Behavioral Targeting - what is it?

Basics of Behavioral Targeting

At its core, behavioral targeting utilizes various data sources – such as website engagement, email interactions, purchase behavior, and mobile apps usage – to group customers into distinct segments based on their observed behaviors. These segments could be based on product interests, stage of the buying journey, demographics, or any other shared characteristics that inform how they should be marketed to. With these segmented audiences in place, businesses can then trigger automated marketing flows that correspond directly to each group's observed actions.

The behavioral targeting process involves data collection from multiple sources to create comprehensive profiles of user segments. This collected data includes customer data, purchase histories, and time spent on specific web pages, providing deep insights into customer behaviors and preferences.  

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Practical Applications of Behavioral Targeting

For instance, a business might create an automated email sequence designed specifically for customers who have abandoned their shopping carts, offering personalized incentives and reminders to complete their purchase. 

On the other hand, loyal customers who frequently make purchases could be enrolled in a tailored loyalty program, receiving exclusive discounts, early access to new products, and other perks that reward their brand affinity. The key advantage here is making data-informed decisions about the customer journey, rather than relying on hypotheses and guesswork about what messaging will resonate.

Behavioral targeting teaches companies to use behavioral data to display relevant ads and content to specific audiences based on users online behavior. This method is particularly effective in online advertising, where behavioral advertising and contextual advertising work together to ensure that marketing messages reach the right audience segments. 

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Benefits of Behavioral Targeting

Indeed, behavioral data reveals precisely what content and offers are hitting the mark with each audience segment, allowing businesses to continuously optimize and refine their marketing campaigns. When implemented transparently and with consumer consent, behavioral targeting creates a win-win scenario – businesses see higher ROI and conversions, while consumers receive more relevant and valuable experiences tailored to their unique needs and preferences.

The key advantage of behavioral targeting is the ability to deeply understand and cater to the specific needs and preferences of distinct audience segments. This level of personalization and relevance pays dividends in the form of elevated customer engagement across the entire lifecycle – from initial brand awareness and lead generation to conversion and long-term loyalty. By delivering the right message to the right person at the right time, businesses can forge stronger, more meaningful connections that keep audiences hooked.

Re-engaging and Retargeting

One of the most powerful applications of behavioral targeting is increasing on-site engagement by retargeting and re-engaging visitors who don't initially convert. Even with a highly optimized website and user experience, a significant portion of traffic will inevitably leave without taking the desired action – whether that's making a purchase, filling out a lead form, or signing up for a service. Behavioral targeting allows businesses to recapture these lost opportunities through tactics like abandoned cart emails and personalized product recommendations.

Beyond re-engaging lost prospects, behavioral targeting also enables businesses to offer personalized incentives and discounts that hook indecisive prospects based on their demonstrated interests. If a visitor has been repeatedly viewing a particular product page, for instance, a well-timed pop-up promotion or email offering a limited-time discount code for that specific item could be just the nudge needed to convert them into a paying customer.

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Types of Behavioral Segmentation

The ultimate goal is to boost sales while providing consumers with a satisfying shopping experience. Behavioral segmentation includes various subcategories, including but not limited to the following:

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Demographic Segmentation

Instead of spreading resources and efforts across an entire market, demographic segmentation allows businesses to focus on the specific demographics most likely to make purchases. This method considers demographic factors such as gender, age, education, income, and other consumer characteristics that provide valuable insights into the customer base, enabling businesses to meet their needs more effectively.

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Psychographic Segmentation

Psychographic segmentation aims to understand consumer motivations, dividing customers into groups based on personality traits and the reasons behind their purchasing decisions. This approach helps assess the effectiveness of marketing campaigns and develop products and customer services that best address consumer needs and preferences.

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Geographic Segmentation

Geographic segmentation divides a customer base according to geographic locations, such as city, state, or region, or by different types of areas, such as rural or urban markets. This method is particularly beneficial for large companies with national or international markets, as it allows them to focus on the specific needs of consumers in different locations. It is also effective for small businesses with limited budgets, enabling them to target local markets efficiently.

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Occasion-Based Segmentation

Occasion-based segmentation focuses on specific occasions or events that drive consumers to engage with certain products. This strategy is useful for product development and business growth, as it identifies key moments when consumers are more likely to make purchases. For example, a bar might use occasion-based segmentation to promote a special holiday beverage, attracting customers who are celebrating the occasion.

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Behavioral Targeting vs. Contextual Targeting 

Behavioral Targeting

Behavioral targeting revolves around gathering and analyzing data to tailor a personalized experience for your audience. By tracking users' online behaviors, such as their web browsing behavior, purchase histories, and interactions with various digital assets, businesses can display highly relevant ads. These targeted ads are known to be twice as effective as their non-targeted counterparts, as they cater to the specific interests and behaviors of users, making the marketing messages more compelling and engaging.

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Contextual Targeting

On the other hand, contextual targeting takes a different approach. Instead of focusing on the individual user, it places ads based on the content of the webpage the user is currently viewing. For instance, if someone is browsing a makeup company's site, they might see ads for skincare products. While this method ensures that the ads are related to the content the user is interested in, it lacks the personalized touch. The primary drawback is that the ads may blend in with similar content on the page, making them less noticeable and impactful.

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Combining Behavioral and Contextual Targeting

Fortunately, businesses don’t have to choose one over the other. By integrating behavioral targeting with contextual targeting, you can enhance the effectiveness of your ads. For example, if a user has previously visited a particular makeup company's website, you can leverage this behavioral data to serve ads for that business on related sites, such as fashion or skincare blogs. This hybrid approach allows for a more personalized and contextually relevant advertising experience, capturing the best of both worlds and maximizing ad engagement and conversion rates.

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Long-Term Engagement and Revenue Growth

But the power of behavioral targeting extends far beyond the initial conversion. By initiating long-lasting communications with tailored content, businesses can keep customers engaged over time and increase their lifetime value. Personalized emails, text messages, and web experiences that align with each customer's preferences and behaviors foster a sense of relevance and value that strengthens brand loyalty.

Moreover, behavioral targeting allows businesses to recommend relevant products and services based on demonstrated preferences, increasing average order value through effective cross-selling and upselling. If a customer has a history of purchasing outdoor gear, for example, they could be presented with complementary items like camping equipment or hiking accessories – increasing the likelihood of additional purchases and maximizing revenue per transaction.

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The Future of Behavioral Targeting

Is behavioral targeting important?  Well, as consumer expectations for personalization continue to rise, behavioral targeting will become an indispensable part of the modern marketer's toolkit. Those who embrace this data-driven approach will be well-positioned to cut through the noise, capture and retain valued customers, and drive sustained business growth in an increasingly competitive digital landscape. Behavioral targeting is indeed a powerful tool for modern marketing strategies, enabling businesses to display products and content that truly resonate with new audiences and existing customers alike.

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