With click through rates (CTR) on ad banners sliding and the furor over purchasing keywords pushing prices higher, it is becoming more pertinent than ever to evaluate which types of online advertising perform best. The results of a recent survey conducted during the December 2004 AD:TECH conference point to a high-performance ad technique called behavioural targeting. This survey, which evaluated the most efficient marketing tactics, found that 41% of the conference guests deemed behavioural targeting to be a method that yields excellent results.  The only tactic that received a better rating was e-mail house list (opt-in), which 45% of participants ranked as the number one technique.
Although very efficient, the term “behavioural targeting” is far from sexy. And yet the concept is very simple: display an ad in relation to the individual navigational behaviour of Internet users. It’s important to understand the distinction between this tactic and contextual targeting, which displays ads in relation to the content of a web page. To take a simple example, contextual targeting will display a car ad if you are visiting the “Automobile” section of a portal, whereas behavioural targeting will evaluate your navigational behaviour up to that point and judge that an ad for dog food on that same “Automobile” page would be more effective.
Behavioural targeting is much more complex, and therefore more costly, than contextual targeting. In order to track visitors’ behaviour, the technology must be able to identify individual Internet users. Companies can use software such as spyware and adware to identify Internet users. These programs collect information on users’ search queries or navigational habits and use it to understand their behaviour. Once this is done, this information is analyzed so that a relevant advertisement can be displayed.
Although only 9% of advertisers currently use this technology, 14% of them plan on testing it in 2005.  The increased interest in behavioural targeting is due mainly to the fact that 65% of Internet users find ads less bothersome or intrusive when they are more suited to their personal interests or needs. 
In addition to being less bothersome, behavioural targeting seems to be one of the most efficient advertising methods. In fact, a study carried out by Advertising.com revealed that compared to campaigns conducted without behavioural targeting, campaigns that use this technique recorded significant improvements across a number of metrics. For instance, in a campaign designed to acquire new clientele, behavioural targeting boosted conversion rates by 3130% and increased the effective cost per thousand (CPM) by 2978%.  Clearly, this is no small improvement! 
However, note that behavioural targeting technology providers must go to great lengths to successfully “install” themselves on consumers to get to know their behaviour. A good example of this is the company WhenU, which advises consumers to download the company’s software to eliminate spyware, while at the same time offering advertisers targeted ad technology, which depends on software that tracks Internet users’ behaviour. A funny kind of link!
To conclude, although few sites currently offer behavioural targeting (approximately 25% in the United States),  the tactic has proved its merit. Now we must simply wait to see whether the companies that collect and analyze the necessary data will continue to offer their services.