What Is Behavioral Targeting? Plus Benefits and How It Works

Updated February 3, 2023

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When selling products or services to consumers online, click-through rates and conversions are important for successful marketing. It's beneficial to use tools to connect with consumers who are searching for your particular type of product or service. Learning about these tools and how they work may help you change your approach to digital advertising and increase your success rate.

In this article, we define what behavioral advertising is, discuss its potential benefits, explain how it works and compare it to other types of advertising.

What is behavioral targeting?

Behavioral targeting is an advertising technique that companies use to target customers based on their behaviors online, such as the purchases they make, the websites they visit and the terms that they search. For example, if an internet user looks at a pair of athletic shoes on an ecommerce site, the company can then display ads to them on other websites, increasing the likelihood that they will eventually make a purchase.

Benefits of behavioral targeting

There are some key benefits of targeting consumers based on their behavior. The primary benefits are:

Higher user engagement: Behavioral targeting allows companies to target consumers based on their habits. Consumers are often more likely to engage with these advertisements because the ads are relevant to their browsing behavior and interests.
Higher click-through rates: These ads align with the consumer's browsing and purchasing behaviors. As a result, they are more likely to click on the ads they're shown.
Better conversion rates: Ads that reach a behavioral target market generally appeal to the consumers who view them. This increases the likelihood that the user will either request more information about the product or service or make a purchase.
Enhanced ad experience: When users see more personalized ads, they generally find the browsing experience more enjoyable. This creates a better browsing experience and leads to higher rates of user satisfaction.
Higher sales: Companies that use behavioral targeting generally see higher sales. They can easily alert customers to relevant products and keep them informed about brands they have previously shown interest in and also capture sales from users who looked at products but left the page before completing the checkout process.

How behavioral targeting works

Here's a look at the behavioral targeting process in three steps:

1. Gathering data

Behavioral targeting begins with gathering data from multiple sources. Data comes from customer relationship management (CRM) systems, websites, mobile apps and other marketing automation systems. To gather this information, companies use special types of third-party cookies or tracking pixels. Once the companies gather the information, they can then analyze and segment it.

The type of data companies collect include:

Frequently visited pages: Companies can monitor whether a user visits a page once, repeatedly or on a regular basis.

Website viewing times: By monitoring the amount of time that someone spends on a website, companies can learn more about their interest level in particular products or services.

Clicked ads or links: Advertisers can monitor the ads and links that a visitor clicks on, which is helpful for understanding what marketing language and images are most effective in attracting users.

Website element interactions: Companies can learn which elements on their website draw the most user interaction, such as which icons, navigation bars, menus, images and video content users click the most.

Transaction progress: Companies can see when users place items in their shopping carts so they can tell when users don't complete the checkout process and target them in the future with ads that encourage them to return to complete their purchases.

Purchases: Behavioral targeting allows companies to target buyers with ads of products that they predict the consumer may be interested in purchasing.

Amount of time between visits: The company can track the amount of time between visits to its site to best assess how much a visitor needs or wants its product or service.

2. Dividing visitors into segments

The second step in the behavioral targeting process is segmentation. Companies can divide consumers into different segments based on browsing or purchasing behavior. For example, if an e-commerce website sells different kinds of shoes, the company can put people who look at athletic shoes into one category, people who look at dress shoes into another and people who actually purchased shoes into a separate category.

3. Applying the data

In the final step of the behavioral targeting process, a company can design unique campaigns based on the segments they created. This allows them to design marketing campaigns that are highly relevant for the users they're targeting. Not only does this add a personalized touch to their marketing campaigns, but it also increases the likelihood of engagement by users and, ultimately, a conversion.

Differences between behavioral and contextual targeting

Contextual targeting involves displaying ads that relate to the content that's on the web page the user is visiting. For example, if a user is visiting a blog that shares smoothie recipes, the website may use contextual targeting to promote a blender. With behavioral targeting, the ads are relevant to the user, not the web page, which requires consumer data. For example, continuing with the smoothie recipe blog, the user may receive ads related to a certain type or protein powder mentioned on the web page.

Reasons to use behavioral instead of contextual advertising

Behavioral targeting offers powerful advantages for companies over contextual advertising, including:

Retargeting

With this technology, an advertiser can show the same ad to the consumer on different websites. For example, if a consumer looked at a pair of athletic shoes on one website, the company could show them an ad for that pair of shoes on multiple different websites. It allows the advertiser to expose the consumer to the item multiple times, increasing the likelihood of a purchase.

Tailored advertising

This is where an advertiser displays ads to a consumer based on their activity online. This form of advertising typically has higher conversion rates because the ads the company displays are relevant to the consumer's browsing behavior and interests. It also creates a better experience for the user.