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Wednesday, November 03, 2004

Evenin', Squire (Can We Interest You in an Alarm System?)

Charlene Li weighs in with an excellent post about the significance of Google's acquisition of Keyhole. Geography is quite often a proxy for income and other demographic characteristics, so deeper use of such technology could help online advertisers target better without necessarily gathering extensive info on users.

Li points out:

What if Google could overlay Claritas PRIZM segments against users IP addresses – and allow advertisers to adjust their bids up if certain households searched on specific terms? For example, if a search user was identified to be in the “Landed Gentry” segment, the advertiser may be more willing to pay more for this person’s attention.

Although such targeting would only be a rough guide in some cases, in specific sub-sectors, such as the so-called "country squires" subsegment of the Claritas profiling, IP targeting would map very closely to the target demographic.

In the Greater Toronto Area where I live, the very large, newly built homes in certain areas around the suburb of Aurora, for example, rest on large lots. In certain neighbourhoods, you'd have to travel a fair distance before you bled into a non-affluent one. And certain "exurbs" such as parts of North Oakville, Georgetown, and Caledon not only harbor large lots with large homes, but in some cases, brand new schools, brand new office parks, etc.

Unraveling the mysteries of urban, suburban, and exurban geography is a matter for anthropologists and marketers alike. Those marketers who do a better job of it will clean up, as they so often have.

In Mississauga, an established but still-expanding suburb west of Toronto, there are clusters of brand-new buildings which employ thousands of knowledge workers for larger companies such as Microsoft. Depending on IP address one could begin targeting these "business users," confident in the knowledge that they're more likely to mean certain things when typing certain keyword searches.

As it stands, Google AdWords offers a sort of "do-it-yourself" version of IP targeting, whereby one could theoretically target various slivers of the urban/suburban/exurban geography.

But until companies like Google build "prefabricated" versions of this to help their advertisers achieve substantive goals without having to become amateur demographers and geographers, advertiser adoption may be slow.

Depending on how affluent or how business-oriented certain subsectors are, the bidding wars on certain keywords could become ferocious once advertisers became more certain about the characteristics of those viewing their ads.

It's clear that as things currently stand, keyword bidding is quite primitive. On Google AdWords, niche or B2B advertisers find it difficult to exclude mass-market searchers on certain terms, because meanings overlap. The result is that the CTR drops too low, and these advertisers' ads get disabled... so they're stuck advertising on extremely narrow terms and hoping that someday they'll show enough ads to their target audience to make a difference.

Being able to experiment with different response rates for different IP-mapped "user profiles," for example allowing one to sell to known business users and home users living in certain areas, would offer greater predictability, and would result in higher CTR's. Search (and paid listings) would become more relevant, and highly focused advertisers wouldn't be punished or disabled based on the popularity of certain keywords in the mass market.

Imagine if you sold riding mowers and wanted to be absolutely sure to grab the attention of people with "lawns" that are roughly between 1 and 5 acres. You probably already know how to send direct-mail pitches to lawn-care companies. But what about those who own their own mower? Do you run a multi-million-dollar TV campaign telling everybody in America that nothing runs like a Deere? Or do you launch a new premium product with advanced features that will get people talking over the fence, and crank up bids really high on certain keywords, showing these only to the group of viewers searching from neighborhoods with "those" types of homes, to aim more squarely at a much smaller segment of the market? Once you've made a quick inroad into that market, putting your latest toy into the hands of a decent number of sneezers, you should be able to sell them related stuff as well. If you even make that stuff, or have the capacity to retail it, that is.

Maybe the mowing example is a rotten one. Those suckers don't seem to break down often enough to warrant replacing a perfectly good one. But maybe Toyota could make a Prius Mower or something for those wanting the ultimate compromise between landed comfort and "look at me" social conscience.

This is only an example. The principles aren't entirely new, but advancing technology combined with the advent of keyword bidding adds plenty of new wrinkles and will open up new opportunities. This is merely a hypothetical view of what should become possible online in the next 18-24 months. Void where prohibited. Wear safety boots while mowing. Do not stick your hand underneath mower, even when shut off.

Yours truly,

Lord Goodman

Posted by Andrew Goodman




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