Criticism of behaviorally targeted ads by consumers, privacy advocates and the government has led to uncertainty in the market, which eMarketer expects to reach nearly $1.13 billion this year. Research from the Network Advertising Initiative (NAI) indicates the high value of those ads, for both marketers and publishers.
The study, which looked at ads run on member networks during 2009, showed that among users who clicked on a behaviorally targeted ad, 6.8% converted. That compared with only 2.8% of those who clicked on a run-of-network ad. Clickers found behavioral ads more relevant, but the NAI did not study how likely they were to click in the first place, a key component of effectiveness.
CPM rates were likewise significantly higher for behaviorally targeted ads, with the average price of a behaviorally targeted ad 2.68 times greater than that of a run-of-network ad. Retargeting also provided higher CPMs.
“Over the past several months, policy discussion around behaviorally targeted advertising has lacked a critical foundation, because there had never been an empirical assessment of the value of such advertising to ad networks, consumers, and publishers,” said Howard Beales, author of the report, in a statement.
“This study found that behaviorally targeted advertising is a critical component of ad network, publisher, and advertiser success,” he said. “Behaviorally targeted ads sell for twice the price and offer twice the effectiveness of normal run-of-network ads, significantly enhancing the advertising revenue engine driving the growth of the Internet.”
However, consumer privacy concerns remain in place, whether behavioral ads are effective or not.