Is site registration based on a fundamental marketing error?

More and more online publishers are requiring users to register if they want to read content. Adrian Holovaty correctly points out that if you don’t do it well, site registration is an invitation to fraud, but Jay Small counters that eventually we’ll learn how to do it and readers will accept it.

In my opinion, demographics (even when they’re correct) are usually the wrong way to target online advertising.

Demographics are almost always proxy for something else. You may believe that the most likely user for your product is a woman between the ages of 25 and 44, but what you’re really looking for is anyone who might want to use your product. It’s just more efficient to buy magazines and TV shows that are viewed by women 25 to 44.

On the Web, you can target users by context and behavior. That’s a lot more powerful than demographics and it’s the reason why Overture and Google are changing the way we think about Internet advertising.

Booz Allen and Neilsen//NetRatings, in an article titled “Seize the Occasion! The Seven-Segment System for Online Marketing“, say:

The focus on demographics — the outward and visible signs of inward attitudes — grew more out of marketers’ need for analytical criteria than out of any inherent link between a person’s demographics and shopping behaviors.

But this approach simply applies traditional marketing methods to the e-world, without exploiting the Web’s unique strengths. The abysmal performance of targeted banner advertising on Internet portal sites, where click-through rates today average 0.1 to 0.2 percent, underscores the failure of this conventional wisdom.

Wherein lies the flaw? An exclusive study by the Digital Customer Project, an alliance between Booz-Allen & Hamilton and Nielsen//NetRatings Inc., shows that the most effective segmentation scheme for online consumers first groups them by their individual behavior at a point in time, not by demographics or psychographics, or even by aggregate online behavior.

There is also an excellent interview with one of the authors at AvantMarketer. Both the article and the interview are a little long-winded for my taste, but the point that demographics is a lousy way to target Internet advertising is dead-on.

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