Behavioral marketing is the “Holy Grail” of marketing attracting highly motivated customers to increase purchase rates. Research by Chen and Stallaert (2014) help show how small advertisers are better off with targeted marketing while larger advertisers are not yet able to fully capitalize on the benefits. The study has implications for marketing investment and where they are dollars are likely to be most fruitful.
Behavioral marketing seeks to use technology to better understand the online behavior of consumers and reach those most open to purchase. The information is collected from webpage cookies, search terms, forums, and other behavior to build a marketing profile of customers and then display ads that are relevant to their needs.
Businesses seek to attract customers in the most cost effective manner possible. The further the marketing reach with the least amount of investment the higher return on investment (ROI). Small businesses have limited capital to spend and target niche customers while larger companies have a broader profile to attract customers through mass marketing campaigns.
The study helps show that small advertisers find significant value in behavioral marketing while large companies may not realize this same value. Market leaders are able to use a wide enough net to capture a high volume of interested customers that produces a higher pay off.
To effectively develop behavioral marketing it is necessary to find an appropriate algorithm and then collect information while updating customer profiles. It is a lot of information to handle, analyze and move. Therefore, popular channels of advertisement often do better with behavioral marketing while less popular sites do better with mass marketing.
The study helps us think of how mass marketing attempts to reach a broad range of customers by economizing its efforts. This is still a popular and cost effective method. Even these large advertisers are realizing the benefit of incorporating features of behavioral marketing to focus their advertising dollars. The closer you can align your approach to your target market the higher your chances of successful campaigns.
Chen, J. & Stallaert, J. (2014). An economic analysis of online advertising using behavioral targeting. MIS Quarterly, 38 (2).