Behavioral targeting and the bottom line

May 6, 2009

Since behaviorally targeted advertising represents a fast growing share of the overall market, we’re starting to see interesting references here and there to its relative value and pricing. Here are a couple from quarterly earnings calls.

From the ValueClick Q1 2009 call (courtesy of Seeking Alpha), emphasis mine:

Tom Vadnais [CEO]

On the pricing issue, we don’t really disclose details on the pricing, but the way the scale works is that the normal CPM rates for display advertising without targeting and without vertical networks and so on, that tends to be the lowest price that we offer. But what advertisers are finding is using our technology. While is the price is higher, they are using targeting technology, the conversions are much higher, so the ROI for the investor or for the advertiser works out very well. So it’s a scale of without targeting, with targeting there is a higher price and then our vertical networks are higher price yet because you are dealing now with very targeted audience that we know is interested in the vertical that we are serving those ads for. So that’s kind of how the scale works, but we don’t disclose the specific numbers.

Youssef Squali – Jefferies & Co.

But just to get a sense of the magnitude, is it two times X? Or is it –?

Tom Vadnais

Yes, I am sure you can imagine, there isn’t like a rate card here that we use, everything is variable. But the targeting – all I can really say there is, it is higher, it’s certainly multiple higher than without targeting and that’s really isn’t as relevant as what the return on investment is that the advertiser is looking for. So it’s not really what you pay for the serving, it’s what you get at the end, that determines the return purchases. And there is still a demand for non-targeted display, but that demand is shifting over towards targeting.

Over on the Scripps Q1 call (also courtesy of Seeking Alpha), behavioral targeting via Yahoo! is where they see all of the growth:

Mark Contreras [SVP Newspapers]

Probably the biggest place where we’re seeing growth and the biggest contributor to that 30% growth in pure play is behavioral targeting with our Yahoo! partnership. All of the verticals – auto, real estate, help wanted even – are down, but our ability to sell behavioral targeting has really caught on with our advertisers and particularly with our sales forces. We compete in the consortium with other companies – we’re members with other companies, I should say – and we’re very proud of the results that we’ve driven so far. We’re kind of at the top of the consortium in terms of gross dollars sold in that. So that’s really what’s driving the pure play number the most.


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