• by Steve Smith , Staff Writer @popeyesm, February 17, 2006

Behavioral targeting is about to become part of consumers' and advertisers' search experience, but how does that change the red-hot SEM market? MSN announced last fall that its upcoming AdCenter product would let SEMs layer onto their keyword buys additional options for running search ads by day parts, into specified demographic segments, and eventually into behavioral targets as determined by a user's recent travels in the portal. Advertisers will not only buy against audiences that raise their hands by putting "Honda" in a search box, but they could also pay a premium to hit that in-market slice of Honda searchers who recently visited MSN's car pages.

Another application of BT will come via personalized search. If Google or Yahoo maintains your search and browsing histories, either can tweak the algorithms on queries so the results (and any associated ads) are even more tightly targeted to your interests. Behavioral search is still in the labs, but it will affect search ad buying in some subtle ways, says Danielle Leitch, executive vice president of MoreVisibility, one of the oldest SEMs around (since 1999) for clients like Sony, Mrs. Field's Cookies, and the Metropolitan Museum of Art. Leitch has been in on MSN's beta test of AdCenter, and while the MSN engine does not have BT elements in its mix yet, she is already seeing the many ways behavioral profiling could help the SEM world.

BI: Are there any elements of behavioral tracking in the MSN AdCenter mix yet?

Leitch: When the engines refer to behavioral targeting, that is more along the lines of smart thinking on the engine's part. If you type in "bass" based on your prior search habits and sites visited, they are trying to interpret whether you are talking about bass as in music or bass fishing. That's where they then try to serve you up results that are more targeted to what they believe you are looking for.

BI: Would personalized search help the advertiser serving the ads as well?

Leitch: Oh, absolutely. It's qualifying the user, which will also help the [text ad's] click-through rate. On MSN and Google, and to some extent, Yahoo, your click-through rate is extremely important. It helps determine your positioning. Price doesn't necessarily guarantee top spot if you have a poor click-through rate. The reason why behavioral search will help the advertiser is that the more qualified the searcher to the ad, the higher the likelihood they will click, and the fewer wasted impressions and the higher percentage on click-through rates.

BI: MSN has already signaled it will sell text ads against behavioral segments, but where are Google and Yahoo positioned?

Leitch: Yahoo, because of the fact that they have large media business, is probably ahead of the curve. They didn't come to the gate as fast as MSN, but it would not surprise me in the near future if they are able to wrap it into their search interface or cost-per-click interface. Because of the large user base they have with MyYahoo and the Yahoo accounts, they are able to encourage users to stay logged in to be able to identify their behaviors and patterns. From the Google angle, they don't have a media business per se, but they have taken a very aggressive stance in personalized search, Gmail, personal Google homepages, and profiling the searcher. From that perspective, it wouldn't surprise me if that doesn't roll into the overall search opportunity in the near future, especially when both companies can go into local search and add that filter. I think all of it is very intriguing in terms of how to tie behavioral back to the user and give an advantage to the advertiser because of that information.

BI: But does having a layer of past search or page histories on a search customer make much iterative difference when they are already self-identifying their interests by typing in a search term?

Leitch: I imagine it will still be tied to the keyword anyway, like a demographic option. It is still keyword driven. So now the option would be, is typing in the keyword enough [to ID a target] or typing in the word and knowing that that person just visited three car sites prior to typing in "Lexus Boca Raton?" To me the more information I have about that person, the better educated I am to determine how valuable they are to me. Do I think it will help the advertiser? Absolutely, because it's going to provide the ability from a bidding perspective. (Especially with keyword prices inflating), it gives us additional education in determining our thresholds of what we are willing to pay. The ultimate test will be the ROI.

BI: When do you expect to start seeing an option for SEMs to buy against behavioral segment at the engines?

Leitch: With all of these incentives for searchers to stick with a search engine like Yahoo and MSN, I would not be surprised if it's here within six months.