Behavioral Targeting

Some companies use data to deliver more tailored ads to their customers. This is often why you see ads for a certain product popping up on your TikTok feed after having just searched for the product. This marketing method is known as behavioral targeting. What is behavioral targeting, and how does it work? How do companies use it to increase brand loyalty, and does it help? In this article, we'll dive into the definition of behavioral targeting and explore the various types of this strategy. We'll also examine the pros and cons of behavioral targeting. But it's not all sunshine and rainbows - we'll also tackle the ethical issues surrounding this marketing method. And just for fun, we'll compare behavioral marketing to its cousin, contextual marketing. So, get ready to learn how your online behavior shapes the ads you see!

Behavioral Targeting Behavioral Targeting

Create learning materials about Behavioral Targeting with our free learning app!

  • Instand access to millions of learning materials
  • Flashcards, notes, mock-exams and more
  • Everything you need to ace your exams
Create a free account
Table of contents

    Behavioral Targeting Definition

    When advertising or marketing, companies should know their desired demographics (groups of people who share similar characteristics). While some large companies may sell products that appeal to virtually all consumers, such as fast food, others may sell products that only particular consumers want, such as sporting equipment.

    Behavioral targeting uses people's activities to determine which groups of customers to advertise to and how.

    This allows for personalized marketing, where people can be exposed to specific ads based on their past and current activities and preferences.

    Behavioral targeting and personalized marketing aim to convince more potential customers to become paying customers.

    By examining people's behaviors, behavioral targeting may predict which adverts and messaging resonate most effectively with a person. This increases the chance of companies converting their potential customers to actual customers.

    To initiate targeted marketing, marketers assess users' behavioral data, such as what individuals do or do not do inside a company's app, website, or in conjunction with the company's campaigns.

    Through behavioral targeting, companies can connect with prospects and consumers who are most likely to buy their items, use their app, or pay for their services.

    This benefits companies since it will allow for more effective and tailored marketing. It is also beneficial for customers since they will no longer be presented with irrelevant campaigns.

    Companies may establish audience segments using behavioral targeting data based on actions or inactions.

    Examples of these behaviors include users upgrading their plans or logging into a company's app.

    Companies deliver customized marketing communications that correlate to the actions users have performed. This is made possible when a company segments its audience based on similarities in behavior.

    The company should consider which part of the customer journey their customers are currently in to conduct behavioral marketing.

    Imagine you are a company that helps match babysitters with families needing babysitting services. The company may build a campaign to reward repeat bookers with a special offer by using behavioral targeting, or they can reintroduce the app to those who have downloaded it but haven't signed in to it.

    Behavioral targeting is an effective and tailored method that helps restrict the focus of marketing efforts and ensures that relevant messages are delivered at the appropriate times. This will result in greater sales as well as improved returns on efforts made in marketing.

    Types of Behavioral Targeting

    There are many types of behavioral targeting, including website engagement, campaign engagement, purchase behavior, and app engagement, as shown in Figure 1.

    • Website engagement. Website engagement in behavioral targeting is used to personalize the user experience on a company's website. This includes creating pop-up promotions, advertisements, and connections to relevant material. Marketers may tailor advertisements to certain groups of website users following the goods, services, and information that are of particular interest to those people.

    • Campaign engagement. Campaign engagement enables companies to target users based on who is reading their emails and the links they click on. When utilizing this type of behavioral targeting as a criterion for segmentation, it makes it easier for companies to fine-tune the method by which they arrange their audience. They may send emails to individuals who have not opened their previous messages, those who have not interacted with their content in some time, or people with the highest average level of engagement.

    • Purchase behavior. Purchase behavior is one of the most well-known types of behavioral targeting. Examples of purchase behavior include customers who receive recommendations for items of interest or companies they have already purchased from while scrolling through the Internet. Consumers are exposed to ads based on their purchase behavior and given the incentive to buy similar goods.

    • App engagement. App engagement is an essential type of behavioral targeting. Behavioral targeting uses data sourced from what people do inside a company's app. Companies can even segment users based on their behaviors within a specific timeframe.

    For example, a company like Duolingo might want to congratulate users of their language learning app who have just finished their first lesson, or they might reach out to users who have downloaded their app but haven't logged in within the past week.

    Behavioral Marketing Benefits

    The primary benefit of behavioral marketing is that it is more efficient. Instead of spending more money advertising to all consumers, firms can advertise to smaller groups of consumers who are more likely to be persuaded to buy. Behavioral marketing can also be used over time to create strong brand loyalty, where customers regularly purchase from one specific company.

    Successful brand marketing can also let firms find likely new customers easily once they have tied their goods or service to a particular activity or behavior. New people engaging in that activity will automatically be considered potential new customers to be marketed to.

    Additionally, behavioral targeting allows companies to make more informed and accurate decisions. As behavioral targeting provides companies with data on what their audience is doing, it allows companies to reach their audience at the most optimal times instead of trying marketing across many channels or basing their targeting on guesses about their customer journey.

    Behavioral Marketing Pros and Cons

    There are many behavioral marketing pros and cons. Let's take a look at some of the most prominent ones.

    Pros of Behavioral Marketing

    The pros of behavioral marketing include efficiency, brand loyalty, and happier customers, as seen in Figure 2. By allowing companies to tailor advertisements to a small group of consumers, firms can get more customers per advertisement (as opposed to generic, blanket ads).

    Over time, behavioral marketing can closely tie a product to an activity or group, creating strong brand loyalty. This can reduce advertising costs in the long run, as consumers naturally associate the brand with the group or activity. Purchase of the good or service by the group becomes an ingrained habit.

    Finally, customers who receive personalized ads may feel happier with the product and require less customer management. They are purchasing a product they feel fits their lifestyle and thus will likely have fewer complaints in the long run.

    Cons of behavioral marketing

    Cons of behavioral marketing include analysis costs, errors, and ethical considerations.

    First, determining a firm's potential customers' demographic, group, or activity may be costly and time-consuming. Some goods and services may be purchased by a broad cross-section of society, making behavior targeting difficult.

    A firm may go through extensive research only to make an error on their likeliest group or activity, resulting in ineffective advertisements that do not resonate with consumers.

    The collection of data, which is necessary for behavioral targeting, may be seen as unethical due to privacy violations. Many social media users may not want companies gleaning information about their consumption habits from their posts, tweets, likes, or messages and see this act as a violation of privacy.

    Behavioral Marketing Ethical Issues

    As behavioral marketing is based on the collection of private data by customers, there are many ethical issues in behavioral marketing.

    Collecting information on customers might be seen as an invasion of their privacy. This often relies on how thoroughly an advertiser investigates a person's Internet usage.

    Many people may not be bothered if an advertisement knew which posts they liked on Facebook or Instagram; nevertheless, many could be unhappy if they heard third-party organizations were accessing their Google searches.

    People's search histories on the Internet may include sensitive material such as personal trauma, legal and medical concerns, and other sensitive information. This has resulted in a tug-of-war between the organizations that make Internet browsers and the advertising companies. Advertisers are interested in gaining access to information about Internet users. Still, Internet browser developers and Internet service providers (ISPs) are under significant pressure from their consumers to protect their privacy.

    Behavioral Marketing vs. Contextual Marketing

    The main difference between behavioral and contextual marketing is how advertisements are personalized and tailored to customers.

    While behavioral targeting focuses on the consumer and their behaviors, contextual targeting displays advertisements based on the current content the consumer is viewing.

    The advertiser is not seeking any data about the viewer and is simply trying to utilize the fact that the viewer is looking at something related to the advertised product. However, the advertisement runs the risk of becoming buried among other material on the page when contextual targeting is used, even though this strategy has the potential to be quite successful.

    For example, behavioral targeting would focus on advertising in multiple ways, specifically to teenage athletes. At the same time, contextual marketing would place ads in sports-focused magazines and websites to capture the attention of anyone looking.

    While contextual targeting may be less expensive, it may not generate deep brand loyalty and multiple purchases.

    Behavioral Targeting - Key takeaways

    • Behavioral targeting uses people's activities to determine which groups of customers to advertise to and how.
    • There are many types of behavioral targeting, including website engagement, campaign engagement, purchase behavior, and app engagement.
    • The pros of behavioral marketing include efficiency, brand loyalty, and happier customers.
    • Cons of behavioral marketing include analysis costs, errors, and ethical considerations.
    • The main difference between behavioral marketing and contextual is how advertisements are personalized and tailored to customers.
    Frequently Asked Questions about Behavioral Targeting

    What is behavioral targeting?

    Behavioral targeting is the use of people's activities to determine which groups of customers to advertise to and how.

    What are the benefits of behavioral targeting?

    The benefits of behavioral targeting include more effective and tailored marketing.

    Why is behavioral targeting controversial?

    Behavioral targeting is controversial because it uses private data for marketing insights.

    Why is behavioral targeting ethical?

    The ethics of behavioral targeting is often questioned as it uses private data for marketing purposes. However, behavioral targeting makes marketing more efficient. 

    What is the difference between contextual and behavioral targeting?

    The main difference between behavioral and contextual marketing is how advertisements are personalized and tailored to customers.

    Test your knowledge with multiple choice flashcards

    Behavioral marketing does not rely on behavioral data of customers.

    Data such as users upgrading their plans or logging into a company's app is used in _______? 

    ____________ in behavioral targeting is used to personalize the user experience on a company's website

    Next

    Discover learning materials with the free StudySmarter app

    Sign up for free
    1
    About StudySmarter

    StudySmarter is a globally recognized educational technology company, offering a holistic learning platform designed for students of all ages and educational levels. Our platform provides learning support for a wide range of subjects, including STEM, Social Sciences, and Languages and also helps students to successfully master various tests and exams worldwide, such as GCSE, A Level, SAT, ACT, Abitur, and more. We offer an extensive library of learning materials, including interactive flashcards, comprehensive textbook solutions, and detailed explanations. The cutting-edge technology and tools we provide help students create their own learning materials. StudySmarter’s content is not only expert-verified but also regularly updated to ensure accuracy and relevance.

    Learn more
    StudySmarter Editorial Team

    Team Marketing Teachers

    • 10 minutes reading time
    • Checked by StudySmarter Editorial Team
    Save Explanation

    Study anywhere. Anytime.Across all devices.

    Sign-up for free

    Sign up to highlight and take notes. It’s 100% free.

    Join over 22 million students in learning with our StudySmarter App

    The first learning app that truly has everything you need to ace your exams in one place

    • Flashcards & Quizzes
    • AI Study Assistant
    • Study Planner
    • Mock-Exams
    • Smart Note-Taking
    Join over 22 million students in learning with our StudySmarter App

    Get unlimited access with a free StudySmarter account.

    • Instant access to millions of learning materials.
    • Flashcards, notes, mock-exams, AI tools and more.
    • Everything you need to ace your exams.
    Second Popup Banner