Behavioral Targeting with Incentives

The other day I wrote about Exelate and what it’s up to around behavioral targeting. Well they have company. [Note: Several details are updated below]

Blue Kai is another new company focusing on making online advertising more relevant to consumers. They, too, buy cookie information but they have a more targeted in their approach. Even more interesting, they’re exploring models that actually give something back to consumers for using their data. I can’t wait to see how far they will go with this.

Blue Kai focuses on intent:

• Have you searched for something?
• Have you shopped for something (e-commerce)?

For now they only focus on three verticals: Retail, Auto and Travel. According to Rowena Toguchi, Marketing Strategist at Blue Kai, Blue Kai wants to make sure they have the cleanest data possible. They want to separate people who are reading a blog about Hawaii, for example, from people who are actually pricing out airfares to Honolulu.

Blue Kai does this by only using data from the top five sites in each vertical. One big difference is that data providers only get compensated once and advertiser purchases the data. Once they auction the data off to Ad Networks or Advertisers, they compensate the sellers and the better the data works, the more they receive. This way Blue Kai makes sure that if advertisers think it's good data, they'll buy it again, and put more money back into the system.

They’re big on taxonomies and breaking the cookies into multiple data stamps. You can purchase segments based on departure or destination cities, or length of stays.

It sounds pretty interesting, as long as you’re in one of those verticals. And it seems to work the same way that working with any online ad third party does, like with rich media or multivariate service providers.

I’m very intrigued by being able to target someone with a specific ad who I know is shopping for my destination. Unfortunately, there aren’t a lot of specific case studies on the Blue Kai site.

One of Blue Kai's big promises is transparency. While Blue Kai also offers controls to consumers to manage preferences or even opt out, what separates Blue Kai from others is that they donate a small percentage of the money they make to the charity of your choice. Right now you can choose between four, March of Dimes, Action Hunger, Reading is Fundamental, or Big Brothers/Big Sisters.

It’s the first step in putting some skin in the game for the people on the other end of those ads: you. Ultimately they’d like to create some type of point system where the more you participate, the more points you get for travel credits, for example.

I for one, hope they do this sooner rather than later. If the customer is in control, then maybe the customer should get a cut in selling their cookies. This is, by far, the best attempt I’ve seen yet.

Blue Kai seems to have a lot of promise. They seem to be growing fast as well. If I end up using them, I’ll let you know what happened.

Can Selling Behavioral Data Save Online Marketing?

I spoke with Mark Zagorski with Exelate today. Mark and his colleagues are trying to make online advertising work better by, as he puts it, “making selling data as important as selling media.”

Exelate buys your cookie information from Web sites, for example publishers of auto, parenting or finance sites, and sells that to ad networks and agencies. What it means to marketers is that when we buy that information, we can target advertising to show up on the page you’re browsing if we see that cookie.

It’s like this:

1. You shop for travel deals to Paris on travel site. Your Cookie = Travel/Paris
2. Travel sites sells cookies to Exelate
3. Marketer selling 12 Language Translator Gadget is looking for people planning a trip overseas.
4. Marketer buys your cookie from Exelate
5. Marketer buys online advertising on ad network.
6. You go online = Network sees Travel/Paris cookie and serves up Translator Gadget ad.
7. Travel site makes money selling the cookie
8. Gadget marketer gets higher response.

It sounds pretty smart and simple. You can work with the ad providers to get even more granular on a contextual level (only showing the ads on the Travel pages of the New York Times, for example) and I’m sure there’s a great play here with some of the multivariate providers, like Adroit.

One of the big issues firms like Exelate run into is privacy. While no user information swaps hands (no e-mail or IP addresses) there’s still a lot of touchiness in the industry about cookies and personal data.

It’s bizarre, actually, when you think of the amount of data snail-mail direct marketers collect about us and use on a daily basis, compared with what’s going on online. There’s something about online that just freaks everyone out about privacy, sexual predators, and data scams. Yes, we have all of that; it’s just that it’s a fraction of what happens offline.

Exelate lets customers opt out of their network, though, in case they don’t want people to sell their cookie info. Kind of like the do not call list. Only, it doesn’t mean that they won’t see any ads; it just means that they may not see any relevant ads. Exelate let’s people see the data they have on them and you can customize what you want to see.

Right now, from a customer standpoint, Exelate’s main promise is reducing something negative – irrelevant ads. It can’t stop bad creative and it can’t stop the ads themselves. It’s too bad there still isn’t a way to provide consumers with a clear upside, something to positive to gain rather than minimizing something unwanted.

While all of this could be help online advertisers and consumers, the biggest value may be in providing Web publishers an alternate way to monetize its visitors. Rather than simply selling more ad space, they can sell data. If it works, it could make the Web universe more stable for publishers and in a perfect world, might even reduce the amount of interruptive ad space.

It will be interesting to see how Exelate and some of the other behavioral data firms fare in this economy. Will online marketers try it? I know I’m seriously looking at testing this with a couple of clients. The cost difference is pretty minimal.

I’ll let you know what happens.