I took the stage immediately after industry legend Dave Morgan, whom Steve Smith, the host of the event, called “Mr. Behavioral Targeting.” Dave’s larger-than-life history includes founding Real Media and then Tacoda, selling to AOL, and becoming their SVP for Global Ad Sales.  I have long admired Dave, and have met with him a few times over the past 5 years to discuss how behavioral targeting and Web analytics could work closely together. From the first cup of coffee we shared in New York 5 years ago, we agreed that both the ad side and the site side were co-dependent.

So, being careful not to offend the media buying and advertising-centric crowd that was sure to make up this event, we talked about the need for the online advertising folks to not only realize that the site is a critical component of every campaign, but to start evangelizing for integrating site optimization to increase campaign success as part of their efforts.

As the total interactive ad spend grows from its current $20 billion to the $61 billion that Forrester estimates will be spent by 2012, we are beginning to see smart marketing executives realize they must invest more in the site. After all, ads funnel visitors to the site — without a site that hums, nothing is sold, and no meaningful relationship is built.

That means that the ads actually depend on the site for ROI. But currently, the money in interactive spend still skews much more towards the ad-spend side than the site side. If you consider that the typical web site for a company receives the majority of its traffic from non-paid sources, one could argue that the spend is weighted on the wrong side for strategic value.  Some may say that this is because marketers are still learning how to market using this new channel, and buying traffic is a relatively easy process — easier, at least, than tackling the multi-dimensional strategic design, voice, flow and usability of a web site.

Think of an iceberg: the tip of the iceberg, which represents ad spending, is more visible and easy to focus on. The tip is also what is easily seen, and what therefore first engages a new audience. However, the mass of the iceberg, as we all know, is 90% below the water. In other words, 90% (or more) of the process of turning a visitor into a customer happens on the site.

The iceberg is a single entity — the 10% above the water and the 90% below are indelibly connected to each other. From the visitor’s point of view, the ad starts a brand impression that is continuous, from view to click to site visit to conversion to repeat visit. Visitors don’t view the ad impression as a single step from the media team which then hands off the site to the site team. They view the whole encounter as an iceberg, a single brand experience with you.

Customer expectations are on the rise with the Web Channel, and when they see an ad that is relevant, their anticipation grows that the next click will deliver even greater value.  When the next experience leads them to a place where the conversation is forgotten or worse, where the conversation goes completely sideways and is disjointed, the anticipation leads to disappointment and the visitor leaves.  We call this unfortunate series of events “anticipointment.”  Today the chasm of anticipointment is great for most companies, and the real costs in low conversion rates, lost brand value add to the poor customer experience in still to be tackled efficiencies of the Web channel for marketers.

To offer solutions to the problem of anticipointment, we have been working hard to build out our online marketing suite over the past 18 months.  There is a concept called the Online Marketing Value Chain that we are discussing quite a bit.  The idea is similar to the iceberg metaphor.  The visitor sees a message whether it’s in the form of a behaviorally targeted ad, a targeted email, or a search result, and they decide whether there is enough value in that message to engage in the next click.  If they do, and they arrive on your site’s landing page or home page, they are looking for more value with each click they make, as they 1) engage deeper in the site, 2) make their way through the conversion opportunity, and 3) become a loyal customer.

Companies today are investing in a host of technologies to deliver more value to the customer and enhance their experience and engagement in the site, from efforts such as landing page optimization using MVT or AB testing, or on-site targeting, or on-site search, widgets, customer reviews, surveys and recommendations.  These applications have the right intent but need to be part of the logical customer dialogue and not just another example a one-way disjointed conversation from the company talking outward.  To make this a dialogue with each customer that makes sense, a common customer dataset must be shared across all of the applications so each application knows what level of engagement the customer had with each other application and takes that into account as it is invoked, so it continues the same conversation and doesn’t change course or start it all over again.

We used the iceberg analogy, and talked through the Online Marketing Value Chain at the OMMA event, and the audience seemed engaged the whole time. They seemed to agree that they were ultimately dependant on the site itself for conversion and ROI success. Still, it was clear that most of the folks don’t have responsibility for the site — so while they agree, they feel they aren’t really in a position to do much about it.

