivariate testing and behavioral targeting). Social media, viral marketing and online advertising became close chapters: I can still do that, I get it and know it well, but passion is moved to something new and more challenging - database marketing and behavioral targeting. At the same time, user experience design concepts still get mixed into the equation as they affect the entire consumer experience and the bottom line.

To that extent, one of the most interesting sessions today was on “Most Common Mistakes That Drive Customers Away” with Thanh Nguyen from Business OnLine, Jeff Shulman with (X+1) and Mark Wachen with Optimost sharing simple nuggets that are worth keeping in mind while optimizing your online communications or sales process. So, the most common mistakes include:

1. Mismatched Offer - when a user comes back in a week and sees the same offer for a lesser price? Ha? It does happen very often and can turn off your customers in seconds.
2. Mismatched Content - happens when “cookies” get on the way and mixed up, or randomly - an example of this can bring a scenario of a college student that stays up all night and frequents MySpace while he is presented with an offer for a Mercedes. Very mismatched content!
3. Multiple Choice - too many choices make it difficult for users to make a choice - a book was referenced in the speech by Jeff “The Paradox of Choice” - that provides a good overview on buyer’s behavior and how people make their decisions.
4. Promoting Benefits That Are Not Benefits - happens all the time. As an example, in the final action step when you ask your visitor share his/her email address and add a “no-spam” disclaimer - it can only hurt you as people start thinking about it. Studies show that if you do not mention too much info or negative info, your conversion rate is much higher - as it makes sense. Do not clutter the user’s mind when there are already ready to take an action with extra info.
5. Continuing To Sell When The Sale Is Made - can prevent your customers to take the final step - as an example, removing FAQ info that was placed together with an offer - increased the conversation rate again - too much info (TMI) - something most of use marketers suffer from.
6. Asking A Lot Of Unnecessary Questions - making your users fill out long forms - turns everyone off - minimize your forms to 3-5 questions.
7. Treating Customers Equally - Segmenting by search keywords does bring more qualified traffic that converts into dollars as opposing to throwing out the same copy to the entire audience.
8. Not Allowing Your Users To Check Out Fast And Easy - according to the studies that a user experience analyst, Thanh Nguyen, conducted, people get frustrated when a bunch of forms or barriers are presented before they can enjoy a product or complete a purchase. ” I do not want to fill out forms to buy a purse. They do not ask me to do that at the counter”, - says right away what your users want.
9. Not Giving Clear Indications For The Shopping Process - makes your customers wonder “How long is it going to take?” - and the way to avoid this pitfall is to offer a visual path to your users, as an example, see the checkout path that Amazon cart has that starts with a “sign-in”, continues to “shipping”, “gift wrap” and finishes with “place an order”.
10. Not Capitalizing On Abandoned Carts - represents a lost opportunity that is not utilized by some online merchants. How many times did I go through the process and did not complete the shopping? Sometimes, I lost the card - as the merchant provided me with no history or some indicator where it was, or sometimes I got distracted. By providing the history, save the cart option and reminding via email with a discount offer can significantly recover the abandoned customer.
11. Not Cross-Selling By Displaying Products Without Recommendations - “Imagine four products displayed and 6 out of 6 visitors did not click through?” - no case studies or testimonials are used - and your users do not trust online content but other users. Make your users recommend and cross-sell for you. Use the user’s browsing history from items searched to tasks accomplished during the session, connect him/her to other users who did the same and purchased - and recommended your product - cross-sell.

To sum it up, it seems like keeping the sales process easy, straight-forward and consistent brings the best results: higher conversion rates, user satisfaction and referred business.

