Consumers are increasingly wary of advertising and more responsive to product placement and word-of-mouth recommendation, according to a study in the US. BIGresearch’s survey of 17,000 consumers found that product placement had the most influence on their grocery purchases (15 per cent, up two per cent from 2007), followed by electronics and apparel.

Word-of-mouth was found to have the most impact on consumers’ choice of venue to eat out, with electronics again featuring strongly.

“Today’s savvy consumers are in control of the market and recognise when advertisers are trying to manipulate them,” said Gary Drenik, President and CEO of BIGresearch. “However, when executed effectively, product placements can serve as a spring board for creating highly influential word-of-mouth among specific consumer groups.”

On Your Best Behaviour

Web advertising looks set to pick up budgets slashed from other traditional media, but if product placements and word-of-mouth recommendations online – such as via blogs or social networks – are of increasing influence, how can advertisers convince the ‘ad-weary’ consumer to click through?

Colin Petrie-Norris, Managing Director (International) of online ad network Specific Media, believes that behavioural targeting offers better value to advertisers keen to maximise return on investment than product placement, and can reach audiences on blogs and social networks.

“With product placement consumers trust the source of the information, but behavioural targeting allows consumers to enjoy a deeper relationship with a brand,” he told NMK.

Specific Media runs a ‘blind network’, whereby advertisers can reach audiences likely to be interested in their products and services via a growing number of publishers – anyone from individual blog sites to big news networks. Its technology analyses surfing behaviour without knowing who the individual is.

Product placement can cost a great deal of money, whereas Petrie-Norris argues that behavioural targeting – because of its specific reach – would enable smaller brands to compete with the leading players in their industry.

“Behavioural targeting democratises the web. You could be the fourth or fifth player in your market but you can still compete with bigger brands,” he said.

Real Returns

The click-through rate (CTR) method has been used to gauge the success of many online advertising campaigns, but this is misleading, Petrie-Norris warns.

“It is important to note that CTR is a very poor proxy for real performance,” he said. “Poorly targeted ads can receive impressive click-through rates only for many visitors to realise the site is not relevant for them and instantly log out. Simply delivering a cheap visitor that may or may not be predisposed to an advertiser’s offer isn’t particularly useful.”

While it is important to attract the right people to an ad, it is also important to be able to reach those consumers in the forums where they are going to notice you, which is where ad networks come in, Petrie-Norris argues.

“Marketers need to navigate the large amount of blogs, websites and communities out there to reach their target audiences. [Behavioural targeting] gives advertisers access to the best stuff,” he concluded. “This is one of the reasons it is seeing the fastest growth [of any online advertising] at the moment. Advertising is all about return on investment, and behavioural targeting offers that. In the next few years I can see it becoming an established part of doing business.”

According to research group, eMarketer, the $775 million that is being spent on behavioural targeting at the moment will rise to $4.4 billion globally by 2012.