Page 169 - Marketing Management

146 PART 3 CONNECTING WITH CUSTOMERS

growth of database marketing in its 27 member countries.“Marketing Insight: The Behavioral
Targeting Controversy” reviews some privacy and security issues.
5. The assumptions behind CRM may not always hold true. 98 High-volume customers often
know their value to a company and can leverage it to extract premium service and/or price dis-
counts, so that it may not cost the firm less to serve them. Loyal customers may expect and de-
mand more and resent any attempt to charge full prices. They may also be jealous of attention
lavished on other customers. When eBay began to chase big corporate customers such as IBM,
Disney, and Sears, some mom-and-pop businesses that helped build the brand felt aban-
99
doned. Loyal customers also may not necessarily be the best ambassadors for the brand. One
study found those who scored high on behavioral loyalty and bought a lot of a company’s
products were less active word-of-mouth marketers than customers who scored high on atti-
tudinal loyalty and expressed greater commitment to the firm.
Thus, the benefits of database marketing do not come without significant costs and risks, not
only in collecting the original customer data, but also in maintaining and mining them. When it
works, a data warehouse yields more than it costs, but the data must be in good condition, and the
discovered relationships must be valid and acceptable to consumers.

For example, Microsoft can help a DiningIn franchisee zero in on
working moms aged 30 to 40 in a given neighborhood with ads designed
to reach them before 10 AM when they’re most likely to be planning their
evening meal. Or if a person clicks on three Web sites related to auto insur-
Marketing InsightInsight
Marketin g ance and then visits an unrelated site for sports or entertainment, auto in-
surance ads may show up on that site, in addition to the auto insurance
sites. This practice ensures that ads are readily apparent for a potential
customer likely to be in the market. Microsoft claims behavioral targeting
can increase the likelihood a visitor clicks an ad by as much as 76 percent.
The Behavioral Targeting Proponents of behavioral targeting maintain that consumers see
Controversy more relevant ads in this way. Because the ads are more effective as a
result, greater ad revenue is available to support free online content.
The emergence of behavioral targeting is allowing companies to track Spending on behavioral targeting is projected to grow to $4.4 billion or
the online behavior of target customers and find the best match be- 8.6 percent of total online ad spending by 2012.
tween ads and prospects.Tracking an individual’s Internet usage behav- But consumers have significant misgivings about being tracked online
ior relies on cookies—randomly assigned numbers, codes, and data by advertisers. In one 2009 U.S. survey, about two-thirds of respondents
that are stored on the user’s computer hard drive and reveal which sites objected to the practice, including 55 percent of respondents aged 18 to 24.
have been visited, the amount of time spent there, which products or Two-thirds of respondents also believed laws should give people the right to
pages were viewed, which search terms entered, and so on. know everything a Web site knows about them. Government regulators won-
Most behavioral targeting is carried out by online ad networks der whether industry self-regulation will be sufficient or legislation is needed.
owned by large Internet firms such as Google or AOL, as well as by some Proponents of behavioral targeting maintain that many consumers lack
Internet service providers (ISPs). These online ad networks—such as full understanding of different tracking practices and would be less con-
AdBrite, which has more than 70,000 sites in its online marketplace— cerned if they knew exactly how it worked. Their claims of anonymity and
use cookies to track consumers’ movements through all their affiliated privacy, however, have been weakened by events such as a leak at AOL of
sites.A new customer signing up with Microsoft for a free Hotmail e-mail online behavioral data in 2006 for 650,000 users and overly aggressive
account, for example, is required to give the company his or her name, attempts to institute data capture procedures at Facebook and various ISPs.
age, gender, and zip code. Microsoft can then combine those facts with
information such as observed online behavior and characteristics of the Sources: Elisabeth Sullivan, “Behave,” Marketing News, September 15, 2008,
pp. 12–15; Stephanie Clifford, “Two-Thirds of Americans Object to Online Tracking,”
area in which the customer lives, to help advertisers better understand
New York Times, September 30, 2009; Jessica Mintz, “Microsoft Adds Behavioral
whether, when, and how to contact that customer. Although Microsoft Targeting,” Associated Press, December 28, 2006; Becky Ebenkamp, “Behavior
must be careful to preserve consumer privacy—the company claims it Issues,” Brandweek, October 20, 2008, pp. 21–25; Brian Morrissey, “Connect the
Thoughts,” Adweek Media, June 29, 2009, pp. 10–11; Laurie Birkett, “The Cookie
won’t purchase an individual’s income history—it can still provide
That Won’t Crumble,” Forbes, January 18, 2010, p. 32; Alden M. Hayashi, “How Not
advertising clients with behavioral targeting information. to Market on the Web,” MIT Sloan Management Review (Winter 2010), pp. 14–15.