Behavioral marketing has actually been around for a few years. In its crudest form, pre-Internet, it may have consisted of special mailings to repeat customers. Today, behavioral marketing involves serving up ads to a particular individual based on his or her previous online behavior. It is not to be confused with contextual advertising, which serves up ads that are related to the content of the web page on which they're appearing.

This means that two people seeing the same web page could see completely different ads. For example, let's take two surfers, one an outdoorsman who likes to visit hiking-related websites, another a big theater buff. They're both planning a visit to South Florida. Maybe they both end up on the same site with general information about the area, but the outdoorsman sees ads for the local parks or hiking groups, while the theater enthusiast sees ads for tickets to upcoming theater performances.

You can probably see why many online advertisers are very excited about behavioral marketing's potential. It promises the ability to reach an even tighter audience with more relevant ads than contextual marketing can achieve. In theory, this means advertisers can show (and pay for) fewer impressions of their ads, while enjoying a higher click-through rate - and more importantly, a higher conversion rate.

With this kind of potential, you would expect to see a lot of advertisers eager to try out this new form of online marketing. The truth is a little more mixed. According to figures quoted by Search Engine Watch, only eight percent of all online advertising is behaviorally targeted. That number seems a little low, but there are reasons for this, as I'll go into shortly. Some of them will become obvious when I explain more about how behavioral targeting actually works.