As a digital industry, we can’t accept this state of affairs. We need to go farther than nodding our heads and then going back to the same conversation we had yesterday. Digital industry folks need to start internalizing and evangelizing that the site is A CRITICAL component in every campaign, and we need to plan, buy and execute every campaign with both owners in the room working together. The site needs traffic to hit its growth numbers, and behaviorally targeted traffic has been proven time and time again to be among the highest yielding traffic an advertiser can drive. That same traffic needs a site that continues the conversation in a relevant manner, from landing page through to conversion, which in many cases takes a few visits to occur.

At the end of last year, a group called the Corporate Executive Board came out with a report called “Identifying the Drivers of Digital Effectiveness”, in which they evaluated the four major areas of digital investment in marketing: display advertising, email marketing, search marketing, and the web site itself. They found that the most strategic area for investment for most companies should be the web site. The report didn’t get much media attention, probably because the media that report on digital love to talk about the sexy side of the business — which tends to be ad-centric rather than site-centric.

So all in all, we were really pleased with the warm welcome we had at the conference, and we look forward to continuing the conversation with the online advertising industry in future events.  But we believe there’s still a lot of work to do. Every professional in the digital industry needs to begin breaking down the silos between the ad side and the site side, and realizing that silos are a huge prevention to the age-old mantra we all learned about in our first jobs: integrated marketing.

A couple of years ago, Joel purchased a beautiful hotel and events center right on the Mississippi River, just outside Minneapolis, MN.  The Riverwood Inn hosts business conferences during the week and beautiful weddings on the weekend. He just discovered that his riverfront location offers some of the best drift boat fishing in the country, so he’ll soon begin marketing to anglers, as well.

We were talking about the next iteration of his web site and what he wants to do with it, and as I explained what I had been doing over the past couple years working with the Testing and Targeting solutions at Omniture, it became clear that targeting to his main customer segments would be incredibly valuable to him.  Joel has three clear and distinct customer segments: business and corporate conference organizers, engaged couples and wedding planners, and coming soon, fishermen.

Joel can’t realistically create and maintain three different Web sites, each tailored to a segment, because of the amount of time and expense involved.  Of course, he could create a web site offering all three options at the highest levels of navigation such as the home page or top and left navigation bars, and allow visitors to self-select, but while this is common, it’s not an ideal solution.

As you can imagine, a conglomeration of wedding images, corporate-friendly  bullet points and fishing tales coexisting on a home page could be rather confusing.  If a bride and her mom were looking for wedding sites and saw a featured photo of a great conference room complete with whiteboard, they’d be more likely to look elsewhere than if they saw a picture of the perfect wedding venue.  In the same way, if an executive seeking a spot for a conference or meeting was greeted with pictures of flower arrangements and sunsets, he might not take the facility seriously.   And neither image would get fishermen loading their tackle boxes.

Segmenting and targeting to these segments with a variety of possible relevant content options comprised of images, text copy, and promotions would be a perfect solution. By delivering the relevant content to each group specific to their interests rather than a selection of things they may or may not be interested in, Joel is far more likely to convert visitors into inquiries and eventually into bookings.

There are a couple of ways Joel’s site could do this: He could use a targeting solution that would detect what keywords a visitor used to find the site. For example, if the visitor searched for “fishing in Minneapolis,” he would be served content about the top-notch fishing conditions available at the Inn.  Another visitor perhaps whose search phrase was “outdoor wedding venues in Twin Cities,” would see information about the perfect venue for a riverfront wedding with a beautifully-tented reception.

If the visitor came directly to his site unaided by a search engine and their easily detectable keywords, the solution would watch for the first click and once a visitor effectively “chose” their area of interest, the content would be tailored to that area subsequently.  On all future visits, it would prominently feature that relevant content, carrying on that conversation, in essence.

It’s easy to see that this new promised land of targeting different content to different segments has a good value proposition for all sized companies, not just the Fortune 500. I’d be willing to bet that if Joel implements a segmented targeting solution, he’ll see a strong increase in inquiries for weddings, meetings and fishing.

