Advertising Out Of Context

For as long as there has been advertising, the advertisers have sought to run the ads in context.

By "in context", I mean car ads in the automotive section, banking ads in the finance section, beer ads in the sports section, etc etc.

The reason for this is that context has been the best available form of targeting.  You wouldn’t be reading the auto section if you aren’t interested in cars, right?

But could it be that advertising out of context works better?  That would be a shocking finding.

Of course, you’d have to have another way of targeting for that to be the case.

Enter behavioral targeting. 

Behavioral targeting is the art of advertising to people based on observed behavior instead of by what page or media they are viewing.  The idea has been around for years, but until digital media and the Internet, its mostly been a concept.

Union Square Ventures is an investor in the leading behavioral targeting comapny, Tacoda Systems.  Tacoda really pioneered large scale behavioral advertising with its Audience Management System which was launched in 2002.  Since that time, Tacoda technology has served millions of behaviorally targeted ads on the pages of many of the leading web sites.

In 2005, Tacoda launched a behaviorally targeted advertising network called Tacoda Audience Networks.  This move extended Tacoda’s reach into a much larger group of advertisers who did not want to deploy their own behavioral targeting system.

Recently Tacoda sponsored some research conducted by Next Century Media Research.  The research was an "eye tracking study" done by PreTesting, one of the leading eye tracking research providers.  In the study, researchers watched the eye movements to determine the number of "looks" and the time spent on each ad.

The results of the study were released this week and the press release is here.

The data shows that behavioral ads are 17% more effective in engaging readers than contextual ads.  But more importantly, after the first exposure to both ads, the behavioral ads perform 54% better than contextual.

Bill Harvey, the CEO of Next Century Media, is quoted in the press release saying:

It is probably a combination of more relevancy and less clutter.  It could be that there are just too many ads for the same product category attacking the user’s eye in contextual targeting, causing the user to avoid looking at any of them.

As an investor in Tacoda for the past three years, I have been privy to many anecdotal examples of this and I have my own theories for why targeted ads perform better out of context.  I think that if you are interested in cars, you are paying attention to what you are reading in the auto section and the car ads blend in.  When you see them in the sports section, out of context, you pay more attention.  Since behavioral technology targets the auto ad to people who have shown an interest in automotive content, showing them the ad in the sports section seems like a great way to get them to pay more attention to it.

It’s not likely that advertisers are going to rush to embrace advertising out of context. Hundreds of years of behavior is going to be hard to change overnight.  But those advertisers who have the courage to give it a try, using Tacoda or another behavioral advertising system, are going to get some really interesting and good results.

#VC & Technology