Geo-targeting is one way forward

As online advertising concludes a phenomenal year, the leading lights are planning their next innovative moves. Kevin May reports.

The online sector is about to end a triumphant year, yet its leading lights are already looking to see what 2006 can bring them in terms of innovation and another jump in revenues.

Media owners are now hoping that technology, enthusiasm within the market and continued growth in internet consumption will enable online to continue to grow.

For the UK division of AOL, the US ISP, a relatively simple change to its technology is about to transform what its sales team can offer advertisers. It is about a more specific form of ad targeting, which is one the medium's strengths.

AOL UK, with its own new ad-server in Germany, is about to embark on what it claims is an open-ended area of the business - that of concentrated targeting of ads to its customers.

While online geo-targeting - where only users in the UK see a particular campaign - is not new, the ISP believes it will use its extremely valuable customer database, with demographic data, to full effect.

Beneficially placed

At some point in 2006, the average AOL user could conceivably see an ad in the traditional banner or skyscraper slot that has been placed, in effect, for their benefit.

This could come in the form of an ad appearing around breakfast time, in which a big-name cereal product, which is on special offer in a supermarket in the area, appears wherever the user happens to be browsing.

Giles Ivey, director of sales for interactive marketing at AOL, says the use of geo-targeting and the advent of day-parting will open up a host of new opportunities.

"Imagine you're Pizza Hut and want to promote a one-hour special lunch offer every day, or you're the COI and you just want to target Scotland," he says.

"Radio and outdoor have been able to do this for years, but in 2006 expect to see a significant increase in online campaigns of this nature."

For advertisers, the benefits are pretty obvious: the ability to reach a particular audience and "deliver a better internet experience", as Yahoo!'s UK commercial director Blake Chandlee puts it, is enormously important for an ISP or portal, like Yahoo!.

"It's the same for advertisers - they need to target users with more meaningful, relevant ads and some of this can be based on the user's locality," he adds.

Guy Phillipson, chief executive of the Internet Advertising Bureau, says targeted online advertising will also help local businesses that do not have or need a national presence.

"For media owners, this looks set to be a profitable development, and could act as a gateway for local advertisers who were originally reluctant to embrace the internet," he says. "It emphasises the flexibility of online and will appeal to everyone from local restaurants to traditional global food brands."

But while geo-targeting can deliver ads dependent on a user's location and day-part software, which is also prevalent across the online world, it can also play a major role, with online media owners already beginning to push for the next stage.

At a seminar this year of leading UK players in the online market, it was said some publishers had little "appetite" for geo-targeting on its own and preferred a long-term view.

"It is a bit Big Brother-ish", admits a senior industry figure, but the next stage will see advertisers able to drill down through their online marketing to hit exactly the right consumer, at precisely the right moment, with the best possible ad.

Big push

Simon Waldman, director of digital publishing at Guardian Newspapers - which is working with Revenue Science, a behavioural targeting specialist that has linked up with Associated New Media - says the next few years will see a bigger push on behavioural targeting, using the demographic information of users, such as profession, spending power and age, coupled with a focus on ads dependent on content or search.

"Generally, we are going to move to smarter targeting and a better understanding of advertising," he says.

Complexity is an issue, of course. Indeed, it is suggested by some that in the short term, this may put some extra demands on the media agency and the media owner, through the need for increasingly sophisticated back-end hardware.

But others also argue privately that taking a chance with resources, perhaps traditionally spent elsewhere, is how the online world has developed anyway - its roaring success has been built often by taking risks that can reveal to advertisers what the sector can truly achieve.

WHAT GEO AND BEHAVIOURAL TARGETING WILL ALLOW

- Ability to display an ad to a user in a particular geographic location, such as a TV region, town or individual postcode

- Choose the time of day an ad will appear in front of the user, depending on their previous browsing activity

- Tailor an ad using information included in a user's registration information, such as profession, interests and family size.

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