(By the way, if you’re interested in a Minneapolis area get-away, meeting or wedding, Joel’s Web-site is Riverwoodinn.com).

Last year, when I explained how targeting works — how a financial services company can serve content about mortgages to one user and offer content on checking accounts to another visitor, all based on anonymous click history and behavioral variables, the typical response was, “Really? You can do that? Wow…”

Most people were in awe that you could use analytics and behavioral data in an automated fashion to deliver more relevant content. They were excited, but also still slightly skeptical when we told them that it could actually be done in a way that did not cause lasting brain damage to the marketing department, and actually brought more fun back to marketing. With targeting, more great ideas for promotions and offers could be created and used more strategically than just serving the same thing to all visitors or rotating the content randomly.

What I’m hearing today is an evolved set of questions. Marketers understand that targeting, as well as testing, has become an element of an online marketing plan that has been proven to work, that can significantly increase revenue, and that is relatively simple to do. They’re becoming interested in making it happen within their own companies, and they’re beginning to explore how they can bring targeting to their own web properties and initiatives.

Now that they understand what is possible with targeting, they’re looking at the next steps. They’re asking, “How can I make this happen on my own site?

Here are some of the questions I have been asked more often than once in recent travels, along with my best shot at answering them.

1. “When should I use A/B and/or multivariate testing, and when should I use targeting?”

Structural decisions, such as where the search box should be placed, or which landing page design is more effective, or which form drives more people to convert, all lend themselves well to testing. By running A/B or multivariate tests, you can quickly discover the best solution for content or placements that generally affect all visitors, or the best flow through certain processes such as checkouts or registration. Creative optimization as well, such as which design works best, which call to action results in more clicks or conversions are all well-suited for testing. Ideally any structural change or important content change to your site, as well as all campaigns and related landing pages, are tested. Testing becomes a step in every campaign or site change. It becomes part of how you optimize all of your marketing efforts.

Targeting serves a different purpose, and they are very harmonious. Targeting is employed at the most significant entry points or touch points of your site, in an effort to make a visitor feel immediately that your site is relevant to him. When done well, targeting makes a visitor sense, “I just landed on this site, and the site seems to have more content for me.” Targeting can be used to bring the more relevant content forward so that each visitor can find it more easily.

Your home page and other key entry points into your site are good places to make this happen. I suggest looking at your web analytics reports and finding the top entry points and the highest trafficked pages. Those are the best places to begin targeting. The good news is that to have a big impact, a small number of pages are typically all that are required for targeting.

Both testing and targeting are indispensable tools that help you optimize the performance of your web channel. By deploying them both in the right places, you can build a site that is relevant to your customers and more effective for your business.

2. “Which specific real estate areas are appropriate for targeting, and how much of my site should I expect to give over to targeting?”

Anywhere on your site that is discretionary real estate — that is, it isn’t tied to navigation or underlying structure — is perfect for targeting.

Typically, companies start with a couple of locations within the site, such as a hero slot or the main promotional slot on a home page. As they learn the process and see the lift, they will usually expand the real estate and content library of different creatives. The idea is to develop a library of different pieces of content which can be various product or promotional offers, editorial content, or a list of links, and have the targeting technology decide which content to serve to which visitor.

Think of targeting as the end-caps of the aisles at a grocery store. Place the promotions on the highest trafficked areas. You’re simply looking to maximize the yield from the real estate with the highest traffic by being more relevant to each customer.

3. “Does targeting only work for repeat visitors?

Not at all. Targeting first time visitors is very effective. While it’s true that repeat visitors lend themselves particularly well to targeting because you have additional knowledge of them, first-time visitors come to you with many data points you can use to target relevant content.

We can use the referring information i.e. how they arrived at your site. If they came to you via a keyword, that tells you very specifically what they are looking for. If they clicked on a link from a campaign you’re running, that also tells you something specific about what they are expecting to see.

The time of day and day of week are good indicators of what type of content the visitor hopes to see. For example, we have found that when people go online during lunchtime in the middle of a work week, they are generally busy “running errands” online. That is, they’re paying bills, booking business trips, and trying to accomplish things during their break . They’re not going to be as receptive to cross-sell and up-sell opportunities that take up time to consider.

