What Is Behavioral Analytics?

Behavioral analytics is an area of data analytics that focuses on providing insight into the actions of people, usually regarding online purchasing. Behavioral analytics is used in e-commerce, gaming, social media, and other applications to identify opportunities to optimize in order to realize specific business outcomes.

Behavioral analytics includes demographic and geographic data, but it also goes deeper by profiling a user’s past activity, pulling in any additional data that is available. 

How Behavioral Analytics Works

Behavioral analytics is based on hard data. It uses the volumes of raw data people use while they're on social media, in gaming applications, marketing, retail sites, or applications. This data is collected and analyzed, and then used as the basis of making certain decisions, including how to determine future trends or business activity, including ad placement.

However, there is a lot of ambiguity about the nature of the insights that it yields. For example, online advertisers use behavioral analytics to help them tailor the right offer at the right time. This is often done utilizing the user’s demographic data, any past search or social information, and a locational market to put the user into a bigger group, sometimes called a cohort or demographic. The user is then served with ads or offers that match the ads and offers that have the highest success rate with that group.

Behavioral analytics can support a number of different hypotheses, so the process of elimination comes from experimentation and evaluation. Businesses usually are looking to increase conversions, so if the change makes it worse, that hypothesis can be thrown out in favor of a different one or no change at all.

Behavioral analytics are most often used to inform A/B testing where one variable is changed at a time. As behavioral analytics have deepened and the technology to test multiple changes in real time evolves, companies are getting much better at targeting customers.

Types of Behavioral Analytics

As is to be expected, behavioral analytics is usually employed for the purpose of driving sales, either via ad placement or suggested products.

  • E-commerce and retail: This type helps make product recommendations and future sales trends based on consumers' current tastes.
  • Online gaming: This helps predict trends in usage and preferences for future offerings. As gaming companies move away from a packaged product, they use behavioral analytics to target their gamers on specific, in-game upsells.
  • Application development: Businesses can figure out how people use an app to forecast future trends. As with online gaming analytics, companies will offer upgrades within the app based on behavioral patterns.
  • Security: This type of analytics helps detect compromised information by finding unusual activity, and is employed by both government agencies and private companies throughout the world.

Key Takeaways

  • Behavioral analytics is used to track users preferences and offer or direct that user to targeted content.
  • Mostly, it is used to drive potential customers to specific products or advertisements.
  • Some feel that the systems put in place to collect data are harmful and intrusive, worrying that everything they do is tracked and monitored.

Criticism of Behavioral Analytics

Amazon offers a personalized homepage based on demographics, past purchases, search queries, and products viewed using behavioral analytics, and each product page shows you what people just like you did after viewing that page. This data trove is the real power behind Amazon.

Starting in 2015, Amazon was among tech companies like Google in releasing in-home voice products that should become a wealth of behavioral analytics regarding off-line life just, as your actions on their sites are a source of data for your online life. Some people view this as intrusive and overly informative to both the data companies and government, but they are de facto agreeing to the terms when they purchase the item.