From the time marketers began to realize that traditional advertising campaigns were of the shot-in-the-dark variety that saw customers as a large, undifferentiated mass, there was a huge sea change in the way customers began to be seen.
Earlier, marketing campaigns were mainly focused on products and services. Manufacturers designed and produced products and services based on certain perceived differences in geography and income level.
Today, it’s a whole new ball game. With millions of gigabytes of data available it’s possible to fine tune ad campaigns and hit the target accurately almost every time. The name of the game today is behavioral marketing.
Advertising and Marketing Down The Ages
Encyclopedia Britannica reveals that in the ancient/medieval world, news, views and advertisements were shared mainly by word of mouth. Modern advertising debuted in 17th century London, when weekly newspapers printed ads and by the 18th century, promotional material was a common feature in almost all papers.
The business and industrial boom of the 19th century saw the launch of advertising agencies in the US and by the early 20th century ad agencies had become experts in producing messages themselves instead of relying on the newspaper to create them. This meant that they used creative copy, graphics, etc. and paid for the positioning of the ad in the papers.
With the development of radio and television, the ad campaigns became more auditory and visual in nature. When cable TV was launched, it became another route for messaging. This was swiftly followed by the MTV revolution, satellite TV and today, the power of the Internet has drowned out almost every other form of reaching the customer.
Marketing history underwent several enormous shifts and schools of thought, starting with the commodity school, going on to the institutional and functional schools of thought, culminating in the emergence of the first search engines in the 1990s. In time social media and integrated marketing debuted, resulting in the availability of mountains of data about consumers, their choices, needs, preferences, budgets and behaviors.
By the 1920s, business owners had begun to realize that market sizes had increased due to better transportation and communications. They began to produce and pitch slightly different models towards different markets, based on demographic, lifestyle and socio-economic factors.
They found that they had a lot of demographic and purchasing data, but it was rarely available for small groups or for individuals. A strategy of dividing the market into finer segments gained popularity and the Segmentation → Targeting → Positioning model became the rule of thumb.
Markets were divided into clusters or segments on the basis of shared characteristics and using base variables that were identifiable, sustainable, accessible, responsive and actionable. Of these, today, the most effective and efficient segment is Behavioral Marketing.
What Is Behavioral Marketing?
It is a method of reaching the target consumer/customer through an analysis of their purchasing behaviors. It collects data available through web analysis, computer applications or apps, cookies, browsing, search history, IP address and location, social media data etc. This information is collated and arranged to create a “behavioral persona” or typical user profile, in turn enabling the website’s ad server to generate the appropriate content and serve it up to the relevant targets so that it engages them, appeals to them and compels them to act.
This means that behavioral marketing can be customized and personalized to the individual customer to create bespoke ad campaigns.
This method can be used primarily by businesses that have access to the technology that’s required to collect such data. Data capture must give information on frequency and motivation for site visits, there must be reliable Customer Relationship Management (CRM) software installed, email and social media analytics, etc.
A study conducted by McKinsey revealed that companies that incorporate behavioral marketing strategies were able to outperform competitors by more than 80% in sales growth and more than 20% in revenues.
Customers feel more comfortable, valued and interested in organizations that give them a personalized UX on the website. This means that a customer’s needs, interests, intentions, behavior, motivation, geolocation and other broad demographics are taken into account while serving advertising messaging.
Types of behavioral data that is harvested includes:
whether repeat customer, frequent purchaser, new visitor, etc.
type of benefits that the customer seeks
data on transactions, purchases and payment methods
level of interest, engagement
occasion and timing of purchase
Goals of Behavioral Marketing
The goals of all types of marketing have remained the same since the dawn of commerce! Nothing much has changed.
The objective has always been:
To raise brand awareness
Generate high quality avenues (or leads to use current terminology)
Grow and maintain opinion leadership
Increase customer value
However, the routes by which we achieve the goal have created newer avenues and sub-goals that provide more enhanced and more easily achievable results.
With behavioral marketing, these goals have evolved into further differentiation of the market. More information is available now than at any other time in history about the individual customer who purchases your goods or services.
Nearly 93% of businesses with a high rate of personalization report higher revenues.
The goals of behavioral marketing are:
To enhance user experience/engagement: Segmented tracking of behaviors provides a business with information on how consumers interact with specific types of marketing materials. This is enabled through one-click ads that allow the consumer to be redirected to the environs of the store-front, where they can get a quick preview of products and services, information about the company etc. The ads give the customer interest and confidence through which they can gain further content from other areas of the site.
Personalized click-throughs: A customized message helps to capture likes, preferences, needs, wants, etc in a more efficient way compared to traditional ads. Business owners can observe that engaged customers seek more information, undertake price comparisons and read reviews.
Higher conversion rates: Behavioral marketing reaches targets more accurately, swiftly and logically as compared to other methods.
Better UX: Personalized ads are more exciting and interesting compared to irrelevant and boring ones. These customers would be more motivated to respond to calls to action.