On the other hand, we have found that visitors during the weekend tend to be less time sensitive with their browsing. They have time to explore, and are more open to various offers where consideration needs to play a role.

Other indicators that can help you target first-time visitors include geography, connection speed, browser settings. All of these are demographic indicators of sorts online, so they are useful for distinguishing what content a visitor may be interested in, versus other content.

4. “Will this affect the visitor experience or slow the loading of my site?”

Nope. The content targeting loads in less than half a second, which means there is no negative effect on the visitor experience whatsoever.

5. “Will this work with my current content management system?”

Omniture’s targeting tool is agnostic to however you are delivering content today. This, in fact, is a key component to the way Omniture’s targeting solution works, because most companies we see have multiple content management systems. We can easily integrate even with the most arcane and complicated systems.

As I continue to travel to conferences, I’ll continue to chronicle the questions I’m being asked and will update this space with additional thoughts if they are useful. In the meantime, if you’ve got questions about testing and targeting that I didn’t cover here, please don’t hesitate to leave a comment below or contact us.

A few weeks ago I wrote about the fact that Web analytics is no longer optional: whether it’s easy or hard is not the issue — Web analytics has become mandatory for us all doing business using the Web.

Web site optimization, as well, has become something that businesses cannot ignore.

Optimization has become a buzzword. As such, its meaning has become diluted; marketers may find it easy to roll their eyes when uttered once again, or gloss over it and ignore it.   Let’s take a look at the rise of “optimization” and why its still a critical concept that needs to spread even deeper into marketing organizations today.

Old-School Web Analytics: Site Optimization

Traditionally, Web analytics and optimization was borne out of the idea of removing bottlenecks on a site.  In the early days, whomever owned the Web site, often IT or specialized eCommerce teams, wanted to know where the barriers for successful conversion were located, and would set out to remove those barriers delivering the best flow for the typical visitor to the site. They were able to use analytics to figure those pieces out.

Marketers Have Arrived: Campaign Optimization

In the last few years, as more marketers have discovered Web analytics, they have begun embracing the idea of optimizing their campaigns — that is, improving each step of a user’s interaction from first impression or touch point (be it a banner ad, an email or a search engine keyword) all the way through to the registration, conversion event or sale. With this campaign analysis comes the idea of using analytics to ensure that the campaign is successful and if not, making course corrections while there is plenty of time to make sure it’s successful.

Are We There Yet?

Mature marketing organizations know that, if they are to continue their adoption of being fully accountable for each dollar spent, and to increase their measurable contribution to the organization, they must embrace optimization as a cultural shift, on all of its many levels. Everyone in the department needs to be thinking about continuous optimization so that marketing’s contribution can continue to grow.

But even as marketers are beginning to take advantage of these types of optimization, there tends to be a disconnect at many levels within the organization.  Optimization often occurs in a sort of ad hoc manner. As of yet, for many organizations, there seems to be no top-down mandate pushing the entire team to make optimization a part of their culture.

That must change — and marketers, who know the benefits of optimization better than anyone, need to be the driving force.

Start With the Tactical, but Move to Strategic

My first two examples — optimizing on the site level and campaign level — are tactical in nature, and most marketing departments with rudimentary analytics in place can begin embracing optimization at these levels.

But marketers can’t stop there, even when success is experienced. Marketers need to broadcast this success and use it to start asking other questions that lead to more strategic optimization. Good questions to ask include:

• Where are we spending our dollars for maximum business benefit?
• How do we best allocate between paid and natural search, rich internet display ads, static banners, email?
• How does our offline marketing effectiveness compare to our online marketing effectiveness?

This will direct marketing organizations toward optimizing their budgets and spending at regular intervals. This can be done on a quarterly, monthly, weekly — even daily — basis. It all depends on a company’s ability to put the analysis to use with improving actions. The process of optimization for each company is different, but after some experience, each organization will figure out the best ways and time intervals to make budget optimization effective and not burdensome.

