Next week’s guest Meyar Sheik, CEO/Co-Founder of Certona asked us to post this interesting article on using self-optimizing behavioral targeting technology for e-commerce success. Be sure to listen to Meyar live next Wednesday at 6 PM Eastern, 3 PM Pacific on Online Marketing with RSS Ray.

Almost from the beginning, e-commerce and Internet marketing professionals have been grappling with two, seemingly mutually-exclusive initiatives: how to personalize online content for each visitor while preserving their right to privacy. Many have given up, relying instead on opt-in initiatives such as newsletters, RSS alerts and social network tools. Others spend enormous time and money to monitor and manually update their sites at great expense and lower profit margins. Neither one of those options delivers sustainable results.

In response, leading technology firms are introducing Web-based “self-optimizing” behavioral targeting and personalization solutions that help firms of all sizes increase online conversions, average order value and online revenues while still protecting the visitor’s right to privacy.

How it works
Instead of requiring demographic or classification information, these dynamic systems automatically generate representations of visitors and products solely from current user interaction on the Web site. Self-optimizing tools leverages the traffic patters of visitors to provide the most relevant Web experience possible without the need for any personal information, third-party cookies or special interaction with the individual. Doing so allows retailers to transparently target each visitor individually, without compromising their privacy.

This process is the most effective way to deliver relevant content because consumers’ present behaviors on the site are the most accurate representation of their interests and needs at that time, not the demographic information that they filled out months ago. As a result, self-optimizing behavioral targeting solutions make it possible to enhance a site’s product cross-sell/up sell and content personalization capabilities while preserving the visitor’s right to privacy. These types of solutions also provide an enhanced Web experience for the customer by not requiring them to fill out annoying pop-up surveys or lengthy, intrusive online registration profiles. Additionally, the more advanced self-optimizing systems do not track visitors’ behavior from site to site.

Case in point – a leading American catalog merchant and online retailer implemented a third-party, self-optimizing behavior targeting and personalization solution just prior to the 2007 holiday season. Since then, the company’s e-commerce site has witnessed a more than 15 percent increase in converted online visitors and a more than 18 percent rise in direct revenue contributions from automated product recommendations and merchandising. Moreover, the system provides higher click-through rates on content as well as increased conversions, site stickiness and repeat purchases while eliminating the tedious, labor-intensive task of manually generating numerous relevant product recommendations and personalized promotions to online visitors.

Other retailers have claimed that such systems account for 20 percent of their online revenues, with the average order value from visitors who acted upon the platform’s automated personalized recommendations being over 60 percent greater than those who didn’t. Such testimonials speak clearly to the value that self-optimizing behavioral targeting and personalization solutions bring to an organization’s bottom line.

Intelligence benefits abound
Furthermore, self-optimizing behavioral targeting and personalization solutions provide significant intelligence-gathering capabilities to any organizations over other personalization methods, such as shopping basket analysis, expert systems, content analysis and collaborative filtering algorithms. By actually profiling the entire individual clickstream behavioral pattern, self-optimizing systems focus on the person-to-content affinities and are not just limited to content-to-content affinity modeling often represented by: people who bought this item also bought these items”.

Self-optimizing solutions are completely data driven as well, and thus able to process large and diverse transaction histories; even across product categories, cultures and languages. Furthermore, these types of systems do not rely upon any knowledge of the content other than the user’s interactions with it. This greatly simplifies integration and unified content profiles across all types, from text to multi-media. Self-optimizing behavioral targeting and personalization solutions can scale to large user bases and catalogs while providing acceptable runtime performance.

Apply to all types of environments
Because of their automated profiling, content neutrality and adaptive content indexing, these types of systems can be embedded into almost any environment that can capture online behavior; including e-commerce, search, content, e-mail, mobile and streaming media. Moreover, self-optimizing solutions allows like-minded visitors to be dynamically grouped together for predictive purposes, providing additional functionality to such applications as community radio, movie guides, gift registries and social shopping.

These types of systems can also be combined with other enterprise data to produce even broader predictive models of customer behavior. Doing so extends their benefits to off-line campaigns, such as direct mail, telemarketing, media advertising and customer loyalty marketing campaigns.

Benefits to any organization
Virtually all types of companies can see value from self-optimizing behavioral targeting and personalization solutions, and usually implement them in of days or weeks. Whether an organization sells products, publishes content or serves ads on its web site, their online customers and visitors want to see more relevant choices with less clutter. Companies that can understand their site visitors’ behaviors without invading their personal privacy and are able to instantly deliver what they need and what they like while building long-lasting, and profitable, relationships.

About the author: Meyar Sheik is CEO and Co-Founder of Certona Corporation, creator of Resonance®, a Web 2.0 optimization and personalization platform. E-mail him at msheik@certona.com.