Programmatic Advertising 101: What Is Behavioral Targeting?

Each month, Basis Technologies’ Programmatic 101 series tackles a different facet of programmatic advertising—from best practices for buyers, to competitors in the space, to trends you should know.

With 73% of consumers expecting companies to understand their unique needs, personalization in marketing is no longer an option—it’s an imperative.

Behavioral targeting is one of the most common techniques used by marketers to deliver personalized messages. At the same time, the impending loss of third-party cookies in Google’s Chrome browser will change how marketers are able to use this kind of targeting in their campaigns.

Looking to understand how behavioral targeting works, what benefits it offers, and what it might look like in a future without third-party cookies? You’ve come to the right place.

What is Behavioral Targeting?

Behavioral targeting is when an advertiser targets potential consumers based on their interests or behaviors demonstrated online, in-app, or in-store. To leverage behavioral targeting, advertisers must have access to first-, second-, or third-party behavioral data.

Digital marketers collect first-party behavioral data by tracking behaviors or actions completed on their websites, such as site page activity and purchase history.

Marketers can also tap into second-party data (i.e., first-party data that is collected by a business other than your own) and third-party data (i.e., data sets that are aggregated by data collection companies) to power behavioral targeting.

How Does Behavioral Targeting Work?

Behavioral data is used to build better, more individualized customer experiences. For example, Target collects shopper data for all in-store and online purchases. They can then use this first-party data to make personalized suggestions based on individual customers’ buying history.

As mentioned earlier, behavioral targeting can go beyond first-party data. For example, let’s say you’re an advertiser looking to target new moms and have maxed out first-party data targeting (retargeting, CRM, lookalike, etc.) from your own website. You could tap into second-party behavioral targeting by purchasing Visa’s New Mom Segment, which they create based on the first-party credit card information they collect.

Marketers can also turn to third-party data providers, which create various audience segments based on aggregations of data, for behavioral targeting. However, with the coming loss of third-party cookies in Chrome, increasing regulation over how companies can use consumer data, and a public that’s concerned about data privacy, it’s best for marketers to lean into more privacy-friendly targeting techniques.

Benefits of Behavioral Targeting

Behavioral targeting offers marketers a variety of benefits, including the ability to:

1. Test and learn key audiences: Behavioral targeting empowers advertisers to test, learn, and discover which audiences drive the highest value without incurring the financial costs of expensive audience segmentation studies.
2. Personalize customer experiences: Behavioral data allows marketers to better understand their audiences, which in turn enables them to craft custom messaging designed to resonate with those audiences.
3. Increase sales with relevant recommendations: By understanding what consumers have previously purchased, which pages they spend the most time viewing, or what products they are researching, brands can reach consumers when they’re in the right mindset to buy.

The Future of Behavioral Targeting

While browsers like Safari and Firefox are already operating without third-party cookies, the loss of third-party cookies in Chrome will impact advertisers even more significantly.

Since third-party behavioral targeting relies mainly on cookies, data companies must find new privacy-compliant ways to create the same—or similar—audiences. As a result, we expect the use of third-party data to become model-based instead of a one-to-one match. To make up for the changes in third-party data opportunities, advertisers will do more to make the most of their first-party behavioral data and lean into second-party behavioral targeting tactics.

Want to learn more about how you can prepare for the cookieless future? Check out our guide to navigating the identity crisis.