The Future of E-Commerce According to the Experts

Filed Under , B2C Marketing, Ecommerce, Online Advertising, Online Marketing, Web Technology | Leave a Comment

Day One of the Online Market World Conference was opened up with a starter session that covered the upcoming trends in the e-commerce industry. I thought it was rather “short and sweet” in content and delivered a good overview that is worth sharing. According to Joe Chung (Allurent), Doug Mack (Adobe) and Michael Hines (Jones Apparel Group) there are a number of trends in the evolving e-business:

1) Rich media meets rich applications - the user experience becomes very engaging, interactive and “seamless” thanks to the latest and greatest in the web development apps that leverage the graphic user interface. Examples include Gucci watch and Teamwork Athletic Apparel sites that bring authentic interactive brand experiences right at your computer.
2) Increasing community involvement - plays a major role in creating relationships, brand recognition and promotion from the mere transactions. If they (transactions) were good, easy experiences - they become stories that people pass along and eventually translate into more revenue.
3) Back to the desktop - lots of $$ is invested into the desktop shopping platforms, “browser-free” online shopping - imagine that!
4) Content as the Interface - plays a great role in the new way e-commerce sites get content and “inventory” - see Zillow’s site where users can post their house info (pictures, videos, etc) on sale in 60 seconds and watch the bids come.
5) Online shopping to be successful must be: enticing + engaging + executional + pervasive + mobile.

It is interesting to see how the same principles and concepts are applied throughout various industries and disciplines: I see the basics of the social media concepts, user experience design, permission marketing, branding and CRM - all work in tandem to accomplish a simple goal. You hear all the time the same fundamentals: ease of use, emotion, relevance, experience, engagement = all in various combinations bring you to success, as they are the same needs expressed by the sophisticated consumer, online shopper, primarily the US-based individual. As Joe Chung says, “extensive increases in the software development are very well offset by increasing customer expectations”, - so viva the online shopper - as there will always be plenty of work for all of us in web applications and services development as well as online marketing!

Online Market World Conference 2007: My Top E-Commerce Sessions to Attend

Filed Under , Conference, Ecommerce, Online Marketing | 1 Comment

I am back to San Francisco, the city that still (and always) enjoys the sunshine, attending the Online Market World Conference, a full-blown event to cover the entire e-commerce lifecycle. It was almost surreal this morning to come from the yellow-and-orange-and-wet Seattle, into a sunny caught-in-the-summer-weather of San Fran - felt like I escaped from the seasons! For the rest of the week, I am looking forward to learning more about the latest and greatest in the e-business and meeting the folks in the industry that did that (eBay, PayPal, Forrester Research are among the biggest players).

So far, at a glance, the “must attend” sessions for me are:

(1) Driving Customer Acquisition and Conversion Through Word-of-Mouth Marketing (will cover the best known cases of integrating product reviews and social media).
(2) and How Analytics Affects Planning Processes (this session claims to reveal how to deploy analytics to affect the planning processes across the organization, in other words being more intelligent about your decisions).
(3) then later in the day, I am looking forward to learn how to Improve Customer Acquisition Through Analytics, through analyzing existing customer behavior and going beyond - understanding new customers. See the magic in numbers!
(4) Customer Lifetime Value - What You Don’t Know Can Hurt You - sounds rather appealing with its promise to share the methods of utilizing business intelligence to fine-tune customer retention strategies.
(5) Understanding the Business Customer - claims to cover the dos and don’ts strategies while working with B2B audience.
(6) of course, I could not let the session on Improving Commerce Site Effectiveness Through Analytics and Multivariate Testing go without my notice - revisiting the tactics of driving online sales is the knowledge that is worth hanging onto by any marketer these days.
(7) The Future of Online Advertising - should be a good recap on whatever happened to online advertising (how it evolved and where it is heading towards) within the last year that we missed while paying attention to everything else!
(8) Common Mistakes That Drive Customers Away - is a great session that will help to get back to reality and understand the buyer decision process and why it stops at some points.
(9) and finally, International Payment Options and Optimization - seems to be rather hot - as it spills the beans on the remaining international payment challenges and what the industry is doing about it.

These top 9 are my picks to engage into. Let’s see which one of them makes the deepest impression.

BTW, if you cannot attend and still want to get a piece of the informational pie, check out a free report on e-commerce trends 2007/2008 provided on the event site. Obviously, you will have to share some info to get it, but should be worthwhile.

    Content Disclaimer

      Everything posted on this blog is a product of my own thoughts, ideas, reflections based on the professional interests. It is based on the public information, works of the colleagues and fellow researchers that are cited respectfully and my opinions as an industry professional.