The days of targeting consumers by keywords only are coming to an end. Now search engines, specifically MSN are giving advertisers the ability to target consumers by age, gender various demographics and website behavior.  MSN’s behavioral targeting is an effective way to deliver customized/relevant messages to the most desirable and targeted consumers. Based on user search and web surfing behavior, behavioral targeting allows advertisers to reach their target consumer.

Although the concept has been around for several years now as it relates to online banner advertising, it is now becoming a fundamental practice for search marketing as well. In fact, a recent report on Clickz.com, states that behavioral targeting is up roughly sixty percent over the last year, which shows tremendous growth.

The Early Days of Search Marketing

Search engine marketing, often referred to as paid search is based on cost-per-click model (CPC); that is, advertisers only pay when a consumers clicks on a particular ad within a search engine.  Of course, starting a search campaign takes hours of research identifying which keywords people are searching for and trying to make the best determination as to what these consumers actually want. It then becomes even more challenging trying to figure out where consumers are in the buying cycle.

Additionally, paid search can also get very expensive since the cost associated with clicking on an ad is determined by somewhat of a bidding process, specifically in Yahoo.  For example, assuming company A sells computers and is willing to spend $5 per click for the term “computer”.  Company B can decide that they are willing to pay $5.05 for the same term and essentially, take the number on position in the search engines.  The situation evolves into a bidding war between competitors and will only drive up the cost for all the other players who want to bid on the same term. Thankfully, this is changing and Yahoo has finally figured out that a bid-only metric for determining position in the search results is not effective for advertisers or consumers.  Now, Yahoo along with Google will be positioning ads not only by what advertisers are willing to spend per click, but also by relevance and a historical click through rate.

There is a small element of targeting with the current search engines, based solely on the key term.  For example, it’s easy for advertisers to differentiate the term “used car” from “buy car”.  One could make an accurate assumption that the consumer who typed in the term “used car” is not necessarily ready to buy a car; but rather is in the research phase of the buying cycle.  On the other hand, the consumer who typed “buy car” is most likely ready to buy a car. Therefore, advertisers can customize their creative (or, ad copy) to try and persuade consumers to click on their ad. They can also customize the landing page and overall customer experience based on the term.

MSN Behavioral Targeting

According to Comscore, MSN is losing search engine market share, roughly 1 – 2% per month since April 2005.  This is one reason why MSN, namely Microsoft, has been investing millions of dollars advertising their new search marketing platform. Their attempt in generating awareness among advertisers and consumers is obviously a strategy to try and take back their lost market share, and also gain additional share.

On a positive note, MSN is the only search engine that can segment consumers into several different categories based on web surfing behavior and what keywords they typically search for.  In addition, MSN can classify these same consumers into demographic profiles; a great tool for advertisers to completely customize the customer experience from the search term, creative, landing page all the way to check out.  The MSN segments are:

• Mobile Users
• Internet Power Users
• Gamers
• Auto Buyers
• Home Buyers
• Personal Investors
• Credit Card Shoppers
• Moms
• New/Expecting Moms
• Hotel Seekers
• Vacationers
• Luxury Car Researchers
• Sports Car Researchers
• SUV Researchers
• Pick-up Truck Researchers
• Passenger Car Researchers
• Movie Watchers
   

Here is a quick illustration. MSN can tell advertisers that 25 to 50 year old males living in California with income between $65K and $100K typically search for the term “sports car” and are generally interested in researching various types and models of new/old sports cars.

How does MSN know so much about consumers?

MSN has been collecting customer information for years in preparation for this new search venture.  That is, they use cookies that track consumer behavior while surfing the web on MSN.com.  These cookies are stored in the consumer’s web browser.  They know what websites users are going to; how much time they are spending on each of these sites; as well as their purchase behavior.  In addition, they couple this data with demographic profiles from MSN’s .NET passport infrastructure and Hotmail accounts.  The only caveat is that if consumers delete their cookies, MSN can no longer track their behavior.

The last I checked, almost all new PCs on the market are pre-configured with previous/existing versions of the Windows operating system (95, 98, 2000, ME, XP and soon to launch Vista). When a consumer purchases a new PC, they are always prompted to register their product; which includes the exact information MSN is using for their behavioral/demographic targeting platform. The same can be said for all of Microsoft software programs, i.e. Office, Project, and SQL server to name a few. 

Why is this important for Direct Marketers?

Essentially, search marketing has many of the same characteristics as traditional direct marketing. With MSN’s newly launched behavioral targeting platform, advertisers can specifically target a demographic or particular online behavior which is consistent with a direct mail piece.  Also, search marketing uses metrics that are extremely in line with direct marketing practices.  Search marketing is measured by click-through rate and conversion rate which can be closely equated with a response rate metric often used in direct mail. 

Lastly, with the increase in broadband adoption in the US and abroad, it becomes almost imperative that direct marketers and companies embrace search and include it into their marketing mix. Not doing so would be alienating several thousand, and in some cases millions of consumers.

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