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).