Take optimization to still another level: what needs to happen in order to help bring optimization into the consciousness of the organization’s CMO and CEO? As marketers become more committed to optimizing their contributions to the company, C-level executives will begin buying into that culture.

Finally, each organization needs to think about how its customers’ relationships are strengthened, and optimized across the organization. At every touch point, are they being given the best service and experience possible? Is the organization as a whole committed to optimizing the customers’ experiences on an ongoing basis, and are the metrics available to measure this in an unbiased manner?

While the Web site, the main channel of driving customer experiences today, needs to sit at the center of all this, it cannot be the only area of the organization that looks to optimize its interactions with customers.

What Does a Culture of Optimization Look Like?

Once all levels of an organization have embraced optimization, there’s a subtle shift in team consciousness. Gut feel, intuition and opinion take a back seat to metrics and facts. Arguing and debating various ideas give way to disciplined testing. Everyone will know that new campaigns will have multiple creatives designed to test, and that numbers will drive the results to decide which version is the best one. Everyone knows that testing will be an ongoing process, because what’s “right” today is not necessarily “right” tomorrow.

In the past, marketers would launch a campaign and three months later, would look at all the data and announce its success (or lack thereof). In today’s world, an organization operating that way gets left behind in an instant. Marketers can now launch campaigns and don’t have to wait to see if it is successful. They have the tools to ensure that it is successful, because they can adjust their course in real-time until it is successful..

Well, it’s been less than 5 years, and It’s satisfying to see that this prediction has come true.  No one doing digital marketing or any form of digital business can survive without it. A web site without analytics is simply a hobby.  So does this acquisition turn the world of analytics upside down? Hardly.   Is it a good move for the industry?  Sure it is. Yahoo is a great media company, and as such, they want to sell more advertising.  They are feverishly developing their new behavioral targeting network to sell more advertising. This move will help them sell more advertising, and so it’s a smart move.

Not widely known is the fact that a few years ago, Omniture actually acquired Yahoo’s enterprise analytics customers that it had inherited from its purchase of Overture, who had earlier acquired Keylime, another early provider in this space.  Yahoo’s motive with this acquisition is clearly to provide a service to their thousands of small business customers.  These customers would have otherwise migrated to Google for their ‘free’ analytics solution.  Mid-sized and enterprise customers, on the other hand, demand advanced products, specialized business services and deep domain expertise to help them optimize their online business.  Yahoo wants to be the best advertising platform it can be, and with that, we know our customers will want to do business with both of us.

Our joint customers will buy advertising with Yahoo, among others, and optimize that spend as well as all other aspects of their digital efforts with Omniture.  What this will do for Yahoo is to give more small businesses access to web analytics, so they can see how well their online ad spending is working and buy even more.  All of this is good for the general maturity of the Web as a serious channel for business, and the most accountable medium for marketing.Web analytics is certainly foundational, but where it gets really exciting is when the analytics become the fuel for a much broader platform that not only measures, but also optimizes and automates decision-making across all online marketing channels.

The news delivered by analytics may be good or bad depending on the marketing channel, depending on the offer, depending on the time of day, depending on the audience, you get the idea.  Yes, any form of measurement is better than none and for that we applaud this move and welcome Yahoo! back to the world of web analytics.  And, for the data driven organizations that need independent reporting and analytics, optimization and automation, we welcome you to the platform where this will lead you.

While most sites have not yet implemented testing and targeting technology, many companies are starting to realize its importance.  Social networks are driving this shift in how companies think about personalized marketing, as they are all about individual visitors and their profiles.  The popularity of social networks is driving companies to understand why customers really visit sites, and more importantly why they come back, purchase, and then purchase again and again.  Understanding where potential customers go on the Web, which networks they belong to, and how to develop a deeper relationship them becomes the marketing focus. Stickiness is no longer the primary objective of a Web site.  Dave Morgan pointed this out in his post on people networks. Through relevant, personalized marketing based on online behavior, companies can better build a relationship with the individual customer.  As the online channel matures, I think more often we’ll see the offline service aspect missing in so many sites today.  Customers will begin to recognize this personalized level of service online and will demand it in all of their online interactions. Web sites that refuse to adapt to this will simply be left behind.