Advertising Out Of Context

For as long as there has been advertising, the advertisers have sought to run the ads in context.

By "in context", I mean car ads in the automotive section, banking ads in the finance section, beer ads in the sports section, etc etc.

The reason for this is that context has been the best available form of targeting. You wouldn't be reading the auto section if you aren't interested in cars, right?

But could it be that advertising out of context works better? That would be a shocking finding.

Of course, you'd have to have another way of targeting for that to be the case.

Enter behavioral targeting.

Behavioral targeting is the art of advertising to people based on observed behavior instead of by what page or media they are viewing. The idea has been around for years, but until digital media and the Internet, its mostly been a concept.

Union Square Ventures is an investor in the leading behavioral targeting comapny, Tacoda Systems. Tacoda really pioneered large scale behavioral advertising with its Audience Management System which was launched in 2002. Since that time, Tacoda technology has served millions of behaviorally targeted ads on the pages of many of the leading web sites.

In 2005, Tacoda launched a behaviorally targeted advertising network called Tacoda Audience Networks. This move extended Tacoda's reach into a much larger group of advertisers who did not want to deploy their own behavioral targeting system.

Recently Tacoda sponsored some research conducted by Next Century Media Research. The research was an "eye tracking study" done by PreTesting, one of the leading eye tracking research providers. In the study, researchers watched the eye movements to determine the number of "looks" and the time spent on each ad.

The results of the study were released this week and the press release is here.

The data shows that behavioral ads are 17% more effective in engaging readers than contextual ads. But more importantly, after the first exposure to both ads, the behavioral ads perform 54% better than contextual.

Bill Harvey, the CEO of Next Century Media, is quoted in the press release saying:

It is probably a combination of more relevancy and less clutter. It could be that there are just too many ads for the same product category attacking the user's eye in contextual targeting, causing the user to avoid looking at any of them.

As an investor in Tacoda for the past three years, I have been privy to many anecdotal examples of this and I have my own theories for why targeted ads perform better out of context. I think that if you are interested in cars, you are paying attention to what you are reading in the auto section and the car ads blend in. When you see them in the sports section, out of context, you pay more attention. Since behavioral technology targets the auto ad to people who have shown an interest in automotive content, showing them the ad in the sports section seems like a great way to get them to pay more attention to it.

It's not likely that advertisers are going to rush to embrace advertising out of context. Hundreds of years of behavior is going to be hard to change overnight. But those advertisers who have the courage to give it a try, using Tacoda or another behavioral advertising system, are going to get some really interesting and good results.

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Fred Wilson writes about a company he funded that uses targeted out-of-context advertising based on behavioral cues. The data shows that behavioral ads are 17% more effective in engaging readers than contextual ads. But more importantly, after the firs... [Read More]

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Posted January 20, 2006 in Venture Capital and Technology

Comments

could be that behavioral targeting is indeed terrific, but that has nothing to do with whether ads belong in or out of context.

the vast majority of past and present advertising -- and the most successful ad vehicles past and present -- are not contextual. Couple of significant cases in point: People magazine, and all other general interest mags. Sports Illustrated, ESPN and all sports media (unless you count ads for baseball gloves and golf clubs), plus virtually all popular TV: sitcoms, wrestling (always the highest rated show on cable), cop shows, soap operas, etc. None provide for contextual advertising.

Also, a general note on targeted advertising in general. Its true that targeting -- contextual, behavioral, whtever -- is and always will be an excellent tool. but targeting can only reinforce existing behavior, not introduce new behavior, hence its usefulness is limited. in other words, if i only try to sell my product to people with a prediliction for it, i never reach anyone who has no idea whether they are interested or not. best case in point: for decades gillette only sold shaving products to men... until a (presumably female) marketing exec pointed out that the vast majority of shaving products are actually purchsed for men by women. the result, the wildly innovative and wildly successful and memorable campiagn where shaving products started being sold by ads where a woman rubs a man's face and purrs about how smooth it is...

Posted by: steve | Jan 21, 2006 4:21:23 PM

Steve - point taken on advertising being out of context. However, what is different is that in the examples you give, there is no additonal targeting other than a statistical demographic profile of readers/viewers. So, I would suggest that while it is out of context, it is also largely untargeted. That this type of advertising has been so successful for so many years should serve to validate that better data (actual demographics rather than implied) should do even better - a result that we are beginning to see with the research that Fred mentions.

As for targeted advertising missing the audience that does not yet have a predilection for the product, I think this is not necessarily true. One exciting aspect of behavioral targeting is the ability to statistically identify those behaviors that are most correlated with a desired outcome, and then target others that have that same behavior, whether those behaviors are contextual to the advertisement or not.

Posted by: Joe Wilson | Jan 23, 2006 11:35:36 AM

"But more importantly, after the first exposure to both ads, the behavioral ads perform 54% better than contextual."

If that is all, then they don't stand a chance against Adsense Behavoiral targetting/demographic targetting product.

Posted by: Markus | Jan 23, 2006 11:36:00 PM

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