As consumers spend more time surfing the Web and the online experience becomes increasingly sophisticated, travel companies are spending a larger percentage of their advertising budgets online. And Web advertising is playing an increasingly important role in the evolution of online travel. Programs like Google's Adsense contextual advertising are monetizing Travel 2.0 related startups and leveling the playing field for smaller travel companies.

In addition to placing ads based on the content of the current site being viewed, a new focus on targeting ads based on the consumer's implicit and explicit behavior is emerging.

Some believe that understanding the underlying intentions of the online consumer may be the Holy Grail of ad placement. If an advertiser can differentiate those consumers who are browsing from those who have a clear intention to buy, ads will more likely result in a sale. The travel industry gathers a wealth of data about consumer behavior both online and offline. Major travel suppliers and intermediaries use sophisticated analytics to understand consumer segments. Applying this insight into customer interaction strategies is what behavioral targeting is all about.

Behavioral targeting is a relatively straightforward concept: monitor a consumer's online behavior and present advertising messages that match that consumer's intentions. Behavioral targeting differs from contextual advertising. In both cases ads are presented based on the particular content the consumer is viewing, but behavioral targeting tries to better understand the reasons the consumer is looking at the content. Often, the view is based on behavior beyond a single Web page, serving ads that reflect the consumer's intentions within and across Web sites. For example, if a consumer visits an online newspaper's travel section, it is safe to assume that they are interested in travel, but we can't assume this behavior means they are about to purchase a trip. By tracking consumer behavior across sites, ads can be delivered to consumers who have shown their intention to purchase travel based on the types of Web sites visited. Whereas contextual ads appear alongside topically related material, behavioral targeting enables ad placement on potentially unrelated sites, but presents them to consumers with relevant interests.

As a recent PhoCusWright GDX article noted, research suggests that behavioral ads convert consumers with more frequency than contextual ads, perhaps because they succeed in creating an element of surprise - presenting information of interest in an unexpected online space. With behavioral targeting, two different consumers may visit the same site but see vastly different ads.

Behavioral targeting is not new, but improvements in data gathering and segmenting capabilities and the emergence of behavioral targeting networks are now enabling advertisers to realize significant benefits. BlueLithium, Claria, Revenue Science and Tacoda are key behavioral targeting vendors. But portals are getting into the game as well. Yahoo!, which has been offering behavioral targeting for several years, recently announced an upgraded platform, and MSN began offering segmented targeting of users across its sites in September 2006. Google has filed related patent applications and is likely to weigh in in the near future.

The success of behavioral targeting is dependent on the ability to scale, the quality of data collection and analysis, customer segmentation and ad delivery. And the practice is not without its pitfalls. Concerns of customer privacy must be carefully addressed by travel companies pursuing this type of targeting. Properly executed, however, behavioral targeting has the potential to provide consumers with targeted, relevant and timely information that they actually want: a proposition that benefits everyone.

Related Link: PhoCusWright