NEW YORK (June 16, 2008)—Behavioral targeting gets loads of media hype—good and bad. But the practice is more than just the ad method du jour, writes David Hallerman, senior analyst and author of the new report, “Behavioral Targeting: Marketing Trends.”

Spending on behavioral targeting will increase to $4.4 billion by 2012. But this year, the spend is still expected to remain low—just $775 million. Behavioral targeting is a way of tracking an Internet user’s behavior online and then serving an ad that matches that user’s interest.

What are the current obstacles to the growth of behavioral targeting? For one, marketers are put off by how the technique can serve ads at any time on any site, without consideration of context. They worry that their ads will show up in an inappropriate spot. Marketers also fret that segments of consumers may be targeted too well—making targeted groups too small for sufficient reach. And advertisers are cautious about infringing on consumer privacy—as the Federal Trade Commission this week holds hearings on behavioral targeting.

One of the biggest drivers of behavioral targeting growth over the next four years will be online video. Online video is growing at a snappy pace, but ads placed around video are high-priced. As more video is available online, advertisers will use behavioral to target those ads and make their media buys cost-effective. By 2012, while behavioral targeting will represent just 8.6% of online ad spending, it will constitute nearly 25% of the display ad pie, which includes video.

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