Targeting Consumers with Advertising the New Fashioned Way

May 23, 2011

Disdain is probably not too strong a word to describe how I used to feel about Direct Marketers. They were all numbers–no creativity, no equity focus, no nothing except whatever worked.

Well guess what? I’ve belatedly come to the conclusion that direct marketers have long known something that brand marketers haven’t:  fish where the fish are. Or to say it differently–responsiveness counts. And not much else.

Finding the Most Responsive Consumers to Your Advertising

Demographic targeting is passe. At least the way that most Marketers practice it: targeting your advertising to consumers based on various demographic and psychographic characteristics — Women 25-34, Male beer drinkers 21+, Early Adopters, and so on. Demographics are good, but demographics plus response based targeting is better.

Advanced marketers are now in the throes of a sea change with respect to targeting, moving from demographic to demographic plus response based targeting–and not just for direct marketing.

The Great Enabler — Single Source

This change wouldn’t be possible without new approaches to match what people buy with what people watch. This is where single-source comes to the fore. Long hailed as the “holy grail” of advertising, single source panels match individual household viewing behavior with the same households buying behavior. Several firms now offer this capability in the consumer packaged goods sector, and it’s likely to come to other categories in the not too distant future.

Using single source, we can analyze historical data to identify households with similar purchase behavior prior to your advertising campaign. We then divide households into those exposed versus non-exposed to your advertising and, using smart statistics (typically ANCOVA), identify the single variable sales impact of your advertising.

Voila…your campaign built sales +8% among those exposed versus not exposed to your brand’s advertising! But that’s just the beginning–here comes the interesting part.

Response Based Targeting

Targeting and media buys are about to move to what I call “response based targeting” – even among brand marketers. Response based targeting is just that: targeting consumers who are proven to be most responsive to your advertising, regardless of what they look like.

How does it work? For starters, let’s assume that your brand historically targeted Women 25-34 years old. Naturally, your media plan targeted this group too. If you’re in a mass category as many CPG brands are, then you probably started with TV to maximize reach at 80%.

Using single source analysis as described earlier, we first identify sales responsive households (e.g. those that purchased based on advertising exposure), and then group them into most to least sales responsive groups.

Questions To Ask About Media Effectiveness

And we can then look at the most responsive households and ask some interesting questions like:

  • What do these households look like?
  • Are they really comprised of women 25-34?
  • What did these households watch?
  • How did their media consumption differ from the original plan?

The answers could surprise you. What if the most responsive consumers were actually women 45+? What if they turned out to watch TV shows that were very different than what your original plan focused on? What indeed.

The answer is simple. You would target based on sales response. You’d plan and buy your media on a different demographic with different media consumption profiles. In short, you’d reverse engineer your targeting, starting with sales responsiveness and then working backward to your optimal consumer target.

Not Just Advertisers But Media Companies Too

Advertisers aren’t the only ones thinking this way. Media companies are thinking about response based targeting as well. David Poltrack, the Chief Research Officer at CBS, recently presented an interesting analysis to the ARF. Mr. Poltrack used data from Nielsen Catalina Solutions (disclosure: I work at Nielsen) to assess the relative effectiveness of targeting based on demographics versus buyer behavior.

Specifically, the analysis reviewed 18 CPG categories and correlated either demographic profile or buyer behavior to sales response. The correlation between demographic targets and sales response was relatively low (<.20). This contrasts with a much stronger correlation (>.60) between heavy category buyer behavior and sales response.

To sum up: in this case, category buyer behavior was highly predictive of consumer sales response to advertising. The obvious next step would be to understand these consumers media behavior, and build your plans accordingly.

Planning Based On Responsiveness

Planning is moving from demographics to responsiveness. I know this approach might sound counter-intuitive, perhaps even backwards for brand marketers. But it’s already done all the time by direct response marketers and besides, isn’t all advertising ultimately about responsiveness, brand oriented or not? Disdain aside, isn’t it time that brand marketers start to think this way too?

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