Web sites must offer advertisers the ability to target users by demographic criteria or the rapid growth of Internet advertising will falter, according to a new study from Jupiter Communications.
Targeting, long touted as a major advantage of advertising on the Internet, has fallen short of its promise of "one-to-one marketing," Jupiter concluded. As a result, Internet ad banners are relatively expensive compared to ads within traditional media, a price difference only justified in the long run if Web ads offer targeting and interactivity.
Major advertisers are accustomed to targeting ads to specific demographic groups based on age, gender, income, and geographic location--data that traditional publications spend bundles of money to acquire and share with prospective advertisers.
But the most effective ad targeting stems from Web site registration, and Internet users have shied away from sites that require registration. "Cookies" on the browsers of Web site visitors also can be used to target ads, but they raise privacy concerns.
"The targeting that has been happening today is cookie-based; you target based on what someone has done before. It's all very inferred human behavior," said Anna Zornosa, president of the membership-based SmartAge community for very small companies.
"The problem with all that is that [user profiles] can only be partially guessed based on behaviors," she added. "Registration--instead of guessing--gives you a lot of personal information."
"We need to figure out right value equation for [registration]," Le Furgy said. "There has to be a level of permission marketing where users know their data is being used and the user gets some sort of value for that. Once users see the value at getting ads that are targeted to them, the whole market will open up."
Le Furgy also argued that the shortcomings of ad targeting haven't hurt Internet ad sales yet. Internet marketers today are advertising based on the number of people they can reach via the Net.
"If you look at the way marketers are buying online presences for portal distribution deals, reach and scale are the big driving forces today," he added.
Jupiter ad research manager Evan Neufeld said a spate of recent deals between major Web sites and vendors of ad targeting technology will boost targeting. He referred to deals such as General Motors' use of MatchLogic technology for ad targeting.
"But the time to move was yesterday," Neufeld said in a statement.