What is Online Behavioral Advertising? - Definition & Principles

Instructor: Lauren Riley

Lauren has taught college level organizational behavior and has a master's degree in Business Administration.

This lesson will discuss online behavioral advertising. We will cover the basics of behavioral advertising, how it works, and the benefits of using it as part of your digital marketing toolkit.


When you're scrolling through your Facebook newsfeed, do you ever spot ads for a website you've only just visited? Perhaps you were looking through Target.com for a new pair of rain boots but decided not to purchase them. Now you're seeing ads for similar rain boots showing up as suggested posts between your best friend's graduation photos and your sister's trip to Italy. That was no happy accident; that was behavioral advertising.


What is Behavioral Advertising?

Online behavioral advertising is a form of marketing where information is collected about consumers and their browsing behavior and used to share ads targeted at their likes, wants, interests, and needs. According to a survey conducted by the Network Advertising Initiative, behavioral advertising is 4% more effective than traditional non-targeted online ads. With success rates for most forms of advertising relatively low, behavioral advertising is an opportunity for firms to capitalize on the data available for specific users to give them an individualized experience through their ads.

How Online Behavioral Advertising Works

In order to effectively target potential customers, you need to collect data about them first. This is done through placing cookies, or small text files created by a website, either temporarily or permanently on a user's computer which will help the website recognize the user and track their preferences.

You can also collect IP addresses, or the unique identifier of a computer accessing your website, to know the geolocation of your users and better understand if they are a potential customer and offer them sales specific to their location.

This information could include what pages the user browsed on a website (i.e. how Target knew to show you ads about their rain boots instead of yoga apparel), what was clicked on the website (did you add a pair of rain boots to your cart before leaving the website?), how long a user remained on the site (how invested are you in finding a pair of rain boots?), and how recently a user browsed the site (how Target knew to show you ads for rain boots at that specific time).

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