It’s All About the Data
Using customer data to improve a company’s marketing is nothing new. This strategy has been a staple of direct marketing for decades. But the way data is being used today in the online world holds great promise, even for small Internet marketers.
For example, virtually anyone selling anything can make use of the targeting capabilities of Google AdWords to get click-throughs from potentially qualified prospects. It’s cost-effective for any marketer of any product or service because of the pay-per-click model.
The next great advance in online advertising is likely to be the widespread availability of powerful personalization tools, similar to the recommendation model pioneered by online sellers like Amazon. While product recommendation technology is ten years old, it is only now that smaller online retailers are considering it. Typically the technology was either proprietary or prohibitively expensive, but that may be changing.
eMarketer reports that 40 percent of online merchants were planning to add personalized product recommendations to websites by the end of 2008. Interestingly, one impetus is the growing popularity of social networking, which enables peer recommendations. The recommend-it and rate-it mentality is ubiquitous in such environments.
Even more intriguing is the emerging market for online customer data. The New York Times reports that “behavioral exchanges” such as Blue Kai and eXelate Media are springing up. Blue Kai says it is “building the world’s largest database of intentions.”
These exchanges buy and sell user cookies. Basically, the owner of a website would sell a cookie from a user transaction to a buyer who wants to more effectively target an online advertising campaign. According to the Times article, the buyer could be an advertiser, its agency, a website publisher, or even an ad network.
To avoid privacy conflicts, Blue Kai and eXelate practice full disclosure – they permit consumers to view the information their exchanges have collected, as well as tell the exchanges if they don’t want to be targeted.
If these exchanges ultimately improve targeting, that could be a welcome development. It may very well reduce randomly served ads and maybe even spam e-mail. Using data the right way could create a richer, more relevant online experience for everyone.
