What's Next In Ad Targeting?

I've been involved with ad targeting technologies since the beginning of the Web, having founded both Real Media and TACODA. I've seen the industry evolve from early fixed banners on Web pages, to rotating ads to registration-targeted ads to cookie-based targeting to sequential targeting to search targeting -- and now to behavioral targeting. With behavioral targeting beginning to emerge as a mainstream solution, it's natural that many in the industry are beginning to ask, "What's next? What's going to be the next wave of online ad targeting?"

What do I think is next? Predictive targeting.

What's that? Predictive is one step closer to the Holy Grail of delivering the right ad to the right person at the right time in the right place. It is about truly understanding enough about the consumer's state of mind at a moment within a particular media or marketing environment to be able to predict what he or she likely needs, wants or desires -- and being able to satisfy or advance that need, want or desire with a commercial message.

It has two components. First, you need to predict the future. You need to predict what consumers likely need, want or desire. Second, you need to have a way to change that future, even if it is only to reinforce and insure that what is likely to happen actually does happen. You need to understand what type of commercial message can make the desired future most likely to occur. How do you do that?

First, you have to know something about a lot of different consumers and their actions within digital media and marketing environments. You need to understand the wisdom of the crowds. The premise is that "birds of a feather flock together" -- that knowing how lots of different consumers have acted, interacted, responded and purchased in the past will help you predict what people like them are likely to do in the future.

Second, for consumers that you want to target, you have to know a certain amount about their actual actions within media and marketing environments. You need some way to connect them to the crowds if you want to predict what they are likely to do, so you have to know something about what they have done in the past.

And third, you need to have an understanding of what types of commercial messaging are likely to create the desired results with the various types of consumers in a variety of states-of-mind and in various media and marketing environments.

None of this is trivial. Developing this kind of capability will require extraordinary scale and skills in data, marketing analytics, consumer behavior and, most important, creativity.

This will be the next generation of our industry, but it will take many years to develop. It will require much more maturity in the marketplace. While it may take a while, its development is very exciting. Even today, we already see early versions of predictive targeting in the e-commerce world -- Amazon's recommendations are a great example -- and also in some implementations of more sophisticated behavioral targeting programs.

What could slow this down? Certainly issues like privacy and over-hype could hurt, but ultimately, if predictive targeting of online advertising can improve consumers' experiences and give them ads that they want and need, it will happen, and sooner rather than later. What do you think?