NAI: Behaviorally-targeted online ads twice as effective

A new study from the Network Advertising Initiative claims behaviorally-targeted advertising is more than twice as effective as non-targeted advertising.

by Helen Leggatt

The study (.pdf) found that the conversion rate for behaviorally-targeted ads was 6.8% while non-targeted ads performed comparatively poorly with 2.8%.

In addition, behaviorally-targeted advertising pulled in an average of 2.68x as much revenue per ad as non-targeted advertising.

They also cost more. The cost of behaviorally-targeted ads was 2.68 times as much as standard ads with CPMs of $4.12 versus $1.98.

"This study demonstrates the increasing significance of behavioral advertising to the economic model supporting free online content and services for consumers, as well as the need for careful consideration of policies that would affect the current online advertising marketplace and the innovation it supports," said NAI executive director, Charles Curran.

The survey also highlights that the importance of behaviorally-targeted ads is increasing. Behaviorally-targeted ads accounted for 16.2% of ad revenue in Q1 09 but that rose to 19.4% by Q4.

"Targeting is driving new opportunities," said Ingrid Sanders, director of AdAvisor at TARGUSinfo. "The market has matured to the point where it's actually possible to apply